Demand for international travel drives travel momentum and spending

According to new research from Bank of America, U.S. household travel spending continues to exceed pre-pandemic levels, a trend supported by a fervor for international travel.

“A major part of the travel momentum lies in vacations abroad,” Taylor Bowley and Joe Wadford, economists at the Bank of America Institute, wrote in an article. remark Wednesday.

Overall, travel spending is down slightly from 2023, but remains “much higher” than in 2019 – an increase of 10.6% per household, they wrote, citing Bank of America credit and debit card data America from January to mid-August.

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International travel is “an area of ​​continued strength,” Bowley and Wadford said.

About 17% of Americans said in June they planned to vacation abroad in the next six months, compared to about 14% in 2018 and 2019, according to a recent Conference Board survey. A

“I do expect demand to continue,” said Hayley Berg, chief economist at travel site Hopper.

Demand for international travel has soared over the past two years as health fears related to Covid-19 eased and countries began dropping their pandemic-era travel restrictions.

Americans spent money diligently amid pent-up wanderlust and a stash of cash.

Falling prices for international airline tickets have contributed to high demand this year, Berg said.

“Those lower prices will certainly stimulate increasing demand for international products [travel] even more so than what we have seen in recent years,” she said.

For example, average round-trip fares to Europe — generally the most popular international destination for American tourists — fell to about $950 this summer, down from more than $1,000 the previous two years, Berg said.

According to Hopper data going back a decade, European rates in 2022 were the highest ever.

A flight to Rome during the fall season now costs about $600, down from a pandemic-era peak of about $1,300, for example, Berg said.

(The fall shoulder season is the time of year between the high season in summer and the low season in winter, usually from September to November.)

According to Bank of America, Europe accounted for the largest share of US spending from May to July, at 43%. Canada and Mexico tied for second place, with 21% of spending.

However, Asia is the fastest growing region, with spending on the continent up 11% from 2023, compared to 3% in Europe, according to Bank of America. Favorable exchange rates played a role in that relative strength, the report said.

While international travel spending remains robust, most Americans still vacation domestically: About 68% of all trips that start in the U.S. stay within U.S. borders, according to a study recent analysis from consultancy firm McKinsey.

That said, “domestic demand has weakened somewhat as American travelers return abroad,” McKinsey wrote.

Higher-income households — those making more than $125,000 a year — appear to be driving the international travel trend, according to economists at Bank of America.

High-end luxury hotels “outperformed” mainstream offerings this summer, suggesting high earners are “more resilient and continue to spend on travel,” the Bank of America report said.

Although “cost-constrained” travelers appear concerned about the pandemic-era inflation spike, most plan to continue traveling, McKinsey said.

“Rather than canceling their trips, these consumers are adjusting their behavior by traveling during off-peak times or booking trips further in advance,” McKinsey writes.