Inflation and a higher cost of living can weigh on consumers’ wallets, but there’s one area where many are reluctant to cut back: their desire to travel.
Nearly a third (31%) of travelers said they intend to spend more on travel this year than they did in 2022, according to a recent report from the World Travel and Tourism Council and booking site Trip.com.
It comes after the vast majority (86%) of those surveyed last year said they were increasing their travel budgets for 2019.
Consumers “spend more on travel than any other experience,” Julia Simpson, president and CEO of WTTC, said Monday at the opening of the ITB Berlin travel conference.
“We are now growing strong and coming back to – or even exceeding – 2019 levels,” she said of the travel sector.
The number of people willing to pay 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 unchanged, Expedia Group’s latest survey of 11,000 people in 11 countries found.
“It’s important given the economic headwinds we’re hearing about,” said Jennifer Andre, global vice president of business development at Expedia Group Media Solutions, while presenting the report Wednesday at ITB Berlin.
This figure, however, is still less than industry expectations – one in six (58%) travel professionals had expected holidaymakers to spend more this year.
This discrepancy could make travelers want to.
“There’s a real disconnect between travelers and the industry,” Andre said.
Disconnect travelers from the industry
While many consumers said they plan to allocate a larger share of their wallets to travel this year, inflation still ranks as the top concern affecting travel plans over the next 12 months, Expedia’s survey shows.
Many industry professionals failed to recognize that pain, health and safety risk assessment and travel restrictions were of greater concern to consumers.
More than a quarter (27%) of consumers said finding atypically low travel prices was their main travel criteria this year – a trend identified by only 15% of the industry.
Inflation and higher living costs can weigh on consumers’ wallets, but many are unwilling to cut back on travel.
Jackynyd photography | Moment | Getty Images
The disruption may mean that travel companies cannot provide consumers with the deals they are looking for.
“Industry professionals underestimate the impact of inflation and consumers’ current price sensitivity. Across all forms of travel, accommodation and activities, low prices are within the top three considerations for consumers,” the report noted.
In fact, stretched economy is already affecting travel habits.
Because it’s more expensive, they want to make sure they get the most out of it.
global commercial director, Accor
“The consumer is choosing to protect their travel spending,” even in the face of inflation and higher energy costs, Karelle Lamouche, global commercial head of hotel group Accor, told CNBC Travel.
“But because it’s more expensive, they want to make sure they’re getting the most out of it,” she said, noting that many guests are now opting for longer stays when they travel.
The same goes for activities on the tour, according to Johannes Reck, founder and CEO of Berlin-based global tour booking platform Get Your Guide.
“People are very price-sensitive,” Reck said of consumers, who largely fall into the 30- to 50-year-old age group on his platform. Customers are also now booking further in advance, he said, prompting Get Your Guide to launch a Reserve Now, Pay Later option to help travelers spread 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 increasing by 30% over the year. Overall, 40% of those with listings said hosting helps with their living expenses, said Kathrin Anselm, a general manager for Airbnb.
‘Revenge trip’ here to stay
Consumer enthusiasm for travel has helped the industry’s recovery after years of restrictions.
The United Nations World Tourism Organization said it expects the global tourism market to recover 80% to 95% of pre-pandemic levels this year. By 2022, that number reached around 63%.
Valencia, a popular holiday destination on Spain’s southeast coast, recorded its best January ever for tourist arrivals this year, according to Ximo Puig, president of the regional government.
“Tourism is no longer a nice-to-have (thing),” he said, noting that visits in 2022 were up to 2019 levels.
The boom of revenge trips continues.
founder and CEO, Get Your Guide
“The Covid recovery has been strong” in Jamaica, the island’s Tourism Minister Edmund Bartlett said, suggesting it had reached 99% of pre-pandemic arrivals by 2022.
New consumer groups are also growing rapidly elsewhere.
“Indians travel in India and they don’t do it cheaply – they spend. India’s middle class has started traveling big time,” said Gopinath Parayil, founder of Kerala-based sustainable travel company The Blue Yonder.
That has the industry optimistic that the era of so-called revenge trips – where consumers returned to travel quickly after the easing of Covid restrictions – is here to stay.
“The urge to travel remains high,” said Olympia Anastasopoulou, secretary general for tourism policy and development at Greece’s Ministry of Tourism. She noted that last year the country reached the tourism levels of 2019 and recorded a revenue of 18 billion dollars. “2022 offered revenge trips. 2023 shows that it continues.”
“The revenge boom continues,” added Reck.