As travel demand shows signs of slowing down, many Americans are grappling with economic anxiety. High prices, uncertainty in the economy, and increasing household debt are creating financial pressure on consumers. As a result, travelers are now seeking value, which could prompt airlines and hotels to offer lower prices and attractive deals.
Just when you thought it was time to make summer travel plans—perhaps a trip to Japan or Paris—economic anxiety is making its presence felt. After enjoying years of a post-pandemic travel boom, demand is beginning to wane. Although spending on leisure travel remains robust, consumer confidence has plunged. Factors such as tariff fluctuations, stock market instability, and growing fears of a recession are contributing to this decline, alongside concerns over aviation safety.
Vanessa Roberts, a 35-year-old from Los Angeles, exemplifies this shift. She and her husband traveled frequently in 2024, including trips to England and an extensive eight-state road trip. However, in 2025, they plan to embrace smaller, more affordable trips focused on local or regional destinations rather than splurging on expensive locations. “I have a long list of short trips planned for the year, and they’re all very affordable,” shared Roberts, who documents her travel experiences on TikTok.
In light of these trends, travel companies are bracing for impact. Major airlines, including Delta, American, and Southwest, have reduced their projections for the first quarter of the year. Analysts at Truist Securities noted a slowdown in cruise bookings over the past month. Industry experts are suggesting that airlines and hotels may need to offer more lucrative deals to attract hesitant, budget-conscious travelers.
However, there is a silver lining for the travel industry. Despite financial concerns, many Americans are determined to travel, albeit with some adjustments. “For American travelers, travel has shifted from a want to a need,” stated Amir Eylon, president and CEO of Longwoods International, a market research firm specializing in the travel and tourism sector. Eylon noted that while travel demand remains strong, it is starting to show signs of weakening.
A recent monthly survey by Longwoods International found that 88% of American travelers plan to take a trip in the next six months, a decrease from 93% during the same period last year. This softening demand can largely be attributed to economic factors. While incidents such as plane crashes in Washington, DC, and Toronto raise concerns among travelers, Eylon indicated that a consistent pattern of safety issues would be necessary to significantly deter flying.
Ali Furman and Jonathan Kletzel, leaders in consumer markets and transportation at PwC, echoed these sentiments, stating that American consumers are currently cutting back on travel spending due to economic uncertainties and financial pressures felt across income levels. Americans had saved extensively during the pandemic and spent lavishly during the post-pandemic travel boom; however, this spending may now be catching up with them.
With household debt steadily increasing, many consumers are struggling to manage credit card and car loan payments. As a result, Furman and Kletzel suggest that Americans are pulling back on various expenditures, including travel, to avoid financial overextension. This combination of debt and economic challenges has led to softer travel demand and a greater emphasis on finding value.
Travelers are increasingly on the lookout for good deals, and there may be more opportunities on the horizon. Tamara Charm, a partner at McKinsey focusing on consumer insights, noted that despite intentions to cut back on travel, many consumers still embark on journeys but make compromises in other areas. This may include opting for domestic trips instead of international ones, choosing budget accommodations, buying fewer souvenirs, or selecting fast food over fine dining during vacations.
Furman and Kletzel have observed that travelers are now delaying their bookings for flights, hotels, and rental cars, waiting until closer to their travel dates due to economic uncertainties. This shift indicates a more strategic approach to spending, contrasting sharply with the post-pandemic phase when consumers were willing to pay almost any price for travel. Financial pressures are now prompting travelers to think critically before making reservations.
Mandy McKaskle, a luxury travel advisor at Embark Beyond, has also noticed that her clients, who would typically plan their summer and holiday trips well in advance, are now holding off. While these changes are primarily affecting budget travelers, Furman and Kletzel warn that if stock market volatility persists, even higher-income consumers may start to cut back on discretionary spending, including travel. This trend could also impact luxury travel demand.
On a positive note, the slowdown in bookings could lead airlines and hotels to offer discounted prices or enticing deals to attract travelers. Furman and Kletzel anticipate that the softening demand may result in opportunities for customers looking to book travel in late summer and into the holiday season.
