Seven Reasons Your Vacation Is More Expensive and It’s More than Rising Airfares, Expensive Rental Cars, Hotel Costs and Gas Prices

Holidays and Vacations Getting More Expensive - Here's Why.

Following the wide spread availability of vaccines and rapid rollback of COVID related restrictions and regulations around travel, millions of Americans are breaking their virtual shackles and overcoming a major case of cabin fever by going on much needed vacations. With pandemic related fears in the rear view mirror (domestically at least) and a strong push by merchants to attract travellers, many Americans and their families are taking long overdue vacations by road, rail and air.

But as I found out when booking my summer trips, vacations are definitely getting more expensive, even relative to pre-pandemic levels. Here are seven reasons why your time away from home will likely be much more expensive this coming summer and why you need to plan and budget accordingly.

Airfares Going Up and Up

Airfares and hotel rates are climbing as travelers return in record numbers since the pandemic began. Domestic U.S. fares are up 9% since April 1st, while international fares are up 17%, according to the latest figures. Even booking early hasn’t helped much as overall capacity is limited, cancellation rules are still flexible (so many are double booking) and the amount of demand is getting back to pre-pandemic levels.

Pro-tip: One tip I have seen work is to try and book at smaller or satellite airports, which tend to have lower fares and lower demand. Further if you can time your departure/arrivals around a Tuesday or Saturday you can get generally get a lower fare.

Rising Hotel Costs – Independents to Big Chains like Marriott and Hilton

Due to additional safety measures, surging demand and capacity constraints the cost of booking a hotel this year has risen considerably. I was recently trying to find a hotel in Austin and San Diego for some planned holidays later this summer and could not get anything decent for my family for less than $280 p/night. I went to the same places two years ago and had a range of choices at the similar hotels for less than $200 p/night. And the difference adds up quickly if you are trying to get two rooms over four nights.

And good luck trying to use your hotel points, especially those from Marriott or Hilton. Unless you are very flexible with location and willing to travel outside of peak times, then using points to cover your hotel will be nigh impossible. Airbnb choices are not much better than hotels as self contained units have been expensive for quite a while.

Why are Rental Cars so Expensive?

Rental car prices are nearly double or triple prices we saw a couple of years ago, which is due to a perfect storm of supply and demand constraints. Due to the pandemic many rental car companies (like Hertz, Avis and Budget) had to sell a lot of their fleets during the pandemic to stay in business. According to one estimate from Jefferies Group, companies got rid of over 770,000 of their cars.

But over the last 12 months the price of new and used cars has increase significantly due to a global microchip shortage. So the cost of replenishing rental fleets has gone up significantly and these costs are being passed to consumers. Hence expect to pay $100 to $200 per day in many locations for your rental car, if you can get one.

Pro:Tip. My suggestion is to look around online at any one of the leading travel aggregator sides (I prefer and just make multiple bookings to lock in a base price. Then keep searching on a regular basis. The other option, like air travel is to also consider renting from suburban locations versus the airport or city centers. These can have lower rates, but are generally open for limited hours and have limited car options.

Gas Prices – On the Rise

Many families, either for cost of safety reasons, will choose to take road trips versus paying for travel. While this will definitely save some money for larger families, expect to pay more over summer as gas prices continue to climb higher and are expected to reach multi-year highs. In places like California gas prices are already over $5 a gallon.

Further with the geopolitical tensions caused by the Russian invasion of Ukraine and subsequent sanctions we can expect gas prices to rise. Russia is a major oil producer and if their energy supplies are cut-off, we can expect supply to shrink and prices to rise.

The other option to look at, which is cheaper than air travel, is traveling by train. I recently took the Amtrak from New York to Washington DC and have to say it was a very comfortable experience and lands you right in the middle of down town. No long security lines or expensive cabs/uber to and from the airport.

Food and Alcohol

Food and Drinks (especially the alcoholic kind) have also been rising in line with inflation and a disrupted supply chain. Coupled with the rising cost of labor, restaurants are passing the higher cost of food and drinks to holidaying consumers to cover costs. So expect to pay a lot more of the sugar and steak this holiday season.

If you can, take your own booze with you when you travel or buy from a local Costco to get the best prices. Buying at the hotel or convenience stores will be the most expensive. And if eating out, have a few drinks before you leave or check if the restaurant allows you bring your own booze by paying a minor corkage fee.

Attractions and Theme Parks

While major theme parks like Disney and Universal are getting back to full capacity, they are also having to impose additional regulations and pay employees more to get them back to work. In addition theme park operators are taking advantage of the increased demand to recoup losses by raising admission prices. It is expected that the cost of a 5-day Disney holiday for family of four could cost over $5,000 this summer! The only way to save money here is if you have flexibility and can travel during the off-season.

Government Fees and Taxes

Like we had a 9-11 related passenger fee for safety that never really got dropped, you are regularly starting to see COVID or Coronavirus surcharges on many bills. This is being done at a state, local and federal level which all add to your cost of travel. Nothing you can really do about this.

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