Budget-conscious travelers continue to prioritize vacations despite rising costs

On a recent weekend, Jami Hagerman embarked on the budget-vacation equivalent of a blind date.

The hairstylist and her husband spent about $400 on Groupon "mystery vacation" vouchers that promised accommodations and airfare for the pair — but no say in the destination. The Oklahoma City residents were sent to New Orleans, where they visited museums, took walking tours and ate the city's famous beignet desert.

"I feel like the value was great for the trip," said Hagerman, 29. "It was fun."

Hagerman isn't the only one balancing an inclination to see the world with the pinch of higher prices.

Travel costs are surging amid the U.S. war with Iran and many companies in the industry are homing in on premium offerings to fetch higher prices and margins. Conventional wisdom might suggest that affordability-minded vacationers in the U.S would buckle in this environment, but data shows that they aren't allowing themselves to get left behind.

Lower-income clients, or those with annual earnings under $36,675, spent more monthly on travel earlier this year than at any point since at least 2019, according to PNC card data analyzed exclusively for CNBC. Spending in July for this cohort rose 7% from the same month a year ago.

Price pressures

Groupon expanded what started as an initial "mystery vacation" offering for North America to a full portfolio. That portfolio recorded around 5,500 orders in the second quarter of 2026, a more than five-fold increase compared with when it had only a flagship product in the first quarter of 2025, according to data shared with CNBC by Groupon.

Groupon advertises the flagship package — which ranges from $199 to $299 in per-person price, depending on the departing airport — as having a 50% discount.

A small percentage of buyers end up at far-flung destinations such as Singapore or Paris, though the majority are sent to domestic locations like Las Vegas, Atlanta or Orlando. Participants are typically told their destinations within a few days of filling out the necessary paperwork.

"Orlando probably wouldn't have been in my top 10 pick of places," said Tammy Wales, a Georgia-based travel agent whose mystery vacation led her to the central Florida city. But, "as long as I'm gone, I don't really care. The biggest thing was being able to take a trip and have the element of surprise."

Gas prices are pacing for a record high on Labor Day and have jumped roughly 30% on an annual basis, according to AAA. Airline fares surged more than 25% year over year as of July, according to the Bureau of Labor Statistics.

At the same time, some parts of the travel industry have centered attention on the luxury segment. Airlines ranging from Delta to Southwest have raced to add offerings like expanded first-class cabins and lounges to woo first-class fliers.

But the outlook for value travel may not be as dire as it seems. Industry data provider OAG found that low-cost airlines have gained market share in 2025 compared with prepandemic, though that could take a hit after Spirit Airlines shut down in May.

Despite a recent pickup in luxury hotel production, the majority of new rooms are still in relatively affordable tiers, said Jay Morrow, head of hospitality advisory at Walker & Dunlop.

Travel in 'good times and bad'

Groupon's mystery package isn't the only value-centric travel product receiving attention as prices rise.

Hostelworld, a booking platform for hostels and other low-cost stays, said transactions from U.S. and Canadian consumers increased 10% in the first half of 2026 compared with the same period a year prior. Across regions, the Ireland-based company said its net average transaction value also climbed versus the year-ago period.

Ewout Steenbergen, finance chief at Booking Holdings, told analysts in April that average daily rates for the Booking.com parent's lower-end segment came in flat. He described that as an improvement following a streak of negative readings.

At budget-friendly Carnival Corp., demand for its cruises in the remainder of 2026 and beyond is stronger than the respective prior-year comparison periods. Revenue in a segment of the business that includes on-board spending jumped more than 7% year over year in its fiscal second quarter.

"We're somewhat recession-resilient," David Bernstein, Carnival's finance chief, told CNBC. "We do very well in good times and bad."

Bernstein said that about half of the U.S. population lives within a five-hour drive of a Carnival cruise departure port, meaning they can choose not to pay for airfares when vacationing.

Each year, Kenny Wilson and her husband pile their two kids into the car and drive hours from her Texas home to a cruise port in Galveston. The stay-at-home mom said she caps the total cruise cost at $1,000 by taking advantage of deals allowing children to sail free with paying adults.

"In this economy for the middle class, it's very, very hard to get vacations in there," the 27-year-old said. "I'm just so grateful that I figured out a way out that I could still give my kids a beautiful childhood and memories for cheap."

From luxury to necessity

More than one out of every 10 of the nearly 1,400 "credit-challenged" consumers surveyed by Snap Finance in March said they spent at least $300 on vacation or travel expenses in the last six months. That's despite just over 40% of this group reporting feeling some degree of financial instability.

Bigger tax refunds as a result of President Donald Trump's "big beautiful bill" could be helping them keep their wallets open. Lower-income consumers should collectively spend half a billion dollars from their heftier returns on travel this year, according to a report from the U.S. Travel Association.

To be sure, there are signs that consumers are looking for ways to cut costs. Expedia said in June that searches using budget filters have climbed more than 1,200% compared with 12 months ago. Vrbo reported also in June that the number of users booking stays within two weeks rose 16% year over year, a sign that buyers are hunting for last-minute deals.

Even if vacationers continue shelling out, higher costs for a discretionary experience like travel could weigh on their psyche, according to Brian LeBlanc, PNC's senior economist. The University of Michigan's closely followed consumer sentiment survey came in 11% lower in August than a year ago, with respondents citing expectations for higher fuel prices as a drag on confidence.

"They're going on Expedia, they're putting in the airline, they're seeing the eye-popping number, and they're feeling bad about it, but they're still paying for it," LeBlanc said. "People are still swiping the cards, but that doesn't mean they're feeling good about it."

To be sure, PNC's analysis found higher earners were spending more compared with 2019 than other income groups. LeBlanc said it's another indicator of the uneven postpandemic recovery that has become known as the "K"-shaped economy.

An unwavering propensity to spend on jetsetting across income classes may also reflect its emergence as a larger priority exiting Covid lockdowns, according to Tarik Dogru, an associate professor at Florida State University's hospitality school. Now, Dogru said the postpandemic "revenge travel" phenomenon should be viewed as a new normal instead of a fad.

Travel is "not a luxury anymore," Dogru said. "It became a necessity."

Hagerman, the hair stylist in Oklahoma City, finds that explanation applicable to her life.

After years staying in her home state during the pandemic, Hagerman has resisted the urge to upsize her house to keep rent costs down. The working mom has used those savings to finance recent trips to places like Hawaii and Washington.

Hagerman said she's considering buying another Groupon mystery vacation, as she felt like it allowed her to get out of town without breaking the bank. The Oklahoma resident said she's just hoping not to be sent back to New Orleans, a city that she has now visited twice.

"I'm really not that picky," Hagerman said. "I just feel fortunate that we got to go anywhere."