Thrifty Consumers Are Saving Up for Longer Vacations

U.S. consumers are still taking a frugal approach to leisure travel, but there’s a silver lining for travel agents. Travelers are sacrificing short getaways in favor of longer, international trips – the kind more likely to require the help of a travel professional.

Also on the plus side: U.S. leisure travelers are more likely to stay at upscale hotels and inclusive resorts.

But for cruise-sellers, there’s bad news: U.S. leisure travelers are significantly less likely to take a cruise.

These are among conclusions in PhoCusWright’s U.S. Consumer Travel Report Fifth Edition, which looked at consumers’ leisure travel and booking habits in 2012.

The study determined that six in 10 U.S. adults traveled for leisure in 2012, about the same as in 2011. Travelers took an average of 2.8 leisure trips, down slightly from the 3.0 taken during the previous year, and the average annual travel spend dropped by $230.

Small sacrifices
While these and other findings indicate a stagnant or even worsening outlook, the authors of the report, which surveyed over 2,500 U.S. travelers, said there are signs that leisure travel is on the upswing.

“Fewer trips may create the impression that consumer confidence has fallen, but many were simply making some small sacrifices to leave room in their budget for the big annual vacation,” said Carroll Rheem, principal analyst and co-author of the report.

“While travelers aren’t exactly feeling footloose and fancy free, they are developing a bit of tolerance for the endless stream of mixed economic messages.”

More international trips
Although consumers took fewer short trips than in 2011, they took more international trips last year and took as many longer trips, those of a week or more in duration, said Marcello Gasdia, a PhoCusWright analyst who co-authored the report.

Thirty percent of U.S. leisure travelers took an international trip in 2012, up from 28% in 2011 and 24% in 2010.

“This bodes well for travel agents, because it shows that people are concentrating their funds on the kind of complex trips that are more likely to require the services of an agent,” Gasdia told Travel Market Report.

More upscale hotel choices
Another positive trend is that travelers are choosing more upscale hotels. Nearly one-third, 32%, purchased a room at an upscale (four-star) property in 2012, up from 26% in 2010.

The percentage of travelers choosing to stay at an all-inclusive resort also increased – from 8% in 2010 to 14% in 2012.

“We also found that far fewer travelers reported staying with family or friends rather than a hotel, while the incidence of staying at a budget hotel fell by 3%,” Gasdia said. “The indicators are that travelers are moving upmarket in their lodging choices.”

Cruises take a hit
When it comes to types of leisure travel being purchased, cruises took a significant hit, with 7% of travelers reporting that they took a cruise in 2012, down from 10% in 2010.

A drop of three percentage points “is pretty significant when you measure it across thousands of consumers,” Gasdia said. “We think the damaging press about the cruise industry is having an impact.

“[It] leaves us wondering what the incidents that happened this year will have,” he said. “The cruise industry clearly needs to do some public relations to turn this around.”

Packaged travel stays strong
By contrast, the survey found little change in the numbers of travelers choosing various types of packaged travel, including tours.

About one in five travelers purchased a travel package in 2012.

“Travel packages, whether dynamic packages or prepackaged travel, are still selling well, and that’s good for agents,” Gasdia said.

Shift to online booking continues
When it comes to consumers’ booking methods, the report found that the shift from offline (either through a travel agent or supplier) to online continues.

The percentage of travelers who use an equal mix of offline and online methods dropped to 25% in 2012, down from 29% in 2011.

About 10% of travelers book offline exclusively. And 37% book online exclusively, and that number increased from 32% in 2011.

‘When we look at the numbers of people booking only online, it reflects the demographic shift – younger people tend to be tech-savvy,” Gasdia said.

Personal service still in demand
The numbers indicate that “a lot of offline travel is still being booked,” Gasdia said. “Even if 37% are booking only online, that means the majority are still booking offline at least some of the time.”

The desire for personal service is the major reason that consumers book offline, he added.

“This doesn’t change from year to year – consumers want the customer service that they can’t get from a website,” he said. “So agents still have opportunity to keep clients through good service.”

Affluent outlook is strong
In terms of leisure travel trends overall, Gasdia said that despite the slow recovery to pre-recessionary levels, there is reason for optimism – especially on the upper end of the economic scale.

“We may need to wait another year or two for mass travelers to start spending more on leisure travel, but this is already starting to happen among affluent travelers,” he said.

Travel agents who are focusing on the luxury segment are wise to do so, he added.

“The affluent traveler is the perfect combo for agents – they are the ones purchasing the complex trips and who are starting to spend more,” he said.