Home Hospitality Holiday Travel Demand is Slowing Amid Economic Concerns

Holiday Travel Demand is Slowing Amid Economic Concerns


According to the 2022 Deloitte Holiday Travel Study, as a worsening economic outlook and concerns over travel disruption loom, travel demand is slowing. Key takeaways from the report include:

  • Inflation will likely curb holiday shopping habits. Holiday spending is flat year-over-year with an average of $1,455 per household, but consumers plan to purchase fewer gifts (nine gifts versus 16 gifts in 2021) for family and friends.
  • As consumers aim to keep the holidays festive, they will likely pull back on non-gift purchases (down 12 percent year-over-year), and shift spending to experiences (up 7 percent year-over-year).
  • Low-income earners plan to spend 25 percent more than last year, while high-income earners plan to cut back 7 percent.
  • Travel demand slows, with less than one-third (31 percent) of U.S. adults planning to travel between Thanksgiving and mid-January, down from 42 percent in 2021.
  • Flexible work schedules continue to help laptop luggers takeoff. Those planning to do some work during their holiday travels are taking more trips and extending their trips by an average of eight days.

The continued impact of inflation and a shift in consumer priorities are set to define the 2022 holiday season, as consumers look for ways to make the season merry and bright. While many U.S. adults feel the pinch of higher prices, they may be evaluating how they spend money overall between socializing, gift-giving, and travel. For 37 years, Deloitte has studied consumer behavior and sentiment ahead of the crucial holiday shopping season. This year’s report, the 2022 Deloitte Holiday Retail Survey, examines what retailers can likely expect from consumers shopping for the holidays. With the current economic sentiment, Deloitte also explores holiday travel intent to help provide a complete spending picture this holiday season in the complementary report, 2022 Deloitte Holiday Travel Survey.

For both studies, Deloitte surveyed 4,986 consumers online between September 6-14, 2022. From that group, 1,540 respondents who noted they would take a leisure trip this season and stay at paid lodging or with family or friends qualified as holiday travelers. For the holiday retail survey, Deloitte also polled 40 retail executives across categories, of which 93 percent were from retailers with annual revenues of $1 billion or more, conducted September 1-13.

Inflation is taking its toll for the second consecutive holiday season in a row. More than one-third of U.S. households (37 percent) say their financial situation is worse than last year, and 41 percent expect the economy to weaken next year, compared with 33 percent in 2021.

After pulling back last year, lower-income groups (those making less than $50,000 per year) plan to spend an average of $671 this holiday season, an increase of 25 percent year-over-year and similar to 2019 levels. Conversely, spending by higher-income earners (those making $100,000 or more per year) is expected to decline 7 percent year-over-year to an average of $2,438 as they pull back on categories like electronics. Overall, consumers plan to maintain spending levels year-over-year by prioritizing shared experiences and cutting back on the number of gifts purchased.

  • Inflation will likely impact consumers’ spending this holiday season, for both those planning to spend more and those planning to spend less. When asked about the reasons for the change in year-over-year spending plans, 51 percent of those spending more attributed it to higher costs (versus in 2021) as did 66 percent of those spending less, similar to 2021 (67 percent).
  • Spending on experiences, which includes entertaining at home and socializing away from home, is expected to increase 7 percent year-over-year to $575 per household.
  • Spending on gifts is nearly the same year-over-year at $507 per household, though consumers plan to purchase fewer gifts.
  • Retail executives are more optimistic, with 77 percent expecting holiday sales to increase year-over-year.
  • With consumers planning to wrap fewer gifts, they will spend less time shopping (5.8 weeks versus 6.4 weeks last year), visit fewer websites and apps (9.1, compared to 11.1 in 2021), and visit fewer stores (5.9, down from 6.6 in 2021).
  • Prompting shoppers to get a head-start on holiday deals, 60 percent of retailers surveyed say their companies will start holiday promotions at least one to two weeks earlier than last year.
  • Amid higher prices and supply chain concerns, gift cards are becoming the go-to gift, prompting an average spend of $252 this year, up 7 percent from 2021.
  • Gifting resale items continues to be a key cost-saving strategy as consumers look for ways to maximize spending: 32 percent of shoppers plan to buy resale items, and nearly half of surveyed retail executives (48 percent) will sell refurbished or used products this season.

With pandemic anxieties waning, consumers continue to warm up to in-store shopping but are not ready to give up the convenience of shopping online. This preference for digital is also driving increased interest in social media and advanced technologies for holiday purchases.

  • The share of in-store spending is expected to rise to 35 percent in 2022 (up from 33 percent in 2021), which is nearly on par with the 36 percent seen in 2019.
  • Online continues to be a holiday shopping mainstay, holding steady with a 63 percent share. Further, the use of smartphones for online holiday shopping is steadily rising, from 52 percent in 2019 to 56 percent in 2022.
  • Consumers continue to value convenience for their holiday shopping, citing online (56 percent) and mass merchants (49 percent) as the most preferred retail formats. This year, grocery stores will likely see a boost in traffic (24 percent in 2022, compared to 19 percent in 2021).
  • As digital-native generations gain purchasing power, social media continues to grow as a resource for shoppers. More than one-third (34 percent) plan to use social media for holiday shopping, and this is even higher for Gen Z (60 percent) and Millennials (56 percent). Further, 30 percent of holiday shoppers follow influencers for product recommendations, up from 24 percent in 2021.
  • Future-minded consumers are exploring non-traditional platforms, with more shoppers (35 percent versus 25 percent in 2021) planning to use technologies like cashier-less stores, live/interactive video streaming, shoppable content, and “buy now” buttons on social media.

While empty shelves and shipping delays were frequent last holiday season, retailers are more confident about inventory levels. However, amid inflation, brand loyalty may be harder to capture as lower prices and better availability will likely lure shoppers away from their standby brands and retailers.

  • More than three-quarters of shoppers (77 percent) expect stockouts this season. However, retail executives are more optimistic. More than half (60 percent) are comfortable with the volume of holiday merchandise ordered, and all surveyed (100 percent) anticipate receiving their holiday inventory on time—versus 57 percent who reported the same in 2021.
  • The holiday shopping season continues to pull forward, with 23 percent of holiday budgets spent by the end of October, compared to 18 percent in 2021. Early shoppers are doing so to help ensure timely delivery (42 percent) and avoid stockouts (41 percent).
  • Though the season is moving up, nearly half (49 percent) of holiday shoppers plan to participate in Thanksgiving week events, up from 47 percent in 2021. Three in 10 holiday shoppers plan to spend on Black Friday (29 percent versus 25 percent in 2021), and Cyber Monday (30 percent versus 27 percent in 2021).
  • More than half of consumers (60 percent) will trade brands if their preferred brand is not in stock, and they will check stock availability before making a shopping trip. Nearly two-thirds (65 percent) will trade brands if prices are too high.

“High prices have holiday shoppers prioritizing their purchases, but there are bright lights throughout the season. Lower-income families feel more confident heading into the holidays, younger generations are embracing new retail formats, and retailers do not anticipate the issues with stockouts we saw last year. As consumers aim to be strategic about their purchases to outsmart inflation, retailers who can be flexible to meet consumers where they are will be more likely to build loyalty and profit from the holiday season and beyond,” said Nick Handrinos, vice chair, Deloitte LLP, and U.S. retail, wholesale and distribution, and consumer products leader.

As U.S. adults reevaluate their spending for this holiday season, more are planning to stay home, with both financial concerns and travel issues, including flight delays and cancellations, weighing on their decisions. Less than one-third (31 percent) plan to travel between Thanksgiving and mid-January, down from 42 percent a year ago. For those who will travel, reuniting and spending time with loved ones is the biggest motivation to travel in 2022.

  • This season will see 15 percent of U.S. adults planning to travel on Thanksgiving weekend; 14 percent plan to travel between Christmas and New Year’s.
  • Financial considerations (selected by 37 percent of non-travelers as a reason not to travel) are this season’s most significant drag on travel demand, and 1 in 5 of respondents who are staying home cite worries about travel disruption.
  • Of those planning to travel, 3 out of 4 plan to spend the same or less than they spent in 2021. This year’s average holiday travel budget (including transportation and lodging costs) will reach $1,287.
  • Thanksgiving will be the busiest time for travel, but the trips are short: 8 out of 10 trips during Thanksgiving will be one week or shorter. While only 10 percent of holiday trips are planned for early January, nearly half of those will be longer than a week.
  • Nearly half of holiday travelers (46 percent) plan to take a flight, up from 37 percent last year. Given the drop in overall travel demand, the share of total U.S. adults taking a flight (14 percent) will be similar to 2021 (15 percent). More than a quarter (29 percent) plan to fly domestically, and international travel is up seven percentage points from last year.
  • Among travel product categories, lodging demand will see the biggest dip, with 59 percent of holiday travelers planning to stay with friends or family. More than one-third (35 percent) will stay at a hotel (down from 37 percent in 2021), and 15 percent will book a private rental (down from 17 percent).
  • Older U.S. adults, who were more enthusiastic for travel after the pandemic conditions improved, are once again staying home. Only 22 percent of U.S. adults 55 and older plan to travel, down from 36 percent in 2021. Older U.S. adults are more affected by concerns about delays and cancellations than younger U.S. adults.
  • Laptop luggers’ zest for travel continues as more than a quarter of travelers (26 percent) intend to work on their longest trip of the holiday season. Those planning to do some work during their vacations take more trips (2.4 versus 1.6 for disconnectors).
  • Younger age groups, including 18-34-year olds (37 percent) and 35-54-year olds (27 percent), are more likely to work on their trips. However, laptop lugger behavior is more similar across income groups: 30 percent for middle-income travelers, 27 percent for lower-income travelers, and 23 percent among higher-income travelers.

“Despite facing economic headwinds and highly anticipated travel delays and cancellations, many travelers are destined to make the most of the season. While fewer will travel, those who will take to the roads and skies will likely spend more than last year. In addition, flexible work schedules continue to offer laptop luggers the opportunity to extend trips and experience more on their journeys. As the travel industry prepares for a weaker holiday season, providers who focus on the customer experience and the needs of those who do venture out will be set to shine throughout the holidays and into the new year,” said Mike Daher, vice chair, Deloitte LLP and U.S. transportation, hospitality, and services non-attest leader.



Source link

Previous articleCapital Tacos Appoints Joel Bulger as Brand’s First Chief Marketing Officer
Next articleWaffle Irons and Personalized Delivery Service Provided at No Cost with Golden Malted – America’s #1 Demanded Waffle