Summer vacation prices are driven higher by surging demand

By Hugo Martin

Los Angeles Times (MCT)

Published: Monday, June 2 2014 7:32 p.m. MDT

Angelica Lopez went to great lengths to save a few bucks on a planned seven-day cruise to the Virgin Islands this month.

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LOS ANGELES — Angelica Lopez went to great lengths to save a few bucks on a planned seven-day cruise to the Virgin Islands this month.

The West Covina, Calif., resident joined with 32 other people to get a group discount on the cruise. She then booked a cheap flight to the cruise port in Fort Lauderdale four months in advance. In all, she figures she saved about $1,500.

“I think the average person always has to watch their pennies, but I don’t think that should stop you from enjoying life,” said Lopez, an escrow account executive who is still bouncing back from the financial blow of a divorce in the middle of the Great Recession.

With the economy rebounding, Americans are taking vacations in near-record numbers again. But that surge in demand is driving up prices for travel costs such as airfare, hotels and attractions, making it tougher for many to afford that much-needed respite from the daily grind.

Americans will spend an average of $1,246 per person on summer vacations — about $100 more than last year, according to an online survey of 1,500 adults by American Express.

Airline tickets are expected to jump an average of 6 percent for the top 10 U.S. destinations, to $415 for a round-trip ticket, according to travel website Orbitz. The hottest summer destinations will have the biggest price increases.

The average round-trip flight to New York this summer is $345, up 18 percent from last summer, while the average hotel room in Honolulu is $248 a night, up 15 percent, according to Orbitz.

The average hotel rate, meanwhile, will hit $115 this summer, up 4.9 percent, according to PKF Consulting.

Theme park ticket prices are also climbing. The Disneyland Resort in Anaheim recently raised its one-day tickets to $96, up $4 over last year, with a $1 increase in parking to $17. Universal Studios Hollywood hiked daily rates to $92, up $8 over last year.

The only break travelers will get this summer will be with the price of gas and rental cars, which should remain stable.

The higher prices are driven by surging demand. Three-fourths of Americans say they will take a vacation this summer, compared with 59 percent two years ago, according to the American Express survey.

Business travel is also on the upswing. Companies are dispatching workers on more trips and conferences this summer to take advantage of the improving economy. That puts high-spending business travelers in competition with vacationing family for hotel rooms and airline seats, putting upward pressure on prices.

Airlines, having learned their lessons from the recession, have been cautious about adding more seats and planes in response to the increased demand. That means air carriers don’t need to offer as many discounts to keep their planes full.

“You are not seeing airlines flood the market with an excessive amount of capacity,” said Henry Harteveldt, a travel analyst at Atmosphere Research. “What we are seeing is customers chasing seats.”

As wanderlust takes hold, the challenge for many Americans will be how to break away without breaking the bank.

“They are in better shape financially than they were in recent years,” said Robert Kleinhenz, chief economist at the Los Angeles County Economic Development Corp. “They ... are more willing to spend what continues to be a hard-earned dollar, but they are doing it cautiously, looking for value.”

The top money-saving techniques include cashing in loyalty reward points and shopping for groceries to prepare meals in hotel rooms.

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