Mellody Hobson talks about the summer travel paradox in today’s “Money Mondays” segment.
Last month, we talked about how to protect yourself from all-too-common summer credit card scams and how to be a smart traveler when it comes to your money—like talking to your bank before you travel and monitoring account activity online. But today I want to talk about The Summer Travel Paradox.
What is it?
It’s that summer travel is great for our economy, but it’s a nightmare for the people actually traveling. The leisure industry is a leading American industry that’s about a lot more than fun. You would be BLOWN AWAY by some of the statistics about the travel industry.
To start, direct spending on leisure travel by domestic and international travelers totaled $597 billion in 2012, and spending on that leisure travel generated $89 billion in tax revenue. And that doesn’t even include business travel! According to the U.S. Travel Association, each U.S. household would pay over $1,000 more in taxes without the tax revenue generated by travel and tourism.
Turns out a day at the beach or even a trip to grandma’s is big business. Travel is a top 10 industry in 48 out of 50 states. But here’s the kicker: Direct travel expenditures support 7.7 million jobs in the travel industry, and American workers directly employed by travel share total wages that exceed $200 billion.
Travel and tourism account for 2.8% of the nation’s GDP, and it’s no question that a thriving travel industry is a boon for our economy, but it comes at a price.
It’s hard to decide if it’s good or bad news when the U.S. Travel Association says leisure travel will hit a record high this year, because what’s good for the economy isn’t necessarily good for our sanity.
According to Orbitz, over 75 percent of Americans are taking a summer vacation. What does that mean for us? Let’s start with the plane for your summer getaway: Flights are extremely full, topping 85% in June. Forget about enjoying some extra space with an empty middle seat, because you might find yourself sitting in it.
Then we have the economic impact on your pocketbook: Expect to pay a little more for air travel this summer. Based on a 30-day sampling of published-price summer airline tickets booked through Priceline.com, the average domestic airfare for June travel was $375, up 1.4 percent from a year ago. August’s average domestic airfare is $377, or 1.5 percent more than last year. July flyers are paying about the same as last year, with an average domestic airfare of $388.
When it comes to the crowds, you could find yourself waiting in long lines at hotels, too. PricewaterhouseCoopers predicts that the average hotel occupancy in the United States this year will reach 62.2 percent, the most crowded that hotels have been since 2007. And you’ll be paying more to stand in that line: Hotel prices are up 7% from last year. Travelocity said the average daily rate for a Memorial Day hotel booking is $157.
So what’s your advice?
First, prepare to hurry up and wait. Be early for flights and try to book trips in advance to get better deals. Generally the sweet spot for buying is four to six weeks before you travel. Prices are highest eight to 10 weeks and two to three weeks in advance. You can also save some money by booking early morning or late evening flight times that tend to be less expensive.
Also, it’s counterintuitive, but flying out on one airline and back on another can result in a less expensive fare than flying round-trip on a single airline.
So many airlines are charging for baggage now, so you can save by packing lightly. And consider bundling the cost of a rental car into the airfare.
For hotels, look into hidden costs like parking and join any available loyalty programs—it might mean perks like free Wi-Fi.
But the long and the short of it is that people are getting comfortable spending more money, and that’s a direct result of a recovering economy, so think of the money you spend and the crowds you suffer as an act of patriotism!