When Amadeus set out to understand consumers’ current spending habits, the travel tech company discovered that travel is viewed as the highest priority discretionary spend category for the coming 12 months.
Despite the economic uncertainty and chaos in airports, majority of the 4,500 respondents from France, Germany, the UK, the US and Singapore signalled their desire to travel. International travel topped the chart in a list of six discretionary spend categories.
Consumers are prioritising 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% |
The consumers surveyed estimate that they will spend an average of US$2,670 on international travel over the next 12 months, slightly lesser than the average in 2019 which stood at US$2,780.
“Consumers are prepared to forego spending in other areas of their lives to accommodate travel this year,” David Doctor, executive vice president, payments, Amadeus, said. “But that’s not the end of the story. The industry will need to look for ways that fintech can make travel costs more transparent as well as help travellers manage their spend.”
To lessen the financial burden in an economically unstable landscape, many travellers indicate that they plan to spread the travel expenditure across instalments and use up loyalty points they have previously accumulated.
Some 75% of respondents said they are more likely to pay for their holidays either through instalments or a buy-now-pay-later concept. This compared 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 borrowing typically incurs high interest rates. As well, 47% of travellers said they are planning to spend any loyalty points they’ve previously collected to pay for trips.
Travellers are also exploring new fintech options with 48% more likely to try pre-paid debit cards that hold multiple currencies to avoid conversion fees when paying abroad, and 49% saying they are now interested in co-branded cards that yield loyalty points.
In the current environment, 73% of travellers say they are more likely to pay attention to FX fees and costs associated with international travel and 56% are more likely to choose a travel provider that lets them pay in their own currency, with transparent currency conversion fees.
“The demand for flexible payment options like buy now, pay later in travel is extraordinarily high,” added Doctor. “Savvy travellers are adapting to limit costs involved in travel. We see in our own data that more travellers are choosing to pay in their local currency across the airlines using our FX Box technology.”