Inflation rose 8.3% in April compared to the same period in 2021, which is less than March’s 8.5% increase, but still at 40-year highs. The Federal Reserve responded by hiking interest rates by 50 basis points in May, the biggest increase in 22 years in an effort to quell inflation.
The Fed previously said additional 50-basis points rate hikes would likely follow at meetings in June and July.
Fuel for thought
Since Russia invaded Ukraine in February, oil and gas prices have risen in the wake of Western countries’ sanctions on Russia. With crude production curtailed, the price of oil rose to more than $114 a barrel early on Tuesday, its highest level in eight weeks, amid tight global supplies and the concern that Chinese demand will pick up soon.
This has caused the national average price of gasoline to hit $4.52 a gallon on Tuesday, as nearly every state has prices above the $4 threshold. And peak summer driving season is still several weeks away. Airfares are also taking off, with prices increasing 33% from a year ago, jumping 18.6% from March to April alone.
Yet surprisingly, 62% of Americans are planning at least one summer trip despite higher gas prices, according to the U.S. Travel Association. And 35% expect to travel more this summer than in 2021. But look closer, and you’ll see how high gas prices are having an impact.
Vacationers staying close to home
That said, 62% of those traveling are staying closer to home, and 53% say they high gas prices are limiting their travel plans, whether on the road or in the air, according to Harvest Hosts, a membership program for RVers. Perhaps this is why the company is seeing peak demand, as 22% have already shortened their trips to control costs.
“Road travel continues to peak travelers’ interest despite the rising cost of fuel. We’re seeing more travelers opt for shorter trips closer to home, planning quick getaways to nearby destinations,” said Joel Holland, CEO of Harvest Hosts.
Your age affects your travel plans
Interestingly, a traveler’s age affects how far they are willing to go, according to the survey, with 59% of Gen Zers and 57% of Baby Boomers say they will limit their travel plans.
But for others, the price of fuel isn’t holding them back, with 53% of millennials saying they are not limiting their travel plans.
Where’s everyone going?
As you might expect, most Americans, 64%, are hitting the beach, while 47% visit cities and 43% opt for national or state parks.
According to an analysis by travel insurance company Allianz Partners, which looked at more than 1,175,000 summer flight itineraries, Orlando, Florida is the top domestic destination this summer. In fact, it has surpassed New York City as the most visited city in the country. Other top destinations include Seattle, Boston, New York, Los Angeles, Las Vegas, Portland and Denver.
Most travelers, 78%, are planning a trip of one week or less, with 26% planning a short 1-3 day excursion.
Yeah, but how much are they spending?
Given that Baby Boomers are aging — 10,000 a day turn 65 years old — it’s little surprise that 35% have maintained the same travel budget during the past five years. That compares with overall population, where half have slightly or significantly increased their travel budget. But 63% said they are not seeking luxury travel, although 45% of millennials are willing to spend more for luxury travel due to money saved by not traveling during the past couple years. They’re not alone as 20% of travelers have doubled their budget to $1,000-$2,000, while another quarter budgeted $500 or less for their getaway.
But be careful out there
As more travelers hit the road this summer, be sure to be extra vigilant while driving. U.S. traffic deaths jumped to 42,915 in 2021, a 10.5% increase and the highest number killed in a single year since 2005, according to the National Highway Traffic Safety Administration. It’s the largest yearly increase since NHTSA began tracking fatalities in 1975.