Inflation and the rising cost of living may be straining consumers’ wallets, but there’s one area where many don’t want to cut spending: their desire to travel.
Nearly a third (31%) of travelers said they intend to spend more on travel this year than in 2022, according to a recent report from the World Travel and Tourism Council and the booking site Trip.com.
This is after the vast majority (86%) of respondents said last year that they were increasing their 2019 travel budgets.
Consumers “spend more on travel than on any other experience,” Julia Simpson, WTTC President and CEO, said Monday at the opening of the ITB’s travel conference in Berlin.
“We are now growing and getting back to 2019 levels, if not surpassing them,” she said of the travel industry.
The number of people willing to shell out more for travel could be even higher as costs rise.
There is a real disconnect between travelers and the industry
More than four in 10 people (43%) said they would increase their travel budget in 2023, while a third (31%) would keep it the same, according to Expedia Group. last survey of 11,000 people in 11 countries found.
“This is significant, given the economic headwinds we’re hearing about,” said Jennifer Andre, global vice president of business development at Expedia Group Media Solutions, during the report’s launch Wednesday at ITB Berlin.
However, this figure remains below industry expectations – one in six travel professionals (58%) had expected holidaymakers to spend more this year.
This mismatch could leave travelers wanting.
“There’s a real disconnect between travelers and the industry,” Andre said.
Disconnect between travelers and industry
While many consumers said they plan to allocate a higher share of their wallet to travel this year, inflation remains the top concern impacting travel plans over the next 12 months, according to the report. Expedia study.
Many industry professionals failed to acknowledge that pain, ranking health and safety risks and travel restrictions as a higher concern for consumers.
More than a quarter (27%) of consumers said finding atypically low travel prices was their top travel criteria this year – a trend identified by just 15% of the industry.
Inflation and the rising cost of living may be straining consumers’ wallets, but many are unwilling to cut back on travel.
jackyenjoyphotography | time | Getty Images
The disconnect could mean that travel agencies may not provide consumers with the deals they are looking for.
“Industry professionals underestimate the impact of inflation and consumers’ current price sensitivity. Across all modes of travel, accommodation and activities, low prices are among the top three considerations for consumers,” the report notes.
In fact, tight finances are already impacting travel habits.
Because it’s more expensive, they want to make sure they get the most out of it.
Global Chief Commercial Officer, Accor
“The consumer is choosing to protect their travel expenses,” even as they face inflation and rising energy costs, Karelle Lamouche, global chief commercial officer for the Accor hotel group, told CNBC Travel.
“But because it’s more expensive, they want to make sure they get the most out of it,” she said, noting that many customers are now opting for longer stays when travelling.
The same goes for activities during the trip, according to Johannes Reck, founder and managing director of Berlin-based global tour booking platform Get Your Guide.
“People are very price sensitive,” Reck said of consumers, who are largely in the 30-50 age bracket on his platform. Customers are also booking further in advance, he said, prompting Get Your Guide to launch a book now, pay later option to help travelers spread out their travel costs.
Airbnb has also seen an increase in the number of people using the platform to supplement their income, with private room listings up 30% year-on-year. Overall, 40% of people with listings said accommodation helped them lower their living costs, said Kathrin Anselm, Airbnb’s chief executive.
“Journey of Revenge” Here to Stay
Consumer enthusiasm for travel has helped the industry recover after years of restrictions.
The United Nations World Tourism Organization said it expects the global tourism market to recover 80% to 95% pre-pandemic levels this year. In 2022, this figure has reached around 63%.
Valencia, a popular holiday destination on the southeast coast of Spain, recorded its best January for tourist arrivals this year, according to Ximo Puig, president of the regional government.
“Tourism is no longer a good to have [thing]“, he said, noting that visits in 2022 were on par with 2019 levels.
The revenge travel boom will stay.
Founder and Managing Director, Get Your Guide
“Covid recovery has been strong” in Jamaica, the island’s tourism minister Edmund Bartlett said, suggesting it had reached 99% of pre-pandemic arrivals in 2022.
New consumer groups are also rapidly developing elsewhere.
“Indians travel to India, and they don’t do it cheap – they spend. India’s middle class has started to travel a lot,” said Gopinath Parayil, founder of Kerala-based sustainable travel company The Blue Yonder.
It makes the industry optimistic that the era of so-called revenge travel – in which consumers started traveling again quickly after Covid restrictions eased – is here to stay.
“The wanderlust remains strong,” said Olympia Anastasopoulou, general secretary for tourism policy and development at the Greek Ministry of Tourism. She noted that last year, the country reached 2019 tourism levels, recording revenues of $18 billion. “2022 has seen vengeance travel. 2023 shows it continues.”
“The revenge travel boom is going to stay,” Reck added.