For a long time, the wealthy dominated the leisure market. In the 18th and 19th centuries, the wealthy went horseback riding in the parks or on Grand Tours of Europe. In the Gilded Age, they went to Newport for week-long socialite parties in the heat of summer. Meanwhile, the working class worked. It was only in relatively recent decades that a vast world of affordable relaxation and entertainment, such as dining out and travel, was opened to people of all classes. Travel became more accessible with the dramatic fall in commercial airfares in the late 1970s. It wasn’t until the mid-to-late 20th century that the idea of a family summer vacation became a symbol of the affluent life available to the American middle class.
That’s still true, but something has changed in the last few years: budget vacations have become a more lackluster experience than they used to be.
Like everything else in an inflationary economy, travel is more expensive than it was in 2019. But it’s not just that prices are rising. The gap between how the rich and the have-nots travel by air is widening. This may be because wealthier travelers are more willing to pay extra for maximum comfort. Today, if you have some disposable money to spend on vacation, there is no shortage of options that can get you shorter wait times or better, more spacious airplane seats. On the other hand, if you’re on a budget, you may find the prices too high, especially considering the poor quality of your vacation experience.
Spending a lot of money gets you little
Whether something is “too expensive” depends on a lot of factors, including how much money an individual has, how quickly prices have risen, how much value a product or service provides, and even how much the cost of other things in the economy has risen. In reality, travel prices haven’t skyrocketed as much as other sectors: They’re up about 10% since 2019, which is much lower than, say, food price inflation. “Over that same period, prices in general have gone up about 23%,” says Sally French, a travel expert at NerdWallet who has been tracking travel inflation since 2019.
According to NerdWallet, airfares are 6.3% cheaper compared to June 2019. But other subcategories of travel are up: hotel prices are up 11.6%, rental car prices are up 33%, the price of entertainment experiences like movies, theaters and concerts is up 21.4%, and dining out is up almost 30%.
One reason people feel travel prices are at an all-time high, French said, could be because people are still trying to book trips last minute. This was relatively inexpensive during the pandemic, when demand was down significantly. But it’s not cheap to do so now. Another possibility is “recency bias,” French said. For example, the average inflation-adjusted fare from Atlanta was $298.52 in early 2021, according to the Bureau of Transportation Statistics. By early 2024, it’s $417.79. The fair price for flights may still be in 2021.
Additionally, cost-effectiveness must also be considered. Although base fares (the fees displayed before checking in your baggage) have fallen since 2019, an increasing number of airlines are adding baggage fees or increasing existing fees. These extra fees, called “ancillary fees,” are making up an increasingly large share of airline revenues and are set to increase significantly around 2022, reaching about $118 billion worldwide last year, the highest ever for the airline industry.
“We are seeing a trend towards what’s being called ‘airfare unbundling,'” French said.
Low-cost airlines (e.g., Southwest, JetBlue) and ultra-low-cost airlines (e.g., Frontier, Spirit) have long separated out everything included in their fare to give budget travelers the cheapest, most basic experience possible, and then charged a small percentage of passengers surcharges to make a profit. However, since the late 2000s, full-service airlines, including all major U.S. airlines except Southwest, have also begun to separate out their basic ticket inclusions, blurring the distinction between full-service and low-cost airlines.
In other words, today’s travelers are paying for a poorer flying experience for a slightly lower base fare than in the past, when full-service tickets included checked bags and seat assignments (the travel industry’s version of skimping). Airlines make a ton of money on extra fees, but a recent YouGov survey claims most consumers probably wouldn’t consider paying extra for a flight. The most appealing is being able to choose your own seat, and the least appealing is being in an “adults only zone” on a plane. Only about 16% of U.S. travelers said they would pay for extra baggage.
It’s not just the flying experience that’s worsening. Many hotel chains have cut back on daily housekeeping services, leading to growing complaints about cleanliness, which is arguably more important for post-pandemic travelers. Hotel resort fees are also becoming more common. The average price of an Airbnb reservation has skyrocketed since 2019, including the cleaning fees that come with short-term rentals. Even listings without exorbitant cleaning fees may have a long list of chores that guests should complete before they leave, like packing laundry, taking out the trash, and putting new sheets on the bed. These are just some of the reasons to take a vacation. Once you arrive at your destination and are ready to explore, you’ll be paying more than travelers used to pay for tourist destinations. Disney World, for example, used to let all guests skip the lines for their favorite rides by booking. Now you have to buy it separately from your admission ticket to do so. TSA PreCheck lines, which cost $78 over five years, are also getting longer, making paying for skipping the lines less worthwhile.
Premium travel
Meanwhile, for those with cash to spare, there are more opportunities than ever to upsell. Maybe you can’t afford a first-class cabin, but what about premium economy? Basic business? Or a bed for $100 an hour on a long-haul flight? Pay to keep the middle seat open on Frontier Airlines? Or shell out $500 a year for a credit card that unlocks the new airport lounges that, by 2024, will cover tens of thousands of square feet of inexplicable opulence?
“This shows that travelers are willing to upgrade,” said Henry Harteveldt, president of the Atmosphere Research Group, a travel industry market research firm.
“We all know there is no God in economics.”
If you have the money, why not? “Everyone knows economy class sucks, and everyone knows there’s no God in economy class,” says Harteveldt. By paring down service to disjointed bells and whistles, airlines are ensuring that basic economy class is a miserable experience, so that travelers with discretionary income are more likely to justify spending more for their comfort and sanity.
People are also willing to spend more than ever on luxury travel. Carl Jr., senior luxury travel curator at Senset, an agency that creates custom luxury itineraries for affluent clients, says he’s seen an uptick in the number of people interested in his company’s services since the pandemic, especially multigenerational families looking to take big trips together. These custom itineraries often range from $10,000 to $100,000, sometimes even more. “They’re definitely willing to spend more just for the ease and comfort of traveling,” Jr. says. The pandemic has shaken up people’s priorities. Those with money to spare are looking to splash out on once-in-a-lifetime trips.
Private jet travel has surged since the pandemic, and while demand for cruises is currently high overall, luxury cruise bookings in particular have increased significantly. Luxury hotels are seeing faster revenue growth than mid-range and budget hotels. More hotels are opening to meet demand, meaning luxury accommodations are making up a higher percentage of total available rooms. According to data from commercial real estate data firm CoStar, luxury hotel occupancy rates for 2024 were slightly higher than the same period last year, while budget hotel occupancy rates fell 3.4%.
Summer vacation is out of reach for some
Summer is the most popular season to travel, but a recent Newsweek survey found that about 45% of respondents said they would not travel this season, with about half citing cost as the reason. This finding is consistent with other surveys showing Americans are cutting back on travel spending. The profile of summer travelers is also becoming slightly more affluent: According to Deloitte, about 31% of Americans who traveled in the summer in 2023 were people earning less than $50,000. In 2024, this group will make up just 19% of travelers.
According to Atmosphere research, the average leisure traveler today has an income of about $95,000. By contrast, the average income of a budget airline traveler is $79,000, higher than the $73,000 to $74,000 range of a few years ago. “There are definitely people out there right now who don’t fly as much as they used to, or don’t fly at all, because they don’t have the budget,” Harteveldt says.
Income has always been tied to the ability to travel. While most Americans have flown at least once in their lives, college graduates, who generally earn much more than high school graduates, are much more likely to have visited multiple foreign countries. A 2015 Statista survey found that nearly one-fifth of households earning more than $80,000 a year travel by plane frequently, while only 3% of those earning less than $40,000 said the same. About one-third of the lowest-income group said they had never flown, compared with just 7% of the highest-income group. Another 2017 survey found that the majority of people earning less than $35,000 had never traveled internationally.
Today, there are many types and levels of travel comfort, but that also means the gulf between high-end travelers and those who can afford the bare minimum is wider than ever. The high end of travel experiences is high, and the low end is low. Few places are the class divides more apparent than at the airport.
