Inflation and the high cost of living may weigh on consumers’ wallets, but there is one area many are unwilling to cut: 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 booking site Trip.com.
The vast majority (86%) of respondents said last year that they are increasing their 2019 travel budget.
“Consumers are spending more on travel than on any other experience,” Julia Simpson, president and CEO of WTTC, said Monday at the opening of the ITB Berlin travel conference.
“We are now consolidating and getting back to 2019 levels – or even higher,” he said of the travel sector.
The number of people willing to spend more on travel could be even greater as costs rise.
There isn’t a real connection between travelers and the industry
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 latest survey 11,000 people were found in 11 countries.
“It’s important what we’re hearing about, it’s important,” Jennifer Andre, global vice president of business development at Expedia Group Media Solutions, said while presenting the report at ITB Berlin on Wednesday.
This figure still fell short of industry expectations – one in six (58%) travel professionals predicted that holidaymakers would spend more this year.
That mismatch can leave travelers wanting.
“There is a real connection between travelers and the industry,” Andre said.
Disconnect between travelers and industry
While many consumers said they plan to allocate a higher portion of their wallets to travel this year, inflation still ranked as the number one concern affecting travel plans over the next 12 months , Expedia’s study found.
Many industry professionals fail to recognize that there is pain, rating health and safety risks and travel restrictions as a high concern for consumers.
More than a quarter (27%) of consumers said that finding unusually low travel prices was their top travel criterion this year – a trend recognized by only 15% of the industry.
Inflation and high cost of living may be hitting the pockets of consumers, but many are unwilling to cut down on travel.
jackenjoyphotography | moments | Getty Images
The disconnect may mean that travel companies may fail to provide consumers with the deals they are looking for.
“Industry professionals underestimate the impact of inflation and consumers’ current sensitivity to prices. Across all modes of travel, accommodation and activities, low prices are among the top three considerations for consumers,” the report said.
In fact, increased finances are already affecting travel habits.
Because it’s more expensive, they want to make sure they get the most out of it.
Bitter Gourd Lamouche
Global Chief Commercial Officer, Accor
“The consumer is choosing to protect their travel spending,” even as they face inflation and higher energy costs, Karel Lamouche, global chief commercial officer for hotel group Accor, told CNBC Travel.
“But because it’s more expensive, they want to make sure they make the most of it,” she said, noting that many guests are now choosing to stay longer when they travel.
The same is true for in-trip activities, according to Johannes Reck, founder and chief executive of Get Your Guide, a Berlin-based global tour booking platform.
“People are very sensitive,” Reck said of consumers, who are largely within the age group of 30 to 50 years flocking to his platform. Customers are also now booking 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 people using the platform to supplement their income, with listings for private rooms up 30% year over year. Overall, 40% of people with listings said hosting helps with their cost of living, said Katherine Anselm, a general manager at Airbnb.
‘Revenge Tour’ 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% at pre-pandemic levels this year. In 2022, this figure jumps to around 63%.
Valencia, a popular holiday destination on Spain’s southeast coast, recorded its best January for tourist arrivals this year, according to regional government president Zimo Puig.
“Tourism Isn’t Good Anymore” [thing],” he said, noting that trips in 2022 were up to 2019 levels.
The journey of revenge is going to be fun.
Founder and CEO, Get Your Guide
The island’s tourism minister, Edmund Bartlett, said Jamaica’s “Covid recovery has been robust”, suggesting it had reached 99% of pre-pandemic arrivals in 2022.
New consumer groups are also growing rapidly elsewhere.
Gopinath Parayil, founder of Kerala-based sustainable travel company The Blue Yonder, said, “Indians are traveling within India, and they are not doing it cheap – they are spending. India’s middle class has started traveling big time. given.”
This has left the industry hopeful that the era of so-called return travel – in which consumers increasingly return to travel following the easing of Covid restrictions – is here to stay.
“The urge to travel remains high,” said Olympia Anastasopoulou, secretary general of tourism policy and development within Greece’s tourism ministry. He said that last year the country reached the tourist level of 2019, registering a revenue of $18 billion. “2022 saw a journey of revenge. 2023 shows that it continues.”
“The revenge travel boom will continue,” Reck said.