- Many travel-related fees have fallen through June despite airport chaos and skyrocketing inflation.
- Prices for flights, hotels and car rentals have all fallen significantly as demand for travel has waned.
- Although prices are well above last year’s levels, the declines offer some relief to potential travelers.
Inflation is heating up. Airports are grappling with widespread staff shortages and baggage nightmares. Flight cancellations are historically frequent.
Yet summer travel is one of the few things in the US economy that is actually getting cheaper.
Data released on Wednesday showed prices rose 9.1% on the year to June, reflecting the fastest inflation since November 1981. Rising energy prices fueled most of the up, but a few categories showed price declines over the same period. A common thread through many price cuts: they have taken place in crucial areas for summer travel.
According to Consumer price index. The airfare cut ended a seven-month streak of price hikes, offering the first sign of relief after the biggest increases in decades. Car rental costs are well below last year’s peak. Hotel inflation has been more rigid, but the drop in June marks the biggest one-month drop since the start of the year.
Admittedly, prices are still much higher than a year ago. But the June inflation report suggests prices are finally cooling after surging ahead of the peak travel season.
Flights are getting cheaper
Airline ticket prices fell 1.8% in June, reflecting the biggest monthly decline since September 2021.
The downward trend makes more sense after taking a look at the latest travel trends. U.S. airline bookings fell 2.8% month-over-month in June, according to Adobe Analytics data released Monday. Online spending on domestic flights fell 5.7% during the month to $7.9 billion. Overall spending is still above pre-pandemic levels, but overall bookings are below those levels by around 1%, suggesting sky-high prices have deterred Americans from summer travel.
“The changing economic landscape and inflation in travel spending are impacting how consumers are redefining their budgets,” Vivek Pandya, principal analyst at Adobe Digital Insights, said in a statement. “While flight prices fell slightly in June, they remain elevated. As a result, we are starting to see summer booking growth leveling off and falling below pre-pandemic levels.”
Accommodation prices are skyrocketing
Finding affordable housing also got a little easier last month. Prices for hotels and motels plunged 3.3% through June, erasing much of the rise seen in the spring.
The slump also reversed the trend seen in the housing sector as a whole. Prices for rent, school accommodation and even household insurance all rose last month, continuing the steady upward trend in housing costs. As travel demand begins to decline, hotels are a rare accommodation option with plummeting prices.
Traveling to your vacation spot is cheaper
Traveling around a vacation spot is also slightly more affordable than it was in May. Car and truck rental prices fell 2.2% through June, marking the first drop since January.
The decline continues a long downtrend that began about a year ago. The semiconductor shortage that has hampered car production in 2021 has spilled over to the rental sector, as companies that have fought lockdowns have found themselves with fewer cars to loan out. Prices rebounded somewhat in early 2022, but the recovery in auto manufacturing eased some pressure on the rental industry.
Although not shown in the June inflation report, gasoline prices have fallen steadily over the past few weeks. This offers even more relief to potential travelers. With the United States squarely in its most popular travel season, Americans could enjoy a break from the price issues that delayed some vacation plans just months ago.