Domestic vacay? Not this year…
Americans are downsizing their summer vacations
High prices and economic jitters are leading Americans to pull back on domestic travel plans. “It’s definitely staycation season,” one hotel manager said.
Americans are downsizing their summer vacations — taking shorter trips, driving instead of flying, and generally staying closer to home in an uncertain economy.
Families appear to be pulling back on travel spending, after years of splurging on vacations and other experiences after the pandemic-era shutdowns. Fewer households are booking airline tickets or hotel rooms now than they were a year ago, Bank of America data shows. And the number of people taking vacation time off work in June dropped to its lowest level since the pandemic, according to Labor Department data.
That pullback follows months of economic warning signs. Americans say they are feeling worse about the economy than they have in years, as new trade and immigration policies take hold. Many are bracing for a spike in prices from new tariffs, while others are worried about losing their jobs in a slowing labor market.
Renewed tariff threats last week — including rates as high as 50 percent on goods from Brazil, Japan and Canada starting Aug. 1 — have added to fears that a new round of inflation may be around the corner. Consumer spending dropped in May, as households put more of their incomes in savings in anticipation of higher costs.
In all, Americans expect to spend an average $3,132 on summer vacations this year, about 25 percent less than the $4,199 they set aside last summer, according to an annual survey conducted by Ipsos for Generali Global Assistance.
“The spending slowdown is real,” said Diane Swonk, chief economist at KPMG. “Consumers are stressed, and this is where we’re seeing it first: in domestic flights, hotels, and a lot of other service-sector spending.”
Although the wealthiest Americans are still splurging on international travel and booking hotel rooms that cost $800 a night or more, most others are retrenching, Swonk said. U.S. hotel occupancy rates fell 1.7 percent in June from a year earlier, marking the fourth straight month of declines, according to real estate analytics firm CoStar.
That waning demand is already lowering the cost of travel. Airplane tickets, rental cars, hotel rooms and concert tickets all got cheaper in June, [even as overall prices picked up,]
To keep up, hotels and resorts across the country are going to greater lengths to woo locals and road-trippers, rolling out “daycation” deals, free parking and discounted spa services to tap into a growing pool of Americans who want a break without breaking the bank.
“This summer, it’s definitely staycation season,” said Madelyn Lydon, assistant director of marketing at the Arizona Biltmore, a resort in Phoenix.
The hotel is offering a 40 percent discount and free parking for visitors from seven nearby states in hopes of attracting more road-trippers. Same-day bookings have picked up, along with demand for day passes, Lydon said, as more people choose the resort and its pools as a last-minute substitute for longer, pricier vacations.
Years of inflation, coupled with rising health care, insurance and utility costs, have pinched household budgets. Credit card balances, at $1.2 trillion, are near an all-time high, and delinquency rates are rising on mortgages and student loans as more Americans fall behind on everyday expenses.
Getting away for the summer this year has required extra scrimping for Chelsea Padilla, a middle school teacher near Galveston, Texas, whose monthly mortgage bill recently rose by $200 because of higher taxes and insurance costs.
Instead of traveling with her family of five, she has stuck to a smaller getaway with just her 16-year-old daughter this month. She bought plane tickets to Destin, Florida, using credit card points. And unlike the nice hotel suite they splurged on last summer, Padilla found a no-frills property a few miles from the beach that included free breakfast. They ate fruit and snacks from the grocery store for lunch, and they usually split an entrée for dinner to save money.
“It’s became a real balance between the pressures of rising costs and still being able to enjoy our lives,” said Padilla, 41. “We’re being as thrifty as we can.”
Southwest Airlines, American Airlines and JetBlue have all warned that slowing domestic demand could weigh on profits this year. Delta Air Lines last week reported a 4 percent drop in main cabin bookings in the first six months of the year, compared with a year earlier. (Notably, premium tickets, for first- and business-class seats, rose by 6 percent during the same period.)
Last summer, Sam Head and his family went on three vacations, twice to Florida and once to Las Vegas. This year, the Milwaukee-based family is sticking to a long weekend in Wisconsin Dells to visit multiple water parks.
Business at Head’s recruiting firm has slowed dramatically, he said, which has made him nervous about the economy. Instead of splurging on travel, Head said, he is focused on saving up a year’s worth of extra cash.
“Do I worry about where things are going? Of course. I already see it in my numbers,” the 35-year-old said. “We’re cutting back on any nondiscretionary spending so we can keep more money in our pockets.”
Most Americans — 56 percent — say they plan to travel less this summer, according to a national poll by SSRS. Many said they were opting for shorter or “more budget-conscious” trips because of financial concerns, with 54 percent saying they would be trying to save more money this year.
In New Paltz, New York, Danielle Dippel, 40, and her boyfriend spent months arranging a week-long vacation in Kennebunkport, Maine — then promptly scrapped that plan when financial jitters got in the way.
Between government funding cuts at her job at a historical site and growing economic uncertainty, Dippel said it no longer made sense to spend $2,000 on a summer trip. Instead, the couple plans to drive four hours to Newport, Rhode Island, where they will spend four nights.
“We’re trying to cram everything into three days,” Dippel said. “It’s about $700 cheaper. And we won’t have to be away from our cat very long.”