Inflation isn’t stopping people from traveling, but travel companies may be missing out
Despite the increasing inflation and living costs, travelers remain reluctant to reduce their travel budgets. According to a report by the World Travel and Tourism Council and Trip.com, 31% of respondents intend to spend more on travel this year than they did in 2022. This follows the 86% of respondents who claimed in 2022 that they would increase their travel budgets for 2019. The majority of consumers are prioritizing spending on travel over other experiences, which is a trend that has continued to grow stronger, even exceeding 2019 levels, according to Julia Simpson, president and CEO of the WTTC.
Although inflation remains the top concern among consumers, the travel industry seems to have underestimated the impact it has on travel plans, with many industry professionals failing to recognize this pain. This mismatch has created a disconnect between travelers and the industry, which could mean that travel companies may fail to provide consumers with the deals they are looking for.
However, despite the financial challenges, consumers are still determined to travel, leading to a boom in revenge travel. This trend has helped the industry recover and grow rapidly following years of restrictions. According to the United Nations World Tourism Organization, the global tourism market is expected to recover 80% to 95% of pre-pandemic levels this year. The industry is optimistic that revenge travel will continue to drive growth, with new consumer groups emerging and travelers seeking to make the most of their trips despite rising costs.
This optimism is in contrast to the concerns expressed by some travel industry professionals about the impact of rising inflation and higher living costs on consumers’ willingness to spend on travel.
However, despite these economic headwinds, travelers remain determined to prioritize travel experiences, with many planning to allocate a higher share of their budgets to travel this year. In fact, more than one-third of travelers surveyed by the World Travel and Tourism Council and Trip.com plan to spend more on travel in 2023 than they did in 2022.
While travel remains a top priority for many, the industry’s expectations for spending may not match consumers’ plans. According to Expedia’s latest survey, 43% of people said they would increase their travel budget in 2023, but only 31% said they would keep it the same. This disconnect between travelers and the industry could lead to missed opportunities for travel companies to provide the deals and experiences that consumers are looking for.
Despite these concerns, the travel industry continues to recover from the pandemic, with many destinations and companies reporting strong growth in bookings and revenue. The United Nations World Tourism Organization predicts that the global tourism market will recover between 80% and 95% of pre-pandemic levels this year.
The boom of “revenge travel” also appears to be here to stay, with many consumers eager to make up for lost travel opportunities during the pandemic. As the industry continues to adapt to changing consumer preferences and concerns, the future of travel remains bright, even in the face of economic uncertainty.
The Covid-19 pandemic has led to significant disruptions in the travel industry, with many businesses struggling to stay afloat. However, it seems that many consumers remain undeterred by higher costs and are still eager to hit the road. In fact, recent surveys have shown that a growing number of people plan to increase their travel budgets this year.
According to a report by the World Travel and Tourism Council and booking site Trip.com, 31% of travelers intend to spend more on travel this year than they did in 2022. This is after the vast majority (86%) of respondents said last year that they were upping their 2019 travel budgets. The number of people willing to fork out more on travel could be even higher as costs rise.
Despite rising inflation and concerns over higher living costs, it appears that travel remains a top priority for many consumers. Julia Simpson, president and CEO of the WTTC, stated that consumers are “spending more on travel than any other experience” at the opening of the ITB Berlin travel conference. In fact, more than four in 10 people (43%) said that they would increase their travel budget in 2023, according to Expedia Group’s latest survey of 11,000 people across 11 countries.
However, there seems to be a disconnect between what travelers are looking for and what the industry is providing. Expedia’s study found that inflation ranked as the number one concern impacting travel plans over the next 12 months, but many industry professionals failed to recognize that pain. Health and safety risks and travel restrictions were rated as of higher concern for consumers. Furthermore, over a quarter (27%) of consumers said that finding atypically low travel prices was their top travel criteria this year – a trend identified by only 15% of the industry.
This mismatch could mean travel companies might fail to provide consumers with the deals they’re looking for. “Industry professionals underestimate the impact of inflation and consumers’ current sensitivity to price. Across all modes of travel, accommodation and activities, low pricing is within the top three considerations for consumers,” the report noted.
In addition to these trends, stretched finances are already impacting travel habits, with many consumers opting for longer stays when they do travel. As Karelle Lamouche, global chief commercial officer of hotel group Accor, pointed out, “The consumer is choosing to protect their travel spend,” even as they face inflation and higher energy costs. “But because it’s more expensive, they want to make sure they make the most of it.”
Despite these challenges, the travel industry is seeing signs of a strong recovery, with many consumers eager to indulge in so-called “revenge travel”. The United Nations World Tourism Organization has projected that the global tourism market will recover 80% to 95% of pre-pandemic levels this year. Valencia, a popular holiday destination on Spain’s southeast coast, recorded its best-ever January for tourist arrivals this year.
New consumer groups are also emerging, with Indians now traveling within India in large numbers and spending more. According to Gopinath Parayil, founder of Kerala-based sustainable travel company The Blue Yonder, “India’s middle class have started traveling big time.”
Overall, it seems that the urge to travel remains strong, and the boom of revenge travel is here to stay. As Johannes Reck, founder and chief executive of Berlin-based global tour bookings platform Get Your Guide, noted, “The Covid recovery has been strong”.