Here’s the good news: Americans are more confident about taking a vacation this summer.
The bad news? An improved economy does not mean a more open wallet.
The annual Vacation Confidence Index commissioned by Allianz Travel Insurance found that U.S. travelers are feeling better about taking time off for traveling, but the rise in millennial travelers means that the average planned budget is down overall.
In 2015, just shy of one in five (19%) Americans who say a vacation is important to them are not confident that they’ll take a vacation, meaning that the vacation deficit is down by 2 points since last year and 5 points since 2013.
A thin majority of Americans remain confident that they’ll take a travel break in 2015, compared to 36% who are not confident. One in 10 has already taken a vacation, while 3% simply aren’t sure.
While wealthy travelers never really stopped taking pleasure trips during the great recession that began in the Bush years, many further down the income scale put it off. Now that unemployment is almost down to almost half of what it was at its peak last decade and 2014 was the best year for job growth in 15 years in the USA, vacation confidence keeps rising.
The much-hyped rise in the spending power or traveling millennials is looking to have only a limited impact on the luxury segment in the near term, however. These 18-34 travelers are very confident in their vacation plans, but are also the most frugal. They are also the most likely group, the survey found, to use “sharing economy” players such as AirBnB, Uber, and Feastly instead of traditional hotel chains, car services, and restaurants.
Many of the free-spending millennial travelers that have flocked to upscale boutique hotel groups such as Grupo Habita, Vik, and W in Latin America have been from Latin America rather than the USA. There’s a headwind there too though: the local currencies are way down in Brazil, Colombia, Argentina, and Mexico giving young travelers in those countries less spending power where rates are listed in dollars.
Overall though, people are obviously still concerned about value across the board. Does that mean they won’t spring for a luxury hotel or a a high-end tour that offers something exclusive or unique? Probably not. They just want to make sure they’re getting something special for that outlay, not a routine series of tour stops they’ve already seen a hundred times on Instagram.
Travelers with the means will pay for true pampering and the feeling that they’re doing something special. So the industry should probably respond to surveys like this by exceeding expectations, not just cutting services in order to compete for the budgets of the masses. And it’s time to drop those outdated and annoying WiFi fees once and all. (Yes, that means you Four Seasons.)
Of course there’s no point in being frugal or chopping $50 off your vacation budget if that vacation gets ruined by lost luggage, canceled flights, or a medical emergency in a foreign country. Get some peace of mind with the Vacation Confidence Index study’s sponsor and see travel insurance options here.
Disclosure: Allianz is an advertising partner of Luxury Latin America. As always, they have no editorial control and all opinions are our own.