Holiday airfare is down. Why isn’t travel spending?
By Craig Joseph, NerdWallet
Holiday airfare is down, but Americans are planning to spend more than ever on holiday travel.
A September 2024 report by online travel agency Kayak shows domestic holiday airfare is at its lowest level in three years. Compared to last year, Christmas and New Year’s flight prices are down 9%, while Thanksgiving flight prices are down 6%.
Consumers feeling the pinch from inflation and dwindling personal savings rates may rejoice. However, lower airfare doesn’t mean people are spending less on travel.
An October 2024 survey by NerdWallet found that nearly half of American adults plan to spend money on flights and hotel stays during the 2024 holiday season (between November 21, 2024 and January 8, 2025). These holiday travelers plan to spend $2,330, on average, on these expenses — nearly a 20% increase over 2023’s average of $1,947.
That’s a big jump in holiday travel spending. So where are those extra dollars going?
Higher hotel prices
Holiday hotel prices are up 4% compared to 2023 — $353 per night vs. $338 per night in 2023 — according to data from Kayak. For shorter hotel stays, that small price increase may not make a huge dent in someone’s budget. But during the holidays, when people might be planning longer stays and multi-day celebrations, those differences can add up.
Better seats, fancier hotels
The average holiday flight price may be down slightly this year, but keep in mind those statistics don’t include upcharges like seat selection and checked baggage. These pricing tactics combined with a consumer willingness to pay for comfort and convenience might be driving up overall travel spending.
According to an October 2024 survey from Deloitte, compared to last year, an additional 20% of holiday flyers intend to spend more on upgraded seats and an additional 8% intend to pay for a more convenient itinerary, while an additional 10% of hotel patrons are willing to pay for upper-class lodging.
More demand for popular destinations
Holiday travelers — and travelers in general — are focusing on destinations that are both more crowded and more expensive than in years past. In turn, that demand drives up prices and holiday travel spending.
“Unlike the pandemic where travelers chose less crowded destinations, those who are traveling are going back to more popular and expensive cities — and they’re willing to pay a premium,” said Noreen Henry, chief revenue officer at Sojern, a travel-based digital marketing firm, in an October 2024 report.
According to Sojern, the top destinations for holiday travelers within the United States for 2024 include Orlando, Honolulu and New York City. Internationally, the top destinations include Mexico, the United Kingdom, Canada and the Dominican Republic.
4 ways to save money on holiday travel
If consumers are just rolling savings on airfare into a more lavish travel experience in more expensive destinations, how else can they save money on holiday travel in 2024? Here are four ways.
1. Book holiday travel soon. According to a 2024 study by Google Flights, the best booking window for low-cost flights around Thanksgiving is between 26 and 59 days before departure. For Christmas, it’s between 36 and 72 days in advance. That makes October the prime month to book your holiday flights before prices start to rise.
2. Use your stash of airline miles, hotel points or credit card rewards. It’s okay to not get an optimal redemption value for your points if it means putting cash back in your pocket during an expensive time of the year, such as the holidays. The least valuable mile or point is the one you don’t use.
3. Fly on low-demand days. You will also find better deals (both with cash and points) if you avoid traveling on the most popular days, such as the Wednesday before or the Sunday after Thanksgiving and the few days prior to Christmas Eve. In general, the cheapest travel days will be the day of the holiday, such as the Thursday of Thanksgiving or on Christmas Day.
4. Opt-in to take a different flight. If your plans are flexible, busy periods like the holidays can be a perfect time to volunteer to get bumped on an oversold flight. If you move to a later flight, you’ll usually get rewarded with a flight voucher and other compensation. You might even ask for a free upgrade to premium economy or first class as a sweetener.
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Craig Joseph writes for NerdWallet. Email: cjoseph@nerdwallet.com.
The article Holiday Airfare Is Down. Why Isn’t Travel Spending? originally appeared on NerdWallet.