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New research from Bank of America shows that travel spending by U.S. households continues to exceed pre-pandemic levels, a trend underpinned by enthusiasm for international travel.
“A key part of the travel dynamic is vacationing abroad,” U.S. Bank Institute economists Tyler Pauley and Joe Wadford wrote in a report. notes Wednesday.
Citing credit and debit card data from Bank of America from January to mid-August, they wrote that overall, travel spending was down slightly from 2023 but was still “much higher” than in 2019 – up 10.6% per household. .
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Bowley and Wadford said international travel was “one of the areas that continues to be strong”.
According to a recent survey by The Conference Board, about 17% of Americans said they intend to vacation abroad in the next six months, compared with about 14% in 2018 and 2019.
“I do expect demand to continue,” said Hayley Berg, chief economist at travel website Hopper.
Lower airfares support international travel demand
International travel demand has surged over the past two years as health concerns related to Covid-19 subsided and countries began lifting pandemic-era travel restrictions.
Americans are fueled by a pent-up desire to travel and plenty of cash, fueled by a spending spree.
price drop International air tickets will help support high demand this year, Berg said.
“Lower prices will certainly drive increased international (travel) demand compared to past years,” she said.
For example, Berg said the average round-trip airfare to Europe, typically the most popular international destination for U.S. tourists, dropped to about $950 this summer, down from more than $1,000 in the previous two years.
According to Hopper data from ten years ago, European ticket prices will hit an all-time high in 2022.
For example, Berg said airfare to Rome during the fall shoulder season is currently about $600, down from a pandemic-era peak of about $1,300.
(The fall shoulder season is the time of year between the peak summer season and the low winter season, usually from September to November.)
Europe accounted for the bulk of Americans’ spending between May and July, accounting for 43%, according to Bank of America data. Canada and Mexico combined ranked second, accounting for 21% of spending.
However, Asia has been the fastest growing region: Bank of America said spending on the continent was up 11% compared to 2023, while Europe was up 3%. Favorable exchange rates play into this relative advantage, the report said.
While international travel spending remains strong, most Americans still vacation domestically: About 68% of all trips originating from the United States still vacation within the United States, according to one survey. recent analysis Courtesy of McKinsey & Company.
Still, “domestic demand weakened slightly as U.S. tourists returned home,” McKinsey wrote.
High-income earners “spend money on travel”
Bank of America economists said high-income households (those making more than $125,000 a year) appear to be driving international travel trends.
Bank of America reported that high-end luxury hotels “outperformed” standard hotels this summer, suggesting that high-income earners are “more resilient and continue to splurge on travel.”
McKinsey said that while “cost-constrained” travelers appear concerned about soaring inflation during the pandemic, most plan to continue traveling.
“Rather than canceling trips, these consumers are adapting their behavior by traveling during off-peak periods or booking travel in advance,” McKinsey wrote.
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