Summer Vacation Prices Are Driven Higher by Surging Demand

LOS ANGELES (Los Angeles Times/MCT) -

Angelica Lopez went to great lengths to save a few dollars 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 a 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.

The only break travelers will get this summer will be on the prices 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 families, 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.

Marilyn Fils, a recently retired school administrator from Tarzana, is flying to Paris to attend a wedding with her husband. She used credit card reward points to pay for the flight, saving thousands of dollars. Otherwise, she said, she could not have afforded the trip.

Vacationers can save even more this summer by steering clear of expensive tourist hot spots, travel experts say.

“Consider visiting national parks, or destinations like Memphis or Nashville,” said Erik Hansen, director of domestic policy for the U.S. Travel Association, the trade group for the nation’s travel industry.

Coby King, president of a Los Angeles public affairs company, is saving by taking his wife and two children to a small lodge on the Havasupai Indian Reservation, near the Grand Canyon, for several days of hiking.

“We are not deliberately saving money by going off the beaten path, but it’s a happy coincidence,” he said.

Planning ahead is another way to save money.

Nick Berkuta, a firefighter from Costa Mesa, wanted to take his wife and daughter to Hawaii, but didn’t want to pay the exorbitant airfares and hotel rates charged during summer.

Instead, he booked the trip for May, just before the higher rates took effect. Berkuta also rented a home in Kona, so that he could prepare his own meals.

“We have decided to save more for those rainy days, so we extend ourselves less,” Berkuta said.

Would-be travelers who have yet to book their trip can still score bargains, if they can travel on short notice, experts say.

Travelers can now hold an airline seat for 24 hours without paying as long as they reserve at least seven days in advance. This often means that flights that appear full can suddenly have empty seats when travelers change their minds, said George Hobica, founder of, an airfare alert and air travel advice website.

“People don’t realize that airlines are dumping last-minute seats,” he said.

Travelers who plan short-distance road trips will also save money, as the price of car rentals is expected to go up only 1 percent, according to the Automobile Club of Southern California.

Gasoline prices should remain stable, and might even drop over the summer, said energy industry analyst Trilby Lundberg.

That’s good news for Heather Wilkins, a public relations manager from Orange County, who plans road trips with her husband and two children to San Diego and Palm Springs.

“The improved economy has encouraged me to splurge more, hence I’m eyeing that future Hawaii or family cruise vacation,” she said. “However, I’m always looking for a deal to make my dollars go further. Who isn’t?”