August travel inflation report: U.S. prices dip again
Travel costs in the United States fell for the fifth straight month, according to NerdWallet's August travel inflation report. The firm's Travel Price Index shows average U.S. travel costs are 1 percent lower than this time in 2024, driven primarily by cheaper hotel rooms. Other categories moved higher in line with broader inflation, which sits at 2.7 percent year over year for July. The result is a mixed picture for travelers, with lodging easing while airfare, car rentals, dining, and entertainment edge up. Relative to July 2019, overall travel costs remain 9 percent higher.
Key Points
- Why it matters: Travel prices declined again, giving budget relief even as overall inflation holds at 2.7 percent.
- Travel impact: Hotel rates fell 4.8 percent year over year, offset by higher dining and entertainment costs.
- What's next: Softer demand in some leisure markets could keep hotel deals coming into fall shoulder season.
- Airfare and car rentals each rose 0.7 percent compared to July 2024.
- Dining out climbed 3.9 percent, and tickets for movies, theaters, and concerts rose 3.8 percent.
Snapshot
NerdWallet's August travel inflation report, based on Bureau of Labor Statistics data for July 2025, points to a nuanced trend. Overall U.S. travel costs are down 1 percent year over year, the fifth month in a row of declines. Hotels are doing the heavy lifting, with average room rates 4.8 percent cheaper than a year ago. Not every line item is falling. Airfare and car rentals are each up 0.7 percent year over year, restaurant prices are up 3.9 percent, and movie, theater, and concert tickets rose 3.8 percent. Compared with the last pre-pandemic reference month, July 2019, travel costs are up 9 percent, far below the 26 percent increase across all items since then. The takeaway, travelers still need to budget smartly.
Background
The Travel Price Index blends BLS Consumer Price Index categories that matter to travelers, including flights, lodging, car rentals, food away from home, and entertainment. The July 2025 CPI shows headline inflation of 2.7 percent year over year. Within that, food away from home rose 3.9 percent, and lodging away from home fell month over month. NerdWallet weights these components by estimated traveler spend, which helps explain why falling hotel rates can pull the whole index down even if meals and shows cost more. The long-view context is telling. Airline tickets are down 16.6 percent versus 2015, while hotel prices are up 12.3 percent over the decade. Dining and entertainment have climbed even faster over ten years. The current cooling in hotel rates corresponds with softer demand signals in some leisure markets, a trend also reflected in recent airline moves and guidance on select routes and regions.
Latest Developments
Hotel rates drive this travel inflation report's decline
Hotels are the clearest relief valve in traveler budgets right now. Average U.S. room rates are 4.8 percent lower than a year ago, which is the principal force pulling the Travel Price Index down 1 percent year over year. Month over month, lodging also softened. Industry dynamics point to pockets of slack demand in classic leisure spots such as Las Vegas, Orlando, and Hawaii, where capacity and summer heat have complicated pricing power for some operators. Airlines have flagged similar softness around certain domestic leisure funnels, which can spill over to hotels through weaker midweek compression and shorter booking windows. Illustrative signs include network and schedule adjustments, as carriers and hotels try to balance price, volume, and yield in late summer and early fall.
Airfare, cars, meals, and shows keep upward pressure
Not everything is cheaper. Airfare and car rentals each rose 0.7 percent year over year in July 2025, reflecting stabilization after big pandemic-era swings. For many travelers, the sticker shock is more acute at restaurants and venues. Dining out is up 3.9 percent year over year, and tickets for movies, theaters, and concerts are up 3.8 percent. Over a decade, dining costs have jumped far faster than general inflation, and entertainment has moved higher as consumers prioritize experiences. Airlines continue to unbundle, which can make base fares look tame while total trip costs rise once you add bags or seat selection. Meanwhile, supply in the rental-car fleet has normalized from pandemic lows, but decade-long increases still test budgets in certain markets.
Analysis
For travelers, this is a tale of two budgets. If your trip is hotel-heavy, the August travel inflation report is good news, as easing room rates can shave meaningful dollars from multi-night stays. If your trip leans into dining and ticketed experiences, however, expect higher out-of-pocket costs than last year, and notably higher than a decade ago. Airfare's modest 0.7 percent year-over-year increase masks two realities. First, advertised base fares exclude many common add-ons, so the total you pay often rises faster than the CPI line for airline tickets. Second, decade-over-decade declines largely reflect that unbundling, plus competitive capacity cycles, not a steady march toward cheaper flying. Hotels are cutting the other way this year, with rates falling as hot-weather seasonality, value-seeking behavior, and destination-specific slowdowns loosen compression. Recent industry signals back that up, from cautious guidance to targeted capacity trims that follow cooling demand rather than lead it. For planning, build flexibility into food and entertainment budgets, and take advantage of lodging softness in shoulder periods. Watch markets that have shown demand cracks, and compare rates over multiple weekends. Where airlines pare schedules or moderate growth, hotel deals often follow, especially outside marquee events.
Within this shifting landscape, advisors can steer clients toward value, such as secondary-market stays near flagship attractions, or alternative trip timing where hotels are soft but weather is still favorable. Those tactics can convert today's mixed inflation picture into a net win.
Final Thoughts
NerdWallet's August travel inflation report confirms a fifth month of easing travel prices overall, led by hotels, with selective pressure from dining, entertainment, airfare, and car rentals. Compared with 2019, the travel basket sits 9 percent higher, well below the 26 percent increase across all items, which suggests opportunity for deal-savvy travelers. Focus on length-of-stay savings, monitor venue surcharges, and right-size dining expectations. As fall approaches, shoulder-season patterns and targeted airline schedule changes could sustain lodging value in key leisure markets. Used wisely, this report can help you stretch the same budget further without sacrificing the experience central to your trip. That is the promise of a timely travel inflation report.
Related reading on Adept Travel Recent demand signals from airlines and destinations, which align with this month's pricing trends, include Frontier Airlines warns deeper Q3 loss as demand fades and Hawaiian Airlines Route Suspension Cuts Boston, Seoul.