This installment of the PYMNTS miniseries based on consumer spending patterns focuses on the travel sector.
Getting away from it all is one of the last discretionary items that consumers are forgetting in their ongoing struggle to curb inflation. This reluctance highlights the importance of travel in the mind of consumers, as travel is often a large expense regardless of the overall economic landscape. However, the majority of consumers plan to cut back on leisure travel this year or have done so in the past year and have no plans to bring it back. This sentiment was detailed in the January PYMNTS collaboration with LendingClub, “New Reality Check: The Paycheck-to-Paycheck Report.”
As illustrated in the chart, 58% of consumers identify themselves as unlikely to purchase travel in 2023, including 9% who purchased travel last year. This declining travel outlook comes as a blow to the airline industry, which has so far remained optimistic about 2023 despite the upheaval in air travel last season. Betting on the same post-pandemic wave that drives travel in 2022, ticket prices are rising up to 40% annually.
The hotel sector also shares the same positive outlook as leisure travel, as hotel room bookings are finally approaching or in some cases eclipsing pre- pandemic. This request led Mark Hoplamazian, chief executive of Hyatt Hotels, to comment recently, “Entertainment is not showing any signs of slowing down.”
This sentiment has been proven. Further research by PYMNTS found that the 14% increase in consumers using digital devices overall was largely driven by apps and platforms related to travel and transportation. In particular, 16% more consumers check travel information online, with the share of purchasing airfare digitally also increasing by 16% from the same time last year. Call it the “great escape” if you will, as consumers’ desire to escape from daily headaches led to a double-digit increase in the spending experience last February.
However, rumblings of the shaky state of online travel stocks could mean the sector is seeing the same cost cuts that plague other discretionary spending categories, as the ripple effects of interest rates continue to rise. This uncertainty may be partly a driver behind Google’s launch earlier in April of its airfare price guarantee program, with any cost differences redeemable through Google Wallet.
Alternative payment methods like buy now, pay later may give some consumers a little breathing room when it comes to paying for a vacation, but some travelers are staying home this year to reduce the expenses. If consumers’ reluctance to forgo annual vacations is any indication, however, travel could pick up once some stability returns to the economic landscape.