Bags packed: Reuniting with lost vacations

Travel’s recovery story probably isn’t just about growth—a bit of recalibration is also necessary. Booking intentions aren’t rising across all travel segments. Private accommodation rentals, for example, have weakened considerably since early 2022 (figure 1). Throughout the pandemic, travelers gravitated to segments better suited for social distancing. As health and safety concerns fade away, pandemic travel preferences are fading along with them.

Making up for lost time

Travel intentions continue trending higher, even as Americans contend with prolonged financial challenges. And part of the reason might be how consumers are prioritizing their overall spending.

Discretionary spending intentions have weakened considerably since the fall of 2021, when inflation first began putting a strain on household budgets (figure 2). But planned spending cutbacks, however, have been deepest in categories such as restaurants, recreation and entertainment, and electronics. Spending intentions for leisure travel, however, have remained much more resilient. The prioritization of travel over other discretionary categories is further evidence that built-up demand still exists in the market.

Additionally, Americans planning to take vacations within the next three months are significantly more likely to cite a willingness to spend on upgraded travel experiences, rather than sacrifice some of their travel preferences to save on travel costs (figure 3). For US-focused travel suppliers, this sentiment perhaps shouldn’t be taken for granted. In many countries, including Spain, Belgium, Denmark, Ireland, and Brazil, savers outnumber spenders.

What’s in a trip? Many ways to adjust based on budget

Despite the many positive signals around travel spending, roughly one-quarter of soon-to-be travelers surveyed say they’re in savings mode. And this group is important to pay attention to. If economic conditions worsen, travel savers could quickly grow in number.

Figure 4 presents 10 distinct points in the travel journey (from planning to in-destination)—and illustrates where “spenders” intend to splurge and where “savers” intend to make sacrifices on upcoming leisure trips.

Following are some key takeaways:

• Lodging location is king: Consumers are less likely to compromise by staying further from the beach/city center; instead, more travelers cite a willingness to downgrade on amenities or class of lodging.
• Location in terms of destination is another high priority: More travelers would prefer to find a less popular time of year to travel than miss out on visiting the destination they want to visit. This sentiment lines up with stronger booking intentions for international travel in recent months.
• Itinerary is the “location” of aviation: When it comes to flights, soon-to-be travelers will book a lower-fare class or forego an upgrade before they will accept an inconvenient itinerary. Even savers appear to be trying to avoid those painful itineraries.
• Let me do my thing! In-destination travel activities remain a high priority for savers and spenders alike. More travelers would rein in their restaurant spending than miss out on the experiences they want to have.

After being dealt a heavy hand throughout the pandemic, airlines, hotels, and other travel suppliers face new economic uncertainties that bring the potential to weaken consumer spending confidence. But sentiment data suggests Americans are prepared to put up a fight to protect their vacations, which could help mitigate some headwinds from a potential downturn. Barring any further economic volatility, the 2023 summer season could be shaping up to be a strong one.

In the coming months, Deloitte’s 2023 summer travel survey and corporate travel study will offer further insight into consumer vacation intentions and trajectory for corporate travel’s recovery.