Gen Z Cuts Back on Holiday Travel in 2025, Focusing on Affordable Destinations: What You Need To Know

Published on November 25, 2025

As the 2025 holiday season approaches, more Americans are planning to travel than ever before, but with inflationary pressures and financial concerns, many are tightening their budgets. According to recent findings from major surveys by Deloitte and PwC, travel plans are up this year, but spending is down, with many Americans opting for more cost-effective travel options. These trends suggest significant shifts in how consumers are approaching their holiday journeys, particularly for domestic trips.

Travel Plans Rise, But Budgets and Trips Decline in 2025

Deloitte’s 2025 Holiday Travel Survey shows that over half of Americans, 54 percent, plan to travel this holiday season, marking the highest percentage in the past five years. However, the average number of trips taken is on the decline, with travellers planning 1.83 trips on average, compared to 2.14 trips last year. Additionally, budgets have taken a notable dip, falling 18 percent to USD 2,334 per person.

Despite these cutbacks, the travel spirit remains strong, driven by a desire to reconnect with family and friends, which is reflected in the rise of road trips. The 2025 Holiday Travel Outlook from PwC also noted a slight increase in travel intentions, but a significant slowdown in overall spending, especially in non-essential categories like entertainment and dining out.

A Shift in Travel Spending: High-Income Households Tighten Their Belts

Interestingly, even high-income households are feeling the financial squeeze this season. Deloitte defines high-income earners as individuals making USD 100,000 or more annually. This group, often considered less price-sensitive, is showing signs of financial strain, with 19 percent of them reporting that they feel worse off financially compared to the previous year. This is a significant jump from 13 percent in 2024.

While high-income households are reducing their travel frequency, they are still opting for premium experiences, particularly in the luxury travel sector. These travellers continue to prioritise luxury properties and first-class air travel, even though they are reducing the number of trips they take. This shift highlights a growing trend where the focus is on quality over quantity, despite fewer overall trips.

In contrast, many travellers across all income brackets are shifting their focus to more affordable travel options. Instead of splurging on luxury hotels and international flights, many are opting for domestic destinations, road trips, and staying with family. The rise in road trips is particularly notable, with approximately 73 million people expected to travel by car this Thanksgiving, a 1.3 million increase from last year.

Road Trips and Vacation Rentals: The New Travel Norm?

The trend towards driving rather than flying is further supported by data from AirDNA, a short-term rental data firm. Vacation rental bookings for major holidays such as Thanksgiving, Christmas Eve, and New Year’s Eve are up by 7 to 21 percent compared to last year. Popular destinations for these rentals include places like Orlando, Austin, and Gatlinburg, Tennessee, areas that are easily accessible by car. For many, staying in vacation rentals offers a more affordable and flexible alternative to hotels, especially for larger groups or family gatherings.

The cost-saving benefits of vacation rentals extend beyond accommodation, with many properties offering kitchens, allowing travellers to save on dining costs during the holidays. This is a key advantage for those planning to cook their own meals or host family celebrations, further reducing the overall expense of the trip.

Gen Z: The Most Cost-Conscious Generation

Among the most significant trends observed this year is a pronounced shift in Gen Z’s travel behaviour. PwC’s survey found that only 55 percent of Gen Z respondents plan to travel this holiday season, a decrease from 61 percent in 2024. Cost remains the primary barrier for this generation, with 50 percent of Gen Z travellers opting to stay home rather than embark on holiday trips. This shift highlights the importance of value-driven travel, even for younger generations that are typically more inclined to spend on experiences.

Domestic Travel Continues to Thrive

With airfares and international travel costs rising, domestic travel continues to thrive as an affordable option. Travellers are increasingly opting for destinations within driving distance, avoiding the high costs associated with flights and hotels. This trend is particularly evident in regions like the US, where many holidaymakers are opting for road trips and short-term vacation rentals rather than international escapes.

Overall, the holiday travel outlook for 2025 shows a robust demand for travel, but with a clear shift towards budget-conscious choices. While more Americans are planning to travel than in previous years, they are spending less on their trips, seeking out more affordable lodging and transport options. Road trips, domestic destinations, and vacation rentals are leading the way as consumers prioritise savings while still making time for travel and family gatherings.

A Season of Smart Spending in Travel

As the 2025 holiday season approaches, travellers are adjusting their habits, choosing cost-effective alternatives without sacrificing the spirit of travel. With road trips and vacation rentals on the rise, and a marked decrease in discretionary spending on luxury experiences, this year’s holiday season will likely see travellers navigating tighter budgets with smarter choices. While demand for travel remains high, it is clear that Americans are more conscious of their travel budgets than ever before, prioritising meaningful connections with family and friends over lavish vacations.