Halfway Through 2019, Leisure Travel Sales Continue to Rise

Sparing a few brief downward dips these last few years, travel agents have enjoyed an unprecedented steady climb in vacation travel sales, and according to three indices, the trend is likely to continue for the near term.

In April, the U.S. Travel Association’s (USTA) Current Travel Index (CTI) was 51.5, up 3% year-over-year from April 2018. The CTI has registered at or above the 50 mark for 112 straight months, as the industry sustains its tenth consecutive year of expansion.

Overall travel volume (person trips to or within the U.S. involving a hotel stay or air travel) grew at the same year-over-year rate in April 2019 as in March 2019. International demand rebounded after two months of contraction, USTA reported, while domestic growth “was supported entirely by the leisure segment,” which grew at a rate of 3.2%.

Meanwhile, Allianz Global Assistance’s 11th annual Vacation Confidence Index forecasts that Americans will spend $101.7 billion on vacations this summer, crossing the $100 billion mark for the third consecutive year in the index’s history.

Average anticipated spend on vacations this summer is $2,037, topping $2,000 for the first time since 2010, when the survey started tracking spending. That marks a 5.2% increase over last year.

“Summer vacation spending will hit record levels this year,” said Daniel Durazo, director of marketing and communications, at Allianz Global Assistance USA, an indication of “the continued value that Americans place on their summer trips.”

Meanwhile, Airlines Reporting Corp. (ARC) reported that total agency sales in May were $9.2 billion, up 4.8% for the month, on 3.5% more passenger trips. International trips led the way in May, up 4.7%, versus domestic trip volume, which increased only 2.7%.

Year-to-date through May, total ARC sales are up nearly 4% versus the corresponding period in 2018. In 2018, ARC reported, sales for that period finished 7% higher than 2017, when sales increased 3.4% off of a down year in 2016.

While leisure passenger trips booked through agents were down 6.9% in May (and have been down all year in year-over-year monthly comparisons), there has been an improving trend all of 2019, ARC figures show.

In October of last year, leisure passenger trips booked through agents dropped for the first time in the five years that ARC has been tracking the data. By December, leisure passenger trips booked through travel agents were down 9.4%, hitting their lowest level in January 2019, when year-over-year trips declined 10.9% for the month. However, since January of this year, year-over-year comparisons have steadily improved through May.

Travel agents may be losing those sales to online travel agencies (OTAs) (for the month of May, OTA sales increased 7.7% versus May 2018), though the American Society of Travel Advisors (ASTA), however, sees it differently. 

“ASTA does not believe that OTAs are chipping away at leisure advisor bookings. Travelers are turning to travel advisors more and more as exemplified by the significant growth in the number of millennials who are using travel advisors. This tells us that our industry will continue to see upward growth and momentum,” an ASTA spokesperson said.

According to ASTA, ARC’s air ticket numbers may not be taking into account how many leisure agencies are using online booking platforms as well as mobile apps. ARC’s data, ASTA says, is not also taking into account bookings made outside of ARC, either without air or where air is booked direct.

“While ARC’s data appears to show that ‘leisure/other’ air tickets purchased through advisors is down year-over-year, the number of ‘leisure/other’ air tickets purchased in 2019 has steadily increased and is on an upward swing each month since January. Anecdotally, our advisors tell us that business is going extremely well for both our corporate and leisure travel agencies,” an ASTA spokesperson told TMR.

ASTA’s research also shows that 70% of travelers earning $100,000+ would use a travel advisor to help avoid booking mistakes that they typically make on their own.   

And, at the same time that live agents have seen negative year-over-year booking comparisons, according to ARC, passenger trips for agencies with a primary focus on leisure travel, and whose primary business model is done through “online website(s) and/or mobile application(s),” has been up every month since last August. 

Signs of moderation
While agents and the industry have taken advantage of the flush times, there may be reason for caution. At the USTA, the Leading Travel Index (LTI) predicts travel will grow, but the rate of growth will moderate through October 2019.

The 6-month LTI reading of 50.9 indicates that total U.S. travel volume is expected to grow at a rate of around 1.8% through October 2019. Over the same period, domestic travel will achieve 2% growth, while international inbound travel will return to more moderate growth around 0.8%.

Additionally, this year’s Allianz index growth of 5.2% is about half the growth rate of 2016 and 2017. Allianz said only 42% of Americans say they are confident they will take a summer vacation this year, close to their lowest level of confidence since 2013, when only 40% were confident they would take a summer vacation.

More than half of Americans who are not confident about taking a vacation this summer cited financial reasons (52%), while 38% of those with low confidence are restricted by time in some manner, such as not wanting to, or not being able to take time off from work.

The Vacation Confidence Index has been conducted each summer, since 2009, by national polling firm Ipsos Public Affairs, on behalf of Allianz Global Assistance USA. A vacation is defined as a leisure trip of at least a week to a place that is 100 miles or more from home.