American desire for international travels encourages the 'travel impulse' and overall expenditure. According to new Bank of America research, American households' travel expenditure continues to outperform pre-pandemic levels, a trend fueled by a desire to travel internationally.
 |
| American Desire for International Travels Encourages Travel And Spending |
"A key part of travel momentum lies within vacationing abroad," Taylor Bowley and Joe Wadford, economists at the Bank of America Institute, said in a note Wednesday.
Overall, travel spending is slightly lower than in 2023, but it is still "much higher" than in 2019 — up 10.6% per household, according to Bank of America credit and debit card data from January to mid-August.
Us demand for international travels drives the 'travel momentum' and overall spending
International travel is "one area of continued strength," according to Bowley and Wadford.
According to a recent Conference Board survey, over 17% of Americans planned to vacation abroad in the next six months in June, up from around 14% in 2018 and 2019.
"I do expect demand to continue," said Hayley Berg, the head economist at travel website Hopper.
Decreased airfares sustain the demand for trips abroad
Over the past two years, demand for international travel has increased as countries have started to lift travel restrictions from the pandemic era and concerns about the health effects of Covid-19 have decreased.
With a financial hoard and a restless sense of travel, Americans spent lavishly.
Berg stated that this year's strong demand has been bolstered by falling foreign travel costs.
"There will be a greater demand for international travel as a result of those lower prices than there has been in the previous few years," she said.
 |
| US wealthy people splurge on travel |
For instance, Berg reported that average round-trip airfares to Europe, which is often the most popular foreign travel destination for Americans, dropped to about $950 this summer from more than $1,000 the previous two years.
Hopper's ten-year history shows that in 2022, European fares were the highest ever.
For example, a flight to Rome in the fall shoulder season currently costs approximately $600, compared to a peak of about $1,300 during the epidemic, according to Berg.
(The period of the year between the summer high season and the winter low season, typically spanning from September to November, is known as the fall shoulder season.)
According to Bank of America, 43% of American spending from May to July went to Europe. With 21% of spending, Canada and Mexico together occupied the No. 2 position.
Also Read: An AI-powered financial advisor has rapidly accumulated $20 billion in assets.
But the region with the fastest growth has been Asia: According to Bank of America, spending on the continent increased by 11% from 2023 compared to 3% in Europe. It stated that favorable exchange rates contributed to that relative strength.
Although spending on overseas travel is still high, the majority of Americans still take their vacations at home: According to a recent survey by the consulting firm McKinsey, over 68% of all journeys that begin in the United States end up staying within its boundaries.
Nevertheless, McKinsey noted that "domestic demand has softened slightly, as American travelers return abroad."
Wealthy people "splurge on travel"
Economists from Bank of America believe that households with annual incomes over $125,000 appear to be the ones spearheading the trend of foreign travel.
According to a Bank of America survey, high earners "are more resilient and continue to splurge on travel," as seen by the fact that upscale luxury hotels have "outperformed" conventional offers this summer.
According to McKinsey, the majority of "cost-constrained" passengers intend to keep traveling despite appearing concerned about an inflation increase brought on by the epidemic.
According to McKinsey, "instead of canceling their trips, these consumers are adapting their behavior by booking travel further in advance or during off-peak periods."