The end of cheap summer vacations? - Luxury experiences are becoming increasingly unattainable!
The days of the so-called "revenge trips" that began after the pandemic are, in all likelihood, over. After long isolation in their home countries, but even after the pandemic ended, travelers rushed to explore the world in a "revenge" mood, sparking a major travel boom from 2022 to 2024. But after huge price increases in both tickets and accommodation, and amid new threats of tariffs, uncertainty tends to dominate the global economy.
A Bankrate summer vacation survey in March found that only 53% of Americans planned to take a vacation this summer, about the same as last year, but fewer than in 2023, when 63% planned to take a vacation. Of those who avoided traveling this year, 65% cited cost as the main factor. And of those who chose to travel, nearly a third said they planned to borrow money to make it happen.
But not everyone is feeling the same pressure. A Deloitte survey conducted in early April found that even after President Donald Trump's broad tariff announcement a few days ago, estimated summer travel budgets remained an average of 13% above estimates compared to last summer.
Through its research over the past few years, Deloitte has identified a trend: High-income Americans make up an increasingly large portion of those planning summer trips. Nearly half of respondents who said they planned to travel this summer earned more than $100,000, a 35% increase in income compared to 2023.
To meet the growing share of high-spending travelers, the luxury segment of the travel industry is outperforming any other segment. As the middle class cuts back on travel spending, many high-income earners are still spending money on their summer vacations. Companies like airlines, hotels and home rentals are still seeing “some pretty healthy financial results,” Moody’s says.
First, because prices are constantly rising, companies can increase their revenues even as demand falls. But also, wealthy people are getting richer by maintaining a strong appetite for travel.
A recent Moody's analysis estimated that the top 10% of households account for half of all consumer spending. As higher-income Americans travel and spend more, this could offset the decline in lower- and middle-income segments of the population, who are seeing prices rise too high for their wallets.
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