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Travel spending amongst American households continues to outpace its pre-pandemic levels, a trend underpinned by a zeal for international trips, based on recent Bank of America research.
“A key a part of travel momentum lies inside vacationing abroad,” Taylor Bowley and Joe Wadford, economists on the Bank of America Institute, wrote in a note Wednesday.
Overall, travel spending is down barely from 2023, yet it stays “much higher” than 2019 — up by 10.6% per household, they wrote, citing Bank of America credit and debit card data from January to mid-August.
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International travel is “one area of continued strength,” Bowley and Wadford said.
About 17% of Americans said in June that they intended to vacation abroad in the course of the next six months, up from roughly 14% in 2018 and 2019, based on a recent Conference Board survey.
“I do expect the demand to proceed,” said Hayley Berg, lead economist at travel site Hopper.
Lower airfares underpin international travel demand
Demand for international travel surged over the past two years as Covid-19-related health fears waned and countries began dropping their pandemic-era travel restrictions.
Americans spent zealously amid pent-up wanderlust and a stockpile of money.
Falling prices for international airfare have helped underpin high demand this yr, Berg said.
“Those lower prices are definitely going to drive some incremental demand for international [travel] more so than what we have see the last couple years,” she said.
For instance, average round-trip fares to Europe — generally the most well-liked international destination for U.S. tourists — declined to roughly $950 this summer, down from greater than $1,000 the prior two years, Berg said.
European fares in 2022 were the very best on record, based on Hopper data, which matches back a decade.
A flight to Rome in the course of the fall shoulder season is now about $600, down from a pandemic-era peak of roughly $1,300, for instance, Berg said.
(The autumn shoulder season is the time of yr between the summer high season and the winter low season, normally from September to November.)
Europe accounted for the majority of Americans’ spending from May to July, at 43%, based on Bank of America. Canada and Mexico combined held the No. 2 spot, at 21% of spending.
Nevertheless, Asia has been the fastest-growing region: Spending on the continent jumped 11% relative to 2023, in comparison with 3% in Europe, Bank of America said. Advantageous exchange rates played into that relative strength, it said.
While international travel spending stays robust, most Americans are still vacationing domestically: About 68% of all trips that start within the U.S. remain inside its borders, based on a recent evaluation by the consulting firm McKinsey.
That said, “domestic demand has softened barely, as American travelers return abroad,” McKinsey wrote.
High earners ‘splurge on travel’
Higher-income households — those earning greater than $125,000 a yr — appear to be driving the international-travel trend, based on Bank of America economists.
High-end luxury hotels have “outperformed” standard offerings this summer, suggesting high earners “are more resilient and proceed to splurge on travel,” the Bank of America report said.
While “cost-constrained” travelers appear to be nervous by a pandemic-era spike in inflation, most plan to proceed traveling, McKinsey said.
“As an alternative of canceling their trips, these consumers are adapting their behavior by traveling during off-peak periods or booking travel further upfront,” McKinsey wrote.
