Fewer Americans are planning vacations in the next six months than at any time in the last 15 years excluding the pandemic, reflecting concerns over inflation, job security and rising travel costs, Fortune reports. These economic worries are changing how Americans travel in 2025.
After years of post-pandemic travel enthusiasm, economic concerns have caused Americans to become more careful about their spending. The pandemic recovery period has ended as people now face increasing expenses, economic anxiety, and unpredictability. So, what does this mean for this year of travel?
Travel Demand Is Slowing, But It’s Not Done
It was reported by Reuters that consumer confidence dropped sharply in March, reaching its lowest point in over four years, as households worry about a potential recession and rising inflation caused by tariffs.
Airlines like Delta, American, and Southwest have already slashed their financial outlook for 2025, while cruise companies report slower bookings. Airlines have also warned that economic pressure might lead to capacity cuts after the summer peak to avoid the need for fare discounts.
A Longwoods International survey gathered data from 1,000 adults and reveals that 42% of travelers expect their expenses to increase this year, but 17% believe prices will lower. The survey also shows that different expectations about travel expenses depend on political party, since Democrats predict price increases at 57% while Republicans predict only 30% price increase.
However, a recent study by MMGY surveyed more than 4,500 travelers and found that Americans are actually traveling more in 2025 than they have in the past five years, despite trips getting more expensive. Nearly 80% of Americans plan to take a vacation in the next year, which is a 7% increase compared to 2023. U.S. travelers expect to spend an average of $5,138 and take 4.2 trips in the coming year.
“Travel is no longer just a luxury – it’s an essential part of Americans’ lives, serving as a key investment in well-being, connection and personal fulfillment,” said Simon Moriarty, MMGY Travel Intelligence VP of Syndicated Research in the release.
Fewer Americans Are Traveling to Europe
The rising expenses of travel have led to a decrease in American tourists who plan to visit Europe in 2025. The European Travel Commission reports that only 37% of international travelers, including Americans, have European destinations on their vacation plans for this year, while the previous year saw 45% interest. The current year represents the smallest European travel interest since 2021.
The main reason Americans avoid Europe is rising costs followed by a preference for domestic travel, as cited by the European Travel Commission. The European tourism boards face the risk of losing half a million U.S. visitors during this summer, considering 2.6 million Americans visited Europe in July 2024 alone. The decline in American travel interest creates a problem for European hotels and businesses because American tourists historically spend a lot during their travels.
In Europe, travelers adjust their plans through the following strategies, according to the MMGY report:
- I chose to visit Europe during April, May, September, and October instead of July and August.
- Skipping costly cities such as Paris and London in favor of more affordable destinations.
- Booking trips to less expensive countries like Albania and Croatia.
Domestic Travel Is on the Rise
Despite the financial squeeze, Americans are not staying home entirely. Airfare prices became a significant factor for 31% of travelers who planned upcoming trips during March, compared to 26% in January, according to Longwoods International, turning Americans to domestic travel as a more affordable solution. Popular destinations include tropical spots in the U.S. like Honolulu, Hawaii and Miami Beach, Florida, as well as beautiful cities like Charleston, South Carolina, and Savannah, Georgia.
The U.S. travel sector will maintain its steady growth of spending during the upcoming years because of positive consumer confidence, continuous business investments, and international visitors from major events.
The U.S. Travel Winter 2025 Forecast projects that total travel spending will increase by 3.9% during 2025 to reach $1.35 trillion, the same level as in 2019 adjusted for inflation. The spending projection shows an ongoing growth that will reach $1.46 trillion by 2028.
The number of U.S. domestic air passengers reached its highest point in 2024, but air travel spending growth lagged behind the total number of trips. The leisure travel sector will achieve pre-pandemic levels of $1 trillion. The upward trend indicates that Americans will continue to spend on travel despite higher costs.