Holiday Travel Demand Grows in the U.S. Despite Tighter Budgets

More than 122 million Americans are expected to travel over the year-end holidays, even as rising costs push travelers to rethink budgets, transport choices, and hotel stays.

By Christopher Lane | Edited by Yuliya Karotkaya Published: Updated:
Holiday Travel Demand Grows in the U.S. Despite Tighter Budgets
Holiday decorations bring seasonal atmosphere to the streets of New York City. Photo: Following NYC / Pexels

Holiday travel in the United States is set to reach new heights this season, with 122.4 million Americans expected to travel at least 50 miles from home between December 20, 2025, and January 1, 2026.

According to new projections, this represents a 2.2 percent increase compared to last year, signaling that the desire to travel remains strong even amid economic uncertainty. After a year marked by inflation concerns and fluctuating consumer confidence, many Americans are still prioritizing time with family, festive getaways, and end-of-year trips.

Driving continues to dominate as the preferred mode of transportation. An estimated 109.5 million people are expected to travel by car, up two percent year over year. Cost control and flexibility are key factors behind this choice, as travelers look for ways to manage expenses without giving up holiday plans. Road trips also allow travelers to avoid higher airfares and maintain greater control over timing during one of the busiest travel periods of the year.

Air travel, however, is also reaching record levels. More than eight million Americans are projected to take domestic flights over the holidays, marking a 2.3 percent increase from last year. This growth comes despite average roundtrip domestic airfare rising roughly seven percent year over year, with prices nearing $900 per ticket. Flights scheduled close to Christmas Day are expected to be the most expensive, reinforcing the idea that travelers are willing to absorb higher costs for peak travel dates.

Budget Pressure Shapes Travel and Hotel Choices

While overall travel demand is growing, budgets are clearly tightening. Recent survey data shows that average holiday travel spending plans are down 18 percent compared to last year, with travelers budgeting just over $2,300 on average. Rising costs across transportation, accommodation, and daily expenses are prompting travelers to make trade-offs, including shorter trips, fewer add-ons, or alternative lodging arrangements.

Hotel stays remain the most popular lodging option, but their share has declined slightly. About 59 percent of holiday travelers plan to stay in hotels this season, down from 62 percent last year. Travelers visiting friends and family are more likely to stay with relatives, while those planning solo trips or romantic getaways continue to favor hotels for comfort and reliability. Despite the dip, hotels remain central to the holiday travel landscape, particularly for leisure and business travelers seeking consistency during peak periods.

Industry surveys suggest that rising prices remain the top reason travelers are scaling back plans. Nearly half of respondents cite overall cost increases as a key factor influencing their decisions. Even so, the willingness to travel persists, highlighting the emotional and social importance of holiday journeys. For many Americans, travel is viewed less as a luxury and more as a meaningful seasonal priority.

As the holiday season approaches, the U.S. travel outlook reflects a careful balance. Americans are traveling in greater numbers, but with sharper attention to value, flexibility, and cost management. This combination of strong demand and budget-conscious planning is shaping one of the most complex and closely watched holiday travel seasons in recent years.