US travel spending has fallen for three months in a row, the first time that’s happened in a decade.
The Independent reports that more than one-half of Americans (56%) say they intend to travel less this summer, largely due to financial worries. Many said they’re exchanging foreign visits for shorter, domestic trips.
The report also said the average US holiday budget has dropped a full 25%, falling from USD $4,199 last year to just $3,132 this year.
“Travel has been weaker this year compared to prior years,” Taylor Bowley, an economist at Bank of America, told Skift. “If you think about over the past few years, people have talked about revenge spending, revenge travel, ‘I’m going to take that trip.’ And we’re seeing services spending drop for the third straight month, and that hasn’t happened in our data for over 10 years.”
“we’re seeing spending drop for the third straight month, and that hasn’t happened in our data for over 10 years.”
“There are some households that are pulling back completely from travel,” Liz Everett Krisberg, head of the Bank of America Institute, said on CNBC.
On the surface, it’s not particularly welcome news for advisors. But Krisberg suggested there’s a shiny, silver lining.
“The pullback really is predominantly with the lower-income household,” she said.
Canada Holding Steady
A recent TD Bank report said tourism spending in Canada is expected to grow in the modest range of 2-4% in 2025.
“American spending is set to exert a drag on the overall tally this year. U.S. visits are falling amid trade tensions and economic uncertainty, with cross-border spending projected to decline by 5-10% this year,” the bank said. “However, lower U.S. spending is expected to be offset by a rise in Canadian domestic tourism outlays as many residents redirect all or part of their travel budgets to the home market.
“Moreover, spending by non-U.S. international tourists in Canada is also likely to turn in a gain, even if only slight.”
Luxury Travel Boom
A recent report by Allied Market Research said the global luxury travel market size was valued at USD $890.8 billion in 2023 and is projected to reach $2149.7 billion by 2035, growing at a compound annual growth rate of 7.4% from 2024 to 2035.
“Travellers are opting for unique and exotic holiday destinations, to get away from daily hectic schedules and to gain valuable experiences,” the report said. “Private, quiet, serene, and exotic locations are major factors that people consider while choosing their travel location.
“Private islands have been voted as a top preference by luxury travellers.”
Airlines have clued into the luxury trend. Delta’s chief executive has been talking for some time about boosting premium cabins, where demand is considerably stronger than it is at the back of the plane. And Virgin Atlantic recently announced major onboard changes to come where bars and lounges will be replaced by large suites. All points to a thinning out of the back of the bus.
