The End of Travel
After two years of revenge-fueled recovery, the high demand for travel may cease to exist according to new data. As countries and industries began to reopen following the COVID-19 pandemic, consumers from across the globe poured large savings dollars into travel, with pent-up demand from a long period of isolation firing the flame. Now, mass levels of inflation and growing travel costs are acting as major deterrents to a full recovery, and several countries’ tourism has depicted either stagnation or even decreases. According to Morning Consult, intentions to travel fell in both France and Germany by 11 and six percentage points, respectively. In Canada and Russia, this same statistic also fell by four percentage points. Morning Consult reiterated that the large drop in travel intentions may be more pronounced in Europe, as larger North American travel throughout the summer drove price increases higher.
Common to both high inflation and interest rates, thinner wallets and savings generally translate to an average fall in significant financial commitments. Purchases regarded as big-ticket items, such as a car, house, or even a holiday trip, become much harder to afford. For several countries around the world, record inflation has eaten into individual’s pockets, and the chances of a recession also do not go in favor of luxury goods and services. Regardless, for travel, there remains some hope for countries where pent-up demand hasn’t yet fizzled out. For instance, in Asia, relatively longer COVID restrictions for citizens mean there are still several who haven’t planned their “revenge” travel trips, with 77% of hotel owners in Asia-Pacific forecasting rises in occupancy until 2025. As the year goes on, investors should focus on end-of-the-year travel for consumers to get an idea of how big-ticket industries will be affected in the future.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
