5 Ways to Plan a Better, Cheaper Vacation

Americans pay for luxurious getaways with credit, while planning to do better next year.

Woman at beach working on laptop against the sea
Some people just can't get away from work. But new data show who is getting out of the office and why.

Most Americans—three out of four—will take a vacation this year. One-third will spend $1,000 or more per family member, and 17 percent will spend $2,500 or more per family member. And since most don’t put money aside in advance to pay for these getaways, about three in 10 Americans will rely on credit cards to fund their trips.

Those numbers come from a new survey from the coupon site RetailMeNot.com, which reveals not only that Americans are splurging on escapes this year, but also that they are not very generous with others while traveling. Just half say they tip housekeeping staff at hotels, and even when they do open their wallets, they don’t open them very widely: One in three travelers who tip leaves just one or two bucks.

Instead, Americans spend most of their money on meals and drinks, after transportation and hotel costs. One in five said they spend most of their budget on entertainment, such as spa services or tours. And since one in seven respondents with jobs said they don’t get paid time off from work, they also have to sacrifice earnings in order to be on the road.

While the survey might be a good sign from an economic perspective—these Americans are certainly spending again, which could give the economy a boost—it is disturbing from a personal-finance one.

Building up expensive credit card debt for a vacation is universally decried by money experts as a bad idea, since debt holders end up paying more for each drink and meal than they would have if they paid upfront. And $1,000 or even $2,500 per family member is hardly frugal. Much cheaper, and perhaps more relaxing, vacations can be found. Here are five ways to plan a better, cheaper vacation:

1. Go where no one else is going.

The hot (and cold) spots are constantly shifting: Mexico has some great deals now, as a result of dips in demand due to the drug violence in some parts of the country. The European countries racked by the debt crisis, including Portugal, Spain, Greece, and Ireland have also sported discounts as a result of their flailing economies. Check the political winds, find deals, and then book your trip accordingly.

2. Travel during less popular weeks.

Demand tends to spike exactly when you expect it to: Around the July 4 holiday, Labor Day, and other national vacation days. Families trend to travel during school holidays. If you can travel during the off-times when most people are going about their everyday lives, then you can find better deals.

3. Ask for discounts and check for coupons.

Running Web searches for discounts in your destination or asking your hotel or restaurant for any special deals available can turn up savings where you didn’t expect them. To maximize your chances of finding discounts, do as much searching in advance as possible and always ask the hotel front desk when you first check in. You might get free breakfast out of it.

4. Use travel websites to compare prices and grab last-minute deals.

The number of travel websites continues to proliferate. To find the best one for you, run a Web search with a few key words relevant to what you’re looking for, such as “budget” or “last-minute” or “retiree travel deals,” and you’ll find customized discounts.

5. Rent homes and split the cost with friends.

Hotel rooms are notoriously expensive. While they come with clean sheets and new towels every day, you might prefer to rent a house with friends. It requires more work, including meal prep and planning, but you can get more space, a prime location, and a much better deal. Websites such as vrbo.com or airbnb.com can help connect you with owners looking to rent.

The good news from the RetailMeNot.com survey is that Americans say they will be more frugal next year. Almost two in five respondents said that for their next vacation, they will think about staying with family and friends to save money, or perhaps explore cost-savings at an all-inclusive resort or rental home. After all, coming home from vacation to a giant credit card statement can wipe out any relaxation accumulated while away.

What are your summer vacation plans?

Twitter: @alphaconsumer