High-end travellers pulling back on vacation spendingTravellers are now spending less and are demanding value for money
They want to pay no more than US$500 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 US 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 is when most people start to finalise summer plans and early birds get a jump on yearend holiday reservations.
Some 69 percent of poll participants said their maximum budget per hotel room night was US$500, while 24 percent were willing to spend up to US$1 000. Still, 5 percent set their limit at US$2 000, and 2 percent continue to entertain spending US$3 000 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 per night in April and May. In Paris that number is higher, ranging from US$707 to US$1 382. 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.
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 labor 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 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 AG, 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 percent predicting positive momentum in the sector.
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 percent of professional investors and 56 percent 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 percent say they find themselves making greener travel choices—contradicting industry reports—and 50 percent say their spending has returned to pre-pandemic levels.
For those travelers, 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 percent. A quarter said they’d possibly upgrade things one
notch. Among the 18 percent that said they would reduce spending, 72 percent were professional traders and 28 percent worked on the retail side.
— Bloomberg.
