Travel is viewed as the highest priority discretionary spend category for the coming 12 months, revealed a study by travel tech company Amadeus. In the ‘Consumer travel spend priorities 2022‘ report, 4,500 consumers in France, Germany, the UK, the US and Singapore were surveyed on their spending forecast for the next twelve months.
Consumers confirmed their desire to travel despite economic uncertainty, with ‘international travel’ as the highest priority from a selection of six discretionary spending categories. Forty-two percent of respondents said international travel is a priority spending area for the coming year, well ahead of fashion, restaurants and big-ticket items such as home improvements.
Consumers are willing to forgo spending in other areas of their lives in order to travel this year.David Doctor, Executive Vice President of Payments, Amadeus
Individuals are prioritizing international travel (42%) more than any other areas, far higher than dining (27%) and shopping (25%), and even buying a new car (20%).
- International travel (e.g. holidays) 42%
- Domestic travel 32%
- Online subscriptions (e.g. Netflix or Amazon Prime) 28%
- Eating out (e.g. restaurants) 27%
- Fashion (e.g. new clothes) 25%
- Big ticket items (e.g. new car or home furnishings) 20%
On average, consumers estimate they will spend 2,670 euros on international travel over the next 12 months, which is in line with what they spent in 2019, 2,780 euros on average. Many travelers plan to spread spending over installments, reducing exposure to costly foreign exchange (FX) transactions and drawing on previously earned loyalty points.
“This study clearly shows that consumers are willing to forgo spending in other areas of their lives in order to travel this year. But this is not the end of the story. The industry will need to look at ways in which financial technology can make travel costs more transparent, as well as help travelers manage their spending,” said David Doctor, Executive Vice President, Payments, Amadeus.
In the face of economic uncertainty, travelers are embracing fintech to reduce the cost of international payments and finance their trips with flexibility.
Three-quarters of respondents (75%) said they are more likely to choose an installment payment option, such as ‘Buy Now, Pay Later,’ to finance their travel over the next year. This compares to 44% who are more likely to use a credit card, and 26% who are more likely to turn to payday loans, where short-term loans often carry high interest rates. Forty-seven percent of travelers say they plan to spend their previously earned loyalty points to pay for travel.
Travelers are also embracing new financial technology options: 48% are more likely to try multi-currency prepaid debit cards to avoid foreign exchange fees when paying abroad, and 49% say they are now interested in co-branded cards that give loyalty points.
In the current environment, 73% of travelers say they are more likely to pay attention to foreign exchange fees and commissions associated with international travel and 56% are more likely to choose a travel provider that allows them to pay in their own currency, with transparent exchange rates.
“Demand for flexible payment options such as ‘Buy Now, Pay Later’ in travel is high. The industry is eager to meet this demand, but it must do so responsibly, with thorough risk management. Travelers are adapting to limit travel costs,” said David Doctor.