Travel costs squeeze American families

- The average cost of a vacation in 2025 is projected to be $7,249, a 24% increase from 2024. For international trips, the average cost is even higher, estimated at $9,922. - While overall travel costs saw a 1% year-over-year increase as of February 2026, specific categories have risen more sharply. The cost of entertainment is up 5.0%, meals out are up 4.0%, and airfare has increased by 2.2%. - Airlines are passing on higher fuel and labor costs to consumers while also cutting less profitable routes. Additionally, ancillary fees for services like seat selection and checked baggage now constitute a larger portion of the total ticket price. - In response to higher costs, 72% of travelers plan to take only one or two trips in 2025, a significant shift from 2024 when just 48% took that few. Bank of America data shows lower-income households are opting for domestic travel, while more middle- and high-income families are traveling internationally. - The value of loyalty points has become less predictable as most major airlines have abandoned fixed award charts in favor of dynamic pricing. This means the number of points needed for a "free" flight now fluctuates with demand, similar to cash prices. - Affluent households, defined as those earning over $200,000 per year, account for as much as one in every four dollars spent on travel globally. Their growing preference for unique cultural experiences and lesser-known destinations is influencing which locations are becoming travel hotspots. - Persistent labor shortages in the hospitality industry contribute to higher costs and have accelerated the adoption of technology and automation to handle tasks previously done by staff. - For those who can afford it, there is a trend of "trading up" on accommodation. In 2024, occupancy rates for luxury and mid-market hotels increased, while occupancy at budget hotels declined, reflecting a move toward more premium options.