Consumers’ wallets may be straining due to inflation and rising living costs, but there is one area where many are unwilling to cut back: their desire to travel.
According to recent research from the World Travel and Tourism Council and booking site Trip.com, over one-third (31%) of travelers anticipate spending more on travel this year than they did in 2022.
This comes after the vast majority of respondents (86%) declared last year that they were increasing their 2019 travel budgets.
Consumers are “spending more on travel than any other experience,” said Julia Simpson, president, and CEO of the World Travel and Tourism Council, at the start of the ITB Berlin travel conference on Monday.
“We are already expanding strongly and returning to — or even exceeding — 2019 levels,” she said of the tourism industry.
When travel costs rise, the number of people ready to spend more on travel may increase.
There is a significant gap between travelers and the industry.
According to Expedia Group’s newest poll of 11,000 consumers from 11 countries, more than four in ten (43%) plan to raise their travel spending in 2023, while one-third (31%) plan to maintain it.
“That’s remarkable, considering the economic challenges we’re hearing about,” Jennifer Andre, global vice president of business development at Expedia Group Media Solutions, said as she presented the findings at ITB Berlin on Wednesday.
This figure, however, falls short of industry forecasts; one in every six (58%) travel professionals predicted that holidaymakers would spend more this year.
This mismatch may leave visitors disappointed.
“There is a significant mismatch between tourists and the industry,” Andre stated.
Travelers and the industry are disconnected.
While many consumers stated they intend to devote a larger portion of their budgets to travel this year, Expedia’s poll found that inflation remains the top concern influencing travel choices over the next 12 months.
Many industry professionals failed to acknowledge the anguish, instead prioritizing consumer concerns about health and safety dangers and travel limitations.
More than a quarter (27%) of consumers stated obtaining unusually low travel rates was their top travel criterion this year, a trend that just 15% of the industry identified.
Because of the gap, travel companies may be unable to give consumers with the deals they seek.
“Industry professionals underestimate the impact of inflation and customers’ present price sensitivity. “Across all modes of travel, lodging, and activities, low cost is among the top three consumer factors,” according to the research.
In fact, tight budgets are already influencing travel habits.
Because it is more expensive, people want to make the most of it.
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“The consumer is opting to safeguard their trip spend” despite inflation and increasing energy expenses, according to Karelle Lamouche, a global chief commercial officer of hotel giant Accor.
“But because it’s more expensive, they want to make the most of it,” she explained, adding that many guests are now opting for longer stays when they travel.
According to Johannes Reck, founder, and CEO of Berlin-based worldwide tour bookings platform Get Your Guide, the same is true for in-trip activities.
“They are highly price sensitive,” Reck said of his platform’s customers, who are mostly between the ages of 30 and 50. Consumers are increasingly booking further in advance, which inspired Get Your Guide to offer a reserve now, pay later option to assist travelers in spreading their travel expenditures, he said.
People are increasingly utilizing Airbnb to supplement their salaries, with private room listings increasing by 30% year on year. According to Kathrin Anselm, Airbnb’s general manager, 40% of individuals with listings stated hosting helped with their living expenses.
‘Revenge travel’ will be around for a while.
Customers’ excitement for travel has aided the industry’s comeback after years of constraints.
According to the United Nations World Tourism Organization, the global tourism sector will rebound to 80% to 95% of pre-pandemic levels this year. By 2022, that figure was expected to be over 63%.
According to Ximo Puig, head of the regional administration, Valencia, a renowned holiday resort on Spain’s southeast coast, had its best-ever January for tourist arrivals this year.
“Tourism is no longer a nice to have [thing],” he remarked, stressing that visitation in 2022 has surpassed that of 2019.
The surge in vengeance travel is here to stay.
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“The Covid recovery has been strong” in Jamaica, according to Edmund Bartlett, the island’s Minister of Tourism, implying that it had reached 99% of pre-pandemic visits by 2022.
New consumer groups are also rapidly expanding elsewhere.
“Indians travel within India, and they don’t do it cheaply – they spend. “India’s middle class has begun to travel extensively,” said Gopinath Parayil, founder of Kerala-based sustainable travel company The Blue Yonder.
This gives the sector hope that the era of so-called vengeance tourism, in which customers returned to travel in large numbers following the relaxation of Covid restrictions, is here to stay.
“There is still a strong desire to travel,” said Olympia Anastasopoulou, secretary general for tourism policy and development at Greece’s Ministry of Tourism. She mentioned that the country approached 2019 tourism levels last year, with $18 billion in income. “Revenge traveled in 2022. That is still going on in 2023.”
“The renaissance of vengeance travel is here to stay,” Reck remarked.