According to a recent study, nearly 20% of travelers will not go on a vacation this year, with financial concerns being the leading reason; nearly 1 in 3 are willing to pay more for sustainable options
[June 26, 2023] –The recent Travel Trends 2023* study by global consultancy Simon-Kucher reveals that nearly one in five consumers will not go on vacation this summer, largely due financial constraints – the cost-of-living crisis is driving consumers to prioritize essential expenses and avoid traveling during the peak season. The study, which surveyed nearly 5,000 consumers across seven countries, also revealed that 41 percent of travelers are booking their holidays well in advance. Among this ‘early bird’ segment, more than one-third are driven by fear of inflation of prices.
“We’re at an interesting intersection in the travel industy – on the one hand, consumers are still very keen to travel and experience holidays, following two years of a pandemic that restricted them to do so; on the other hand, the cost-of-living crisis is starting to hinder their ability to spend on travel,” says Dimitris Hiotis, Partner at Simon-Kucher. “For travel providers, the heightened willingness to travel will help them have a good summer financially, but they need to start thinking of putting attractive offers and offer good value for money to consumers, as cost pressures, further compounded by increasing interest rates, will hit customers’ wallets and willingness to spend in the near term.”
Leisure travel budgets are growing, but spending is becoming more deliberate
While financial concerns are the leading driver for those who do not plan to book a vacation this summer, overall the number of lesiure travelers who indicate they will not go on a holiday this year (17 percent) has reduced compared to the previous two years (25 percent in 2022 and 31 percent in 2021). Globally, consumers in the UK and the Netherlands are the most likely to have already booked or plan to book a holiday this summer, whereas consumers in the USA are least likely to. Across all markets, travelers indicate that they are opting to book more personalized vacations, rather than all-inclusive trips. While there is a general rise in splurge travelers (travelers who plan to spend more than they did in the previous year), the growth is much more dominant among those who book personalized trips.
On average, consumers who will be traveling are expecting to spend eight percent more on their 2023 holiday than they spent on their 2022 holiday – this is most prominent in the UK (17 percent increase in spending) and the US (21 percent increase in spending). To offset inflationary concerns, travelers are expecting to spend more on essentials like food and beverage, but relatively less on discretionary purchases like souvenirs.
Business travel is slowing down and trips are getting shorter
Rising costs are putting a strain on business budgets -- around 20 percent of business travelers are choosing not to travel for work, while those who do travel are opting for shorter work trips. Nearly two out three of businesses encourage their employees to travel by train instead of plane when possible. This indicates that sustainability is a key priority for busienss as well as consumers when it comes to travel.
Sustainable travel is taking off
With sustainability becoming the norm rather than the exception, a clear shift towards sustainable travel is evident. Along with a a general preference to travel by train instead of by plane or car, many respondents indicated that they are willing to sacrifice an increase in journey time to do so (30 percent say they prefer train irrespective of journey time) -- however, this trend is most prevalent in younger and wealthier respondents.
Despite increasing prices, some consumers are also willing to spend more on sustainable holidays -- a sentiment most prominent amongst consumers in the UAE. Across all regions, a larger percentage of consumers are willing to pay more for more sustainable accommodation (50 percent), dining (52 percent), and flights (43 percent), but less so on smaller ticket items like activities/excursions (27 percent) or shopping (21 percent). However, there is limited enthusiasm for paying for carbon emission charges on flights – Spanish consumers were the most in favour of paying a compulsory emissions charge to cover thecarbon emissions while flying, while US consumers are the least supportive.
Complete study findings are available upon request, including country splits.
*About the Study: The Travel Trends Study was conducted during May 2023 by the global consultancy Simon-Kucher & Partners. 4,825 consumers from across seven countries (France, Germany, Netherlands, Spain, the UAE, the UK, and the US) were surveyed on leisure and business travel.
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