Around the world, consumers are prioritising holidays in their household budgets and many are prepared to spend a little more on affordable luxuries, according to research from the World Travel Market.
During the pandemic, household spending tended to be on white goods such as fridges and washing machines, as well as home-improvement items as home offices became the norm.
The end of the pandemic sparked a frenzy of holiday activity, and consumers were prepared to splash out on luxury vacations after being locked down for months in some countries.
"After the pandemic and restrictions on travel, many wanted to upgrade their experiences ... as consumers proactively catch up on missed tourism experiences," said the WTM report, which was compiled in association with Oxford Economics.
The combination of savings built up during lockdowns with low unemployment in most countries unleashed millions of holidaymakers with a lust for travel and extra cash on the hip, a phenomenon being called "revenge travel" in the industry.
In recent times, economic considerations such as rising inflation and interest rates have reduced demand in some sectors of the holiday market, but luxury travel remains buoyant.
“Consumers unaffected by economic downturns are likely to continue opting for luxury destinations," the report said.
“Meanwhile, those in lower income groups might increasingly feel the impact of squeezed personal incomes and seek out more budget travel options or reduce their travel overall.”
'Insatiable demand'
But it's not all a bed of roses. The report points to concerns ranging from the high levels of sterling and the euro, which have affected European destinations attracting US consumers, rising oil prices caused by geopolitical tensions and conflict and a staff shortage in the global travel industry after the pandemic.
Nonetheless, the report claims the higher costs associated with these worries "have not yet been a significant deterrent to growth and travellers appear willing to pay higher prices”.
One of the report's authors, Dave Goodger from Tourism Economics, said the “findings show how consumers have a seemingly insatiable demand for travel despite a complex economic backdrop".
This demand is illustrated by evidence that consumers are prepared to pay more for comfort and new experiences.
“We are witnessing a remarkable resilience as people are still prioritising travel and many are seeking ‘affordable luxury’, such as higher rated accommodation or premium economy and business cabins instead of economy," said Juliette Losardo, exhibition director at WTM London.
“This offers those in the travel industry a chance to help consumers who want simple travel hacks to get more bang for their buck, such as being more flexible with departure dates or finding destinations that offer better value for money.
“Savvy travel firms can capitalise on this tendency for consumers to value comfort over saving money by providing top tips for clients, loyalty schemes or added extras, for example,” she added.
Overall leisure travel in 2024 is expect to be robust, according to the WTM report, and the long-term prospects are good.
By 2033, global leisure travel spending is expected to be more than double that reached in 2019.
One important element in achieving that will be a significant increase in household incomes in China, India and Indonesia, meaning that budgets will be able to stretch to include international travel.
Destinations expected to benefit most from the increase in international travel over the next 10 years include Jordon, where the value of inbound tourism is expected to grow by 104 per cent, and Tunisia, where it's predicted to growth by 105 per cent.
