A cold wind is sweeping through the travel market, which led the 'revenge spending' boom after the pandemic. Although the peak summer vacation season is just around the corner, travel demand has rapidly frozen, particularly in the United States, the world's largest consumer market.
Airline and hotel prices have turned downward early. Consumers are exhibiting an unusual phenomenon of postponing travel plans or turning their attention to last-minute 'bargain' products.
According to the Financial Times (FT) on the 16th (local time), the number of travelers passing through U.S. airports in the past 90 days has decreased compared to the same period last year. This is the first decline since the peak of the pandemic.
The decrease in travel demand is clearly evident in price indicators. According to the U.S. Bureau of Labor Statistics (BLS) report, airline ticket and hotel accommodation fees switched to a downward trend between April and May compared to the same period last year.
Experts in the travel industry noted, 'While it is still difficult to find tickets for certain popular routes in some countries, this is the result of an imbalanced recovery in the airline supply chain and a concentration of specific demand following the pandemic.' They analyzed that 'the macroeconomic slowdown due to demand contraction is clear, rather than an oversupply issue.'
The contraction of the U.S. travel market has considerable ripple effects on a global scale. According to the United Nations World Tourism Organization (UN Tourism), American tourists are the biggest spenders abroad. In the year 2023 alone, they spent over $175 billion (about 240 trillion won) on overseas travel, accounting for about 16% of global tourism expenditure. In Asia, American tourists made up 40% of total tourism revenue.
When these Americans start to tighten their wallets, tourist destinations worldwide, including Europe, the Caribbean, and Asia, which relied on them as major consumers, experience a chain reaction of negative impacts.
With high prices and economic uncertainty persisting, American consumers have begun to tighten their belts. They particularly cut back on travel expenditure first. An analysis of credit and debit card spending by Bank of America (BofA) showed that by May of this year, Americans' expenditures on accommodations and airfare had significantly decreased across all income levels compared to the same period in 2024.
Similar trends are being detected in major countries in Europe and Asia.
In the UK, a survey by Ernst & Young found that 54% of respondents are considering reducing or canceling their vacation plans this summer due to cost-of-living pressures. The French statistical agency Elab reported that over 70% of respondents in their poll plan to cut their vacation budget due to inflation, indicating a widespread trend of budget-conscious travel across the European continent this year.
The situation in the Asian market is more complex. Japan is bustling with foreign tourists due to the weak yen. In contrast, Japanese citizens are unable to travel abroad. The Japan Travel Bureau (JTB) projected that the number of Japanese travelers going abroad this summer would only reach about 50% of pre-COVID levels in 2019. Costs of expensive airfare and overseas prices are leading many to turn to domestic travel.
The much-anticipated recovery of the Chinese overseas travel market is also progressing slower than expected. According to the China Tourism Academy (CTA), outbound travel by Chinese individuals is expected to recover to about 80% of 2019 levels this year. However, chronic economic stagnation, real estate market instability, and complicated visa issues are leading to a clear trend of preferring domestic travel over international.
Some consumers are changing their travel methods instead of completely giving up on travel.
Eut Steinbergen, chief financial officer (CFO) of Booking Holdings, a global travel booking platform, stated in an interview with the Financial Times that there has been increased demand for 'shorter trips' or 'last-minute bookings.'
They either wait and purchase inexpensive products labeled as 'bargains' just before departure or opt for a 2-night, 3-day trip to nearby resorts by car instead of flying from New York to Europe for a vacation.
The research group Tourism Economics analyzed, 'Consumers are adjusting downwards to closer or shorter trips at home instead of canceling their travels.'