The two strongest indicators of consumer confidence are annual travel incidence and spending. The later has just reached a five-year high, and the percentage of US adults who traveled for leisure in 2014 has almost recovered to pre-recession levels. Consumers are finally treating themselves to a vacation again and are not watching every dollar spent on relaxing. Although people are traveling again, it is a new area for all involved. Additional players and channels have appeared on the market, changing the way people plan, book and take vacations.
The last time US consumers were this confident and leisure travel spending this high was around 2008, right before the big crash. In 2009, the amount of US consumers qualifying as leisure travelers dropped down to 61%. When 4 out of every ten consumers go 12 months without spending a dime on leisure travel, it has a huge effect on the travel industry. As travel pros know, the issue was not only 2009 but the following years, while we all waited for the floodgates to open back up.
It took almost five years but in 2013 we saw a huge increase and about two-thirds of the US adult population took a leisure trip in 2014. While we still have ways to go before we get back to pre- recession numbers, this is a very encouraging trend.
Top Travel Industry Trends
Millennials
While 18 - 34 year-olds are in general the demographic most likely to travel, they are not the highest spenders. But considering that over 70% of Millennials traveled in 2014 (and greatly helped the travel industry to recover after the recession) it is a demographic all of us should watch closely.
Baby Boomers
The group of 45- 64-year-olds is greatly lagging behind in terms of numbers- almost 50% of that group is skipping vacation every year. To get the number of Americans traveling incidence back to the pre-recession number of 70%, we need to get baby boomers confident enough to start spending on leisure travel again.Why People Are Not Traveling
Let’s take a look at the 3 top reasons why parts of the US population are not taking leisure trips:
- Too busy to take vacations- over 35% of Millennials are in that group.
- Financial considerations are the reason why people skip vacations.
- And a whopping 35% of people over 55 have absolutely no desire to travel.
US & Europe
One trend that is unique to the US market is the fact that traveling is not very high on people's wish list of discretionary spending. While dining, nightlife, electronics and home improvements top the list and fashion, cars are on the bottom, travel and tourism come in fifth place.For comparison in the UK, France, and Germany, travel-related spending comes in at the top spot.
When confronted with financial stress, US consumers are quick to take their vacationing out of the equation. This is why travel incidence correlates closely with the American economy.
Spending Trends
One encouraging trend we have seen in the last three years is that there is a steady climb in people spending more than 2% of their income on vacations. In 2014, the annual Household leisure travel spending was $3,441, up from $3,311 in 2013 and only $2,874 in 2012. This clearly shows a rise in consumer confidence.When that happens, we see a change in the type of vacation consumers are taking. While weekend getaways of 3 or fewer nights are down by 2% (41% to 39%), long trips (7 nights or more) are up by over 4% (30%-34%) from 2013.
Who Travels
Another positive trend we see is that family vacations (typically the most expensive trips to book) are up almost 6 % in the last four years. When family travel is up, it's another strong sign of consumer confidence.
While a little over half of US travelers vacationed as couples, a new trend emerged: 37% of Millennials traveled alone. As we see, it’s not only complex family trips that are on the rise but also solo traveling, which can be quite expensive as well.International travel went from about 28% of leisure trips taken in 2011 to about 33% in 2013, and the upwards trend continued through 2014.
Lodging Trends
Even though there is a lot of disruption and change happening in the industry, over 90% of travelers have consistently purchased some form of paid lodging over the last four years- not only once, but twice a year.Also, 4 out of 5 accommodation bookings were purchased individually and not as part of a package.
Midscale accommodations (3-star rating) lead the market by almost 40%, followed by almost 25% of luxury (4-star) and around 18% for budget motels/ hotels. Looking at the same type of accommodations travelers are a lot more likely to book 3 star lodging vs. 4 star on domestic trips ( 50/20) but the effect is almost reversed on international trips where travelers opt for more upscale hotels/ resorts.
One sector that is getting a lot of industry hype (and is the 3rd largest group of accommodation used on international trips) is the private accommodation (a rented home, condo or apartment). A stunning 25% of US pleasure travelers booked at least one private accommodation in 2014 (up from 13% in 2012 and 17% in 2013). This is a huge shift that is happening in terms of consumer awareness and what choices they are considering.
Consumer Confidence Is Rising
In conclusion, all these signs indicate that leisure travel growth will continue in the next few years. More people are planning to travel longer and further. While the year to year growth is not huge, it is a steady one. Looking towards 2016 and beyond we see the number of people wanting to take more trips as well as spend more on their trips will steadily increase. All these signs are exciting and show that the travel industry is alive and well.Want to learn more? Please sign up to our travel blog for weekly industry insight.
