If you're planning to travel more in 2022, book early and expect higher costs.
Travel will be in high demand this year, as the U.S.'s GDP contribution for global tourism revenue is expected to exceed pre-pandemic levels — 6% more than it was in 2019 — according to the World Travel & Tourism Council's most recent projections.
People are also saying they want to travel: More than two-thirds of respondents are planning to "go big" on their next trip, according to a recent Expedia survey of 12,000 travelers in 12 countries, including the U.S.
Travel costs are expected to increase, too
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Expect sticker shock if you haven't traveled much over the last two years.
Prices have increased for food (+10%), hotels (+13.3%) and motor fuel (+26.6%), compared with 2019, according to the U.S. Travel Association's most recent Travel Price Index, which measures travel costs in the U.S.
Airfare through June is also expected to increase by 7% per month for domestic flights, and 5% each month for international flights, according to travel booking app Hopper's Consumer Airfare Index.
With that in mind, you'll likely want to refresh your budget to know what you can actually afford.
You can start with topping up an emergency fund. Setting aside three to six months worth of living expenses is commonly recommended by financial planners, and before you splurge on travel, it's smart to put money aside to cover possible emergency expenses, like unexpected medical bills.
To avoid the increasing cost of travel, you can also consider these three tips to help you budget for your trip.
- Revisit your budget: Start by reviewing all of your recurring expenses, particularly the monthly statements for your credit cards. What might have been an indispensable subscription during the pandemic, such as video streaming apps or food delivery, might be something you can cut to boost your travel budget.
- Book early: Airfare prices in January were 18% cheaper than pre-pandemic prices, according to Hopper, but they're expected to rise. Hotel and car rental prices have also been impacted by inflation and labor shortages, which means prices could rise further as demand for travel grows. If you'll need a rental car, be sure to check on availability and costs before you book a flight and hotel.
- Consider travel insurance: The only certainty about the pandemic has been uncertainty, so consider travel insurance if your trip is expensive and you want that extra peace-of-mind when it comes to cancellations. Plus, it might be required: 60 countries require tourists to have a minimum level of travel insurance. For more on your travel insurance options, check out this State Department webpage.
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