Even high-end travellers are pulling back on their vacation spending.
They want to pay no more than US$500 (RM2,248) a night for a hotel, and they aren’t interested in paying extra for greener or fancier options, according to the latest MLIV Pulse survey with 465 respondents, a little more than half from the United States and Canada and a quarter from Europe.
This may be a reflection of diminishing consumer confidence or complaints that inflated pricing hasn’t been accompanied by a proportionate increase in service quality.
The results come during what should be one of the busiest periods for travel booking. March to May is when most people start to finalise summer plans and early birds get a jump on year-end holiday reservations.
Some 69% of poll participants said their maximum budget per hotel room night was US$500, while 24% were willing to spend up to US$1,000 (RM4,497). Still, 5% set their limit at US$2,000 (RM8,995), and 2% continue to entertain spending US$3,000 (RM13,492) per night or more. Respondents include traders, portfolio managers, senior managers and retail investors.
Although US$500 to US$1,000 per night for a room might sound high, that range eliminates the fanciest hotels in most major markets, let alone suites or larger rooms at mid-tier properties.
According to data from Google, typical prices for five-star hotels in New York City are US$523 to US$999 (RM2,352 to RM4493) per night in April and May. In Paris that number is higher, ranging from US$707 to US$1,382 (RM3,179 to RM6,215). In St Barts, where late spring constitutes the tail end of the season, the typical price range for a top-end hotel stretches up to US$1,451 (RM6,525).
The results of the survey suggest that luxury hotels, restaurants and airlines will face increasingly irritated consumers this summer.
Bank failures, fast inflation, elevated mortgage payments and a softening labour market, especially in high-income sectors such as tech, could see tourists keep discretionary spending in check. Travellers are watching their wallets, even after personal incomes (in the US) rose faster than prices in the 12 months through February.
Limited appetite for excessive spending will probably also make some travellers balk at elevated airfares. Some airlines, like Deutsche Lufthansa, deliberately kept capacity in check, hoping pent-up, price-agnostic tourists would be willing to pay through their noses to get to desired destinations.
More than half of professional investors said negative economic factors, such as a recession, will undermine airline stocks in the next 12 months. Retail investors were more optimistic, with 60% predicting positive momentum in the sector. European respondents were more likely to see positive drivers for airline shares than US and Canadian ones.
Another trend busted by the findings of the survey is the continued growth of “bleisure” travel, in which travellers tack vacation days onto a work trip to enjoy their business destination at leisure; 62% of professional investors and 56% of retail investors said this isn’t something that they’re doing more of this year.
It may not be surprising to see that retail investors have more ongoing flexibility for remote work than banks and Wall Street firms, but it’s noteworthy that both groups are generally staying away from extended absences. In fact, a majority of respondents say their habits have recalibrated to pre-pandemic norms overall.
Only 10% say they find themselves making greener travel choices – contradicting industry reports – and 50% say their spending has returned to pre-pandemic levels.
For those travellers, the days of so-called revenge spending as the pandemic passes are over, if they happened at all.
The number of people “splashing out” on their next vacation was exceedingly small: 7%. A quarter said they’d possibly upgrade things one notch. Among the 18% that said they would reduce spending, 72% were professional traders and 28% worked on the retail side.
One facet of travel that’s remained unchanged since 2019 is consumer sentiment about major aviation hubs. When asked which airport they dread the most, respondents coalesced around New York’s John F. Kennedy International Airport and London’s Heathrow, followed by Los Angeles International and Newark Liberty International Airports.
And an electric flying taxi seems far in the future, if ever. Almost half of respondents said they think they will fly in one from 2030 onward, while 37% said never. – Bloomberg