With all the signs pointing to travel costs rising in the New Year, what's the money-conscious traveler to do? You can still cut expenses if you strategize ahead of time, whether your travel dates and destinations are fixed or not.
If you must travel to a certain place at a certain time, it's wise to plan ahead. "Book very early," says Cynthia Brough, a spokeswoman with AAA. "With airlines cutting capacity worldwide, less capacity typically leads to increased prices. If consumers are planning vacations in 2012, they should be looking to plan those vacations now." If you're willing to be flexible about where and when you take your vacations, there are still discounts to be had. "Some destinations and times of year will be much more expensive than others, and there might be little obvious reason for it," said George Hobica, founder and president of Airfarewatchdog.com. "Don't set your sights myopically on one destination. Airfares and other trip components are not static in price. They change seasonally and geographically." Continue to cut costs, even after you've booked your travel. "What we can do is use some ingenuity about how we delegate our dollars at travel destinations," said Evelyn Hannon, founder of Journeywoman, an online travel resource for women.
Fewer flights, fuller flights
The challenge: Fewer flights means fewer flight discounts.
As airlines have merged, cut routes and grounded planes to cut costs, more planes are flying full. That leaves fewer seats to discount for the leisure traveler or penny-pinching business traveler. "If you wait until the last minute, don't think you'll have a deal with an airline," said Adam Weissenberg, vice chairman and U.S. Leader of Deloitte & Touche's Tourism, Hospitality & Leisure sector.
The solution: Be flexible with your travel dates. If an airline flies to your favorite cities, sign up for the airline's frequent flier program, weekly discount e-mail alerts and Twitter feeds. The airlines usually offer discount alerts for the following weekend's travel. Airlines have been known to use their Twitter feeds to post exclusive sales that only last for a short period -- say 24 to 48 hours -- but the tickets passengers buy might be for travel far in the future. Sign up for e-mail newsletters such as Airfarewatchdog.com, which sends out airline discounts and sales. Another solution: Note where the discounter airlines are adding flights and bankrupt American Airlines defends its turf. JetBlue and Spirit have added Dallas to their routes, competing with an increasingly weak American. While American is expected to drop 10-15% of its routes, it will fight to protect its lucrative Miami hub, according to Vaughn Cordle, founder and owner of Airline Forecasts, an investment research firm. That could translate into price wars for flights originating or landing in Miami. And as Southwest Airlines moves into Atlanta with its takeover of AirTran, Delta Airlines might lower fares on competing routes. Look for price wars there.
Not much room at the inn
The challenge: Higher demand for hotel rooms means U.S. hotel rates are expected to increase an average of 3.7%, according to Smith Travel Research's latest analysis.
"We've seen an increase in hotel room rates but hotels are still pretty full," said Jan Freitag, senior vice president of Smith Travel Research. That's in contrast to the past couple years, where hoteliers reduced room rates rather than let rooms sit vacant. They certainly didn't start any new construction projects. Now that business and leisure travelers are returning to the air, room rates are going back up. New construction to relieve the price increases won't be ready for guests until the end of next year.
The solution: If you want to stay in a luxury hotel, book now or wait for a flash sale on the hotel's website. Sign up for your favorite hotel's frequent points program to get early notices of sales and discounts. Priceline.com and other online discounters often offer reduced rates if you're traveling sooner rather than later.
Fill your tank now
The challenge: Gas prices are still high, and they're probably going to increase because they're often at their highest during July and August. That's because demand for gas is usually at its highest during those summer months when kids are out of school and families tend to take more driving vacations.
The solution: Travel in the winter months or off-season or explore the areas around your home. The national average price of a regular unleaded gallon of gas is usually at its lowest in the winter months of November, December and January. The current national average price was about $3.26 per gallon, according to AAA's recent year-end holiday travel report. Although that's about 29 cents more this year than one year ago, it's still 72 cents less than this year's peak price of $3.98, which occurred on May 5.
The challenge: Cruise lines are reversing their policy of saving discounts for people who book their rooms at the last minute, said AAA spokeswoman Cynthia Brough. "Cruise lines are offering early booking discounts, waivers of single supplements for cruise and discounts for paying in full at time of booking," said Brough. "A trend for next year is to buy now for next year. Discounts that exist now will not exist next year."
The solution: Book early and buy travel insurance, said Brough, especially if you're taking a multi-generational trip with relatives in ill-health. "Consumers who purchase insurance and needed it said it was best purchase they ever made."
Innovative ways to cut costs
The challenge: The sheer number of expert and amateur travelers sharing their cost-cutting tips can be overwhelming. Who has time to sort through the thousands of online news sources, newspaper columns, bloggers and others sources written by people who so dearly want to help you? What if you're traveling solo, looking for special discounts, traveling with kids or moving to Europe to live for a year?
The solution: Find the advice you need from travel bloggers. Check out the suggestions at Travel Blog or other sites that review blogs. Even with dated posts, readers often add recommendations in the comments section. Do make sure to read your chosen blogs over time to ensure you're in sync with the writer.