For example, airlines received billions of dollars in federal dollars in exchange for not laying off employees. But job cuts and acquisitions have crippled even well-run companies like Southwest Airlines. (Luv) – Get Free Reportstruggled to keep up with the increasing demand.
Colin Smyth, Flywire’s VP and General Manager of Travel, and Jon Copestake, EY Global Consumer Analyst, answered questions from TheStreet about what to expect from travel in 2023.
TheStreet: Do you see a continuing trend toward experiences over things?
Smith: In certain areas of travel, absolutely. For example, as demand for post-COVID-19 travel continues to grow, we believe there is a growing interest in experiential travel, including luxury travel, bespoke tours and adventure travel. In a survey of luxury travelers from the US released earlier this year by Flywire, 85% of those surveyed said having a personalized travel experience is what they want post-corona. increase. Our survey also found that travel as a whole has become a bigger spending priority, with 78% saying spending on travel is more important than it was pre-pandemic.
Cope Stake: What we are seeing is a long-term trend away from ownership and toward using discretionary income for more meaningful purchases, including experiences. Depending on who you are, some prefer to spend money on events, perhaps on vacations, and still others on digital experiences.
Importantly, according to the EY Consumer Index, 63% of consumers no longer feel the need to keep up with the latest fashion trends, and 50% of consumers say they already own more than they need. It’s what I feel This means that the conspicuous restraint in product consumption is likely to continue, and as disposable income recovers or increases, there will be a greater focus on services and experiences rather than simply buying ‘things’. It means that .
TheStreet: Are there any lasting changes due to the ongoing COVID-19 pandemic?
Smith: First, the role of travel agents or advisors remains important in the luxury travel sector. The same survey found that 87% of surveyed luxury travelers from the US are likely to use a travel agency in the next 18 months. 85% of those surveyed say travel agents are the best way to get a personalized travel experience.
Second, we believe the typical “peak” season extension will continue. We expect this trend to continue as various factors converge. The ambiguity of work and leisure travel post-corona and the continued reopening of major tourist destinations has led many travelers to travel beyond what would normally be their busiest travel season. We hear this from many of our clients across travel agencies, destination management companies and accommodation providers around the world.
Cope Stake: Yes, what has changed as consumers are adapting to the new normal very quickly and now in a “post-corona” but geopolitically and macroeconomically uncertain environment Consumers tend to get used to change relatively quickly, and unless they look back and see how they were behaving before the change came to their lives, the substantive change in their behavior is always difficult. We often go unnoticed for changes.
For example, over time, the world has come to rely on social media, the Internet, and smartphones as an integral part of life. It would be difficult to pinpoint the trigger, but there was clearly a big shift.
There remains a heightened susceptibility to health pandemics that was not evident before COVID. 35% of consumers remain very concerned about the potential impact of future health pandemics, and 68% intend to pay more attention to their physical health and are less likely to travel to new places. It requires more consideration when making decisions.
TheStreet: Do you think international travel to major US destinations like Las Vegas, Orlando and New York will return to normal?
Cope Stake: I think it’s difficult to say “return to normal”, but the new normal has emerged. From a consumer point of view, only 39% of consumers travel abroad by air for vacation, and 52% of consumers plan to travel domestically by car for travel. There is stagnant demand, but costs and other factors act as constraints.
Large international centers have a certain amount of resilience that their reputation as a destination brings, but a growing mindset is asking ‘why’ you need to hop on a plane rather than just the instinct to hop on a plane. I think vacation is just one factor here. Travel is also being reduced by the fact that digital connectivity has made so many meetings possible remotely.
This is greatly exacerbated by sustainability and cost reduction initiatives. Travel is likely to be one of the first easy changes for companies to reduce their carbon footprint and cost base, so there may be more headwinds in the short and medium term, but travel is necessary. Businesses and consumers will often find a way out if, for example, a significant trade event or other significant gravity factor.
TheStreet: What else do consumers and investors need to know?
Cope Stake: In general, travel and consumption intentions can vary subtly across consumer groups. Those who value affordability (25% of consumers) or the planet (25% of consumers) are much less likely to spend on travel than those who value experience (20%). Forty-four percent of those interested in affordability do not expect to be able to afford to fly in the next 12 months, while 45% of those interested in experiences are willing to spend a little more money. I have the opposite idea, hoping that it will improve my comfort level. This means that there is no “one size fits all” approach to what the consequences and impacts will be.
Another elephant in the room comes from innovation and scale. Commercial hydrogen and solar-powered air travel may be a decade away from him, but as fossil fuel prices rise, investment and interest in alternatives accelerates. These are being rapidly tried.