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Economic uncertainty hasn’t dented Americans’ travel plans — at least not yet.
The “revenge travel” trend of 2022 has continued and may have even accelerated in the first months of 2023 as travelers continue to search for and book trips. In fact, while overall inflation has cooled over the past year, the typical cost of a trip has gone up by a thumping 9% since December, according to the NerdWallet Travel Price Index. This means that for a $2,000 trip, travelers are now paying an extra $180 per person.
Travel patterns have also shifted significantly since last year. More people are flying abroad than they were in 2022, particularly to destinations in Asia, Oceania and Europe. In February alone, these places saw more than twice the number of U.S.-originating travelers compared to the same period last year. Asian countries saw quadruple the number.
While some of these shifts represent a rebound from the pandemic's lows, others suggest that new travel patterns could be emerging. For example, nearly a third more Americans flew to Mexico during the first quarter of 2023 compared with the same period in 2019.
The price of a typical trip rose 9% over the first quarter of 2023.
Hotel prices jumped 19% between December and March.
Car rentals remain by far the most inflated travel category; they're 53% more expensive than they were in 2019.
Travel-related transportation, shelter and food costs have been on a roller coaster for the past few years and show few signs of normalizing.
Airfare prices, which tend to get the most attention, are up 10% compared with 2019 and 18% year over year. Yet airfare is actually the cheapest component of an itinerary relative to 2019 prices. Although car rental prices have moderated somewhat, they’re still 53% pricier than they were in 2019. And a $100 hotel room in 2019 now costs $119 on average, an increase of 19%.
Overall, travel prices rose by 9% during the first quarter of 2023, based on the NerdWallet Travel Price Index, which tracks the relative cost of a typical trip.
International travel is back, increasing by 53% year over year in February.
Asia, Oceania and Canada have seen particularly big spikes.
These and many other regions still remain below 2019 pre-pandemic travel levels.
The travel tide continues to rise. More U.S. travelers left for international destinations in February 2023 than the same month in 2019, suggesting that pent-up demand for travel experiences remains, well, pent up.
Some countries are seeing particularly large spikes in U.S. travelers, including several such as Japan and Canada that have loosened travel restrictions over the past year. The number of passengers leaving for Asia more than quadrupled in February 2023 compared with February 2022. Even Mexico, which was popular during the pandemic because of its loose restrictions, saw an increase in U.S. passengers compared with the first quarter of 2022.
What to expect moving forward
Typically, when prices increase, demand decreases. That hasn’t happened with travel, and while macroeconomic weakness could temper consumer spending soon, that hasn’t yet appeared in the data.
In fact, online search volume for travel-related topics increased by 26% year over year in March, according to NerdWallet data. Since this is when many travelers make their summer plans, that suggests this summer could see even larger crowds — and higher prices — than last year.
Forward-looking booking data from AirDNA, a vacation rental analytics company, corroborates this prediction. More travelers booked short-term vacation rentals such as Airbnbs and VRBOs in March 2023 than in any other month since 2019, according to an April report. Again, many of these bookings are for the summer, suggesting that any potential downswing is still many months away.
If anything, travel demand remains on the upswing, despite higher prices.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
Flexibility, point transfers and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Bank of America® Travel Rewards credit card
Flat-rate travel rewards: Capital One Venture Rewards Credit Card
Bonus travel rewards and high-end perks: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card