Record-breaking heat introduces a new type of summer getaway, the 'coolcation' — here's how to save for cooler-temperature destinations

In late June, a heat dome covering a good portion of Western Europe led to soaring temperatures in France, Spain and Italy, with temperatures soaring above 100°F. The UK is experiencing its hottest June on record, and places that aren’t normally hot — like Scotland and the Swiss Alps — are feeling the heat.

Many of these destinations are already buckling under the pressure of growing tourism. And many don’t have air-conditioned hotels or airports to which Americans are accustomed.

That’s why more Americans are considering a “coolcation” instead, where you vacation in destinations with milder temperatures and cooler climates. As a bonus, they might not be packed with tourists in summertime.

At the same time, travel is becoming more expensive, thanks to inflation. And some of these “coolcation” destinations, like Scandinavia, aren’t cheap to begin with.

Here’s how to save for your next vacation or avoid overspending — no matter where you choose to travel.

The rising cost of travel

Like groceries and gasoline, travel has also been impacted by inflation. Indeed, according to the Travel Price Index (TPI), the cost of travel increased 9.8% year over year in May.

Airfares, in particular, have skyrocketed, thanks to the rising cost of jet fuel related to the war in Iran. Airfares increased 26.7% year over year in May. Hotel prices jumped 5.1% over the same period, while restaurant prices increased 5.1% and recreation prices rose 2.0%.

Even though the price of jet fuel is coming down, prices are still elevated, and airlines have no immediate plans to pass on savings to consumers.

In other words, travel keeps getting more expensive. And many “coolcation” destinations are already expensive.

In Europe, for example, a “coolcation” might mean swapping Greece, Spain, Italy or France for northern nations like Sweden, Norway, Finland or Iceland — which are generally considered more expensive than other parts of Europe.

Other “coolcation” destinations are south of the U.S. — but far south, like Argentina or Chile. Here, too, costs can be higher than expected. Patagonia, for example, which straddles both countries, is considered one of the most expensive regions in South America.

It’s also possible to take a “coolcation” domestically, like Alaska. In daytime, temperatures average around 70°F, but in coastal areas and at higher elevations, the temperature rarely exceeds 65°F. But here, too, costs are higher because of its more remote location.

In some cases, if you’re traveling during the shoulder season or off-season, you may be able to get deals on flights, hotels and tours. But some “coolcation” destinations are becoming more popular — like Norway — so it could drive prices up.

How to save your next “coolcation”

It’s easy to get caught up in the moment and overspend on vacation — and end up coming home with an enormous credit card bill.

To avoid this, research your destination to get a realistic sense of how much the trip will actually cost and then create a daily budget (there are plenty of apps that can help, such as TravelSpend). Look for an app that can handle multiple currencies.

Fidelity recommends saving 30% of your monthly take-home pay for discretionary spending like entertainment, restaurants and travel.

If you’re saving for a big trip, try to cut back on other areas of discretionary spending, such as subscriptions, dining out and impulse purchases. Then, funnel those savings directly into your vacation fund.

You might want to set up a separate account as a vacation fund — preferably a high-yield savings account with no minimum balance and no monthly fees. If it’s separate from other savings, you’ll be less tempted to dip into it.