Travel is getting cheaper — should you book your trip now?

After a "sold-out summer" filled with high travel prices for both airfare and lodging, relief for travelers may be on its way this fall.

Domestic airfare this September and October is currently priced 37% below peak summer fares, according to a study by Hopper, a travel deals site. Oil and gas prices are dropping to levels not seen since before summer began, with prices now below $4 at many stations. Even hotel rates have been declining slightly, with the most recent U.S. inflation data showing a 3.2% drop in hotel room prices from June to July.

But do these improving prices mean travel is expected to get cheaper for the foreseeable future? Or is this just a regular seasonal slowdown as fall approaches — or perhaps a temporary glitch in the system?

TPG spoke with industry sources to see if now is the time to book travel.

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Pricing trends and forecasts

Travelers certainly have some reasons to celebrate an end to the sky-high prices of summer.

In addition to the overall 37% drop in domestic flight pricing reported by Hopper, the company's study noted cross-country flight savings of around $200 for this fall, plus a drop by about $500 per ticket for flights to popular Asian destinations like Bali, Indonesia. The same study also reported hotel discounts totaling several hundreds of dollars for vacation spots like Hawaii, the Caribbean and Greece.

But rather than a downward trend, these dropping prices may be more of a return to a normal state of affairs.

"Pricing in the summer of 2022 was extraordinarily high," Henry Harteveldt, a travel industry analyst with Atmosphere Research Group, told TPG in an interview. "What we're now seeing are more rational levels of pricing being offered."

Regular seasonality is another factor in these price decreases.

"The fall shoulder season is typically a more depressed time for travel,” Hopper economist Hayley Berg told TPG for a previous story about airfare. “Everyone’s headed back to school, back to work for the last quarter of the year."

Related: Summer prices too high? Try booking a trip for the fall

But are there factors beyond regular seasonality that point to further price decreases ahead?

The lagging recovery of business travel may be keeping pricing down as well. More than two-thirds of executives surveyed expect their companies will spend less on business travel during the next six months than they did in 2019, according to a recent report by the U.S. Travel Association. The USTA also notes that half the companies in its survey still have policies in place restricting business travel. As a result, airlines and hotels won't be able to rely on business travelers to fill seats and rooms during the slower travel season as much as they had before the coronavirus pandemic, as many are staying home and conducting business via video calls.

The subsequent increase in availability should be a boon for fall travelers (at least, for those visiting typical business destinations) in terms of lower airfare and lodging rates. An additional slowdown in the leisure travel sector could lead to more savings for travelers, too.

"We're seeing a marked decline in demand," Harteveldt said. "So many passengers had existing credits (from pandemic-era cancellations) they wanted to use — and did use for travel this summer. Now that they've spent them and have to dip into discretionary funds, they're becoming less likely to book trips."

All the travel delays, cancellations and baggage-handling disasters of this summer could also be having an impact on travelers' interest in booking future trips, causing a further drop in prices.

"The airlines have been potentially destroying a significant amount of their own demand," Harteveldt said.

Rental cars, however, may be one area still resisting price decreases. Rental car prices are more than double their historical average, according to the latest Consumer Price Index from the U.S. Bureau of Labor Statistics.

While some optimism is being expressed in terms of pricing and availability as companies replenish their fleets and staff, travelers are still facing long waits and high prices for rentals. TPG reader Carol Pointdexter wrote that she just paid more than $700 for a weekly car rental in Hawaii, while many other readers have come across one- to two-hour waits at overwhelmed rental car counters.

Related: Fall airfares might provide some relief for inflation-weary travelers

Is this the best time to book travel?

Given the recent price decreases in airfare and lodging, now may seem like the right time to book trips to take advantage of fall travel deals and even ones for the winter holidays, but there are a few other factors to consider before you book. For airfare specifically, you'll want to be strategic about how far in advance and what time of day or week you book a flight.

Know that holiday weekends, like the upcoming Labor Day weekend, are historically more expensive, so if you're looking for a deal, you may want to wait a couple more weeks before booking trips. Labor Day travel prices this year are seemingly just as high as prime summer rates were, with holiday weekend airfare running 23% higher than last year and 20% above pre-pandemic levels, according to a recent study by Hopper's Hayley Berg.

However, if you're hoping to snag a last-minute deal for Labor Day, you may have luck finding one if you're flexible with your dates. Berg recommends branching out beyond the standard travel dates of Friday and Monday to possibly score significant savings.

Current high pricing and low availability in the rental car market mean deals are harder to come by for car rentals, so you may want to hold off on booking cars further in advance until car inventory levels increase.

That said, if you're planning a trip to Europe, you may find it tempting to lock in rates soon while the dollar and euro are equal, especially if you have specific destinations, tours and timing in mind. Some experts caution against this, though.

"There's enough uncertainly out there," Harteveldt said. "It may not be worth it to try to game the system."

Bottom line

While nobody can perfectly predict future pricing, travel costs do seem to be trending downward for fall and winter travel, even beyond the effect of normal seasonality. Before demand picks back up, you may want to book that bucket list trip you held off on because of the summer travel chaos.

As you look to finalize travel plans, keep an eye out for travel deals around the holidays, as airlines and hotels concerned about falling demand may offer promotions for flights and lodging this year.

To protect your investment, book price-protected or fully refundable tickets, lodging and transportation whenever possible, as global travel conditions (and your own situation) can change unexpectedly.