Inflation Staycation: Are Rising Prices Putting the Kibosh on Travel?

Inflation may be killing post-pandemic travel mojo, according to new research showing how rising costs in travel may be convincing some Americans to stay put. At the same time, Boomers and higher-income households are planning to keep traveling in spite of economic headwinds and will likely increase their spending on travel over the next year. 

This traveler dichotomy is just one of the key findings release this week as part MMGY’s 2022 Portrait of American Travelers® “Fall Edition” survey, which examines the intentions and behaviors of more than 4,500 adult survey respondents.

Inflation With Study 

The study found that overall 63% of U.S. travelers intend to take a vacation in the next six months – holding steady with figures captured earlier this summer – also marking a 10-point decrease compare to the same time last year. Among those not planning to vacation in the next six months, nearly 40% cite concerns about their financial situation or the rising cost of travel as a reason. The offsetting good news for the travel trade and product industry is that those who do plan to travel for leisure in the next 12 months plan to spend significantly more on their vacations than those survey last year at this same time ($3,785, up from $2,758 in 2021). 

According to Chris Davidson, EVP of MMGY Travel Intelligence, Boomers and higher-income households plan to spend more on travel regardless of current inflation woes, while lower-income households indicate they expect to spend considerably less on travel in the year ahead.

“With these factors in mind, we’re predicting that overall leisure travel volume may decrease somewhat in 2023 while prices will likely increase,” said Davidson. “From a hospitality perspective, we expect leisure occupancy to decrease while average daily rate (ADR) increases modestly. As a result, we’re anticipating a slight increase in revenue per available room (RevPAR) on a year-over-year basis in 2023.” 

Other key findings include: 

+ Winter Travel Planning: With the winter holidays approaching, fewer U.S. adults are planning to travel this season compare to last year, down from 42% in 2021 to 36% this year. Though a statistically significant decline, researchers anticipate that this will still be a very healthy holiday travel season for the industry but potentially down slightly from a volume perspective compare to 2021/2022.

+ Food for Thought: Culinary experiences are a high priority and disproportionately so for younger travelers. In fact, 6 in 10 Gen Zs (56%) and Millennials (61%) are influenced by the quality of the culinary scene when choosing where to stay in a destination. Regardless of how affluent travelers are, respondents in these age groups were found to generally value authentic local food and beverage experiences much more so than traditional fine-dining experiences, such as those designate as Michelin-starred restaurants.

+Recommendations Matter: Social media continues to play an important role in travel planning, especially among younger generations. Four in 10 Millennials indicate celebrities and digital content creators have a great deal of influence on their travel decisions (38%). In addition, nearly 6 in 10 Millennials have made a travel purchase base at least partially on a post by a celebrity or influencer (57%). These findings confirm that the reach and effectiveness of social media influencers remain powerful tools in today’s travel marketing landscape. 

Similarly, Passport-Photo.online took the pulse of 1000 American travelers this week and found that inflation was, indeed, creating pivots in their travel planning. 

+ Almost nine in 10 vacation-goers (88%) were muscle to downgrade their vacation plans due to inflation and soaring prices.

+ Most US travelers had to budget 11–20% more toward travel to keep their plans afloat.

+ 96% of Americans still plan to go on vacation in 2022.

+ For 85% of Americans, higher airfares made them seek alternative means of transportation when traveling this year: 75% will opt for an (electric) car.

+ 72% of vacationers are likely or very likely to (further) cut back on travel in 2022 and beyond if inflation persists.

With Air fares and hotel rates at record highs, even the price of lettuce has gone up 50%, it is no surprise that Americans are changing plans. But Americans also have a short memory and have previously weathered these swings and worse. Minimizing may not mean eliminating when it comes to travel, which has a solution for every problem. But it may mean postponing until one or more pieces of a planned vacation take a dip into more reasonable altitudes.