Lately, listening to coworkers, friends, and family all beginning to get excited about their travel plans has been a highlight of my Zoom meeting schedule. Because we’ve all learned to respect the potential for disruptions, everybody couches their plans with the mandatory level of qualifications—a lot of “hopefully” and “god willing.” But people are starting to get excited.
My man and I are already planning out multiple costume changes for our forthcoming Bonnaroo adventure, our best friends can’t wait to get some couple’s time on a secluded Mexican beach, and one of our more fabulous coworkers is heading here next week. Go ahead and click that link—I will be here when you catch your breath and adjust to your smoldering envy.
Jealousy aside, it seems that everybody who can afford to—we are, after all, coming out of one of the great economic and social disruptions of our time— is planning their first great, post-pandemic escape. Of course, summer travel plans are nothing new, but there is every indication that people are planning on going bigger this year, both in terms of duration and cost.
Today, we’re putting in the market research to contextualize and anticipate this forthcoming travel boom. How has a gnarly 2020 shaped what promises to be a traveling bonanza, which groups of people are the likeliest to travel and how much are they likely to spend, and what does this all mean for people’s budgets moving out of the pandemic?
Expedia’s recent Vacation Deprivation Study sheds some light on people’s frustrated 2020 vacation aspirations and their 2021 plans. The study, while admittedly self-serving—Expedia sells travel accommodations—nonetheless offers us a glimpse into people’s plans.
Expedia’s study emphasizes the vacation sacrifices Americans made last year. Owing predominately to the pandemic but also to the mere fact of being American, a culture still ultimately beholden to the Protestant work ethic, which values work over play.
Some data points from the survey, which show how very vacation deprived people have become:
It’s that last number that is especially interesting (honestly, the other ones are just depressing). Nearly half of Americans surveyed had planned a trip they were forced to cancel because of pandemic-related complications, be it travel restrictions, employment changes, childcare needs, or any other host of factors that emerged in 2020.
Note these statistics draw no class distinction—there were no income bracket variables considered, meaning that a large swath of wealthy, middle- and working-class Americans were forced to cancel their travel plans in 2020.
This is important to remember when assessing the second half of Expedia’s conclusions, namely that people are planning on going big for their vacations in 2021 and beyond. Indeed, according to the study, the majority of Americans plan to take an extra five days of PTO in 2021, exercising a “no days left behind” mentality where they will maximize their vacation time and recover from the pandemic.
This, of course, makes sense. Vacations are a singular way to decompress, to escape the daily stresses and recharge by exploration, relaxation, or some combination of the two. With 2020’s brutality hopefully long behind us, people have a lot of decompressing and escaping to do, and it follows that these people will be very protective of their PTO, ensuring they use it to finally get away.
Yet, even more interestingly, 61% of Americans are now willing to spend more on their 2021 vacation than they had budgeted in 2020, paying more money for a more luxurious and convenient experience.
This willingness to pay more in 2021 can also be seen in data from Vacasa, an international short-term vacation rental service. Vacasa compared 4+ bedroom vacation rentals booked in March 2021 to those booked in March of 2019 (comparing with March 2020 rates would be pointless since the year was so aberrational and nobody was booking trips at that point). According to Vacasa, there is a nearly 30% (28%) increase in the cost-per reservation compared to March 2019.
This indicates that travelers are willing to spend significantly more money in the months ahead than they had in the years before. Yes, this could also be explained by increased costs of rental properties writ large, but the pandemic has actually driven down rental prices around the globe. People aren’t paying more for the same rental; they are paying more for a better one.
The public’s appetite for a more luxurious vacation may transcend class, but it is the rich and the super-rich, of course, who are most able to do so.
When it comes to the truly wealthy, it’s safe to say they are going all out in a way most of us can hardly imagine. For people who already had the money to travel in luxury but were unable to because of pandemic restrictions, 2021, with vaccinations and eased guidelines, is going to be a carnival of five-star resorts and restaurants, private islands and airplanes, and, frankly, things we don’t even want to know about.
Yet even many working professionals are finding the means and motivation to travel in luxury. As we’ve previously described, while the pandemic was financially crippling for a large segment of Americans, it proved a financial boon for those who were able to maintain their jobs, work remotely, and save money on planned 2020 travel and other expenditures that did not come to fruition.
During the pandemic, households worldwide saved an additional $5.4 trillion above their expected savings level. That’s a lot of disposable income, sure, but a great deal of it is concentrated among the wealthy. In fact, the richest 40% of Americans account for more than $2 trillion of those $5.4 trillion saved.
But this also means that typical people are likelier to have some extra money on hand and would like to use it for a nicer-than-normal vacation. Of course, the super-rich and the unfathomably rich are going to even greater extremes when it comes to luxury travel, not because they can suddenly afford it but because they no longer face travel restrictions.
Luxury, of course, has many different tiers—there’s a lot of distance between a suite at the Hilton and one at The Mark, for example. Yet, despite the term’s flexibility, it is nonetheless worth noting that Google reports increased search interest in the phrase “luxury hotels.” In fact, search volume for this phrase is as high as it has been since 2006, which, our most observant readers will quickly note means we are dealing with a pre-2008 recession levels of interest.
Not since before the financial crash, which continues to haunt the U.S. economy and its people, has there been such a pronounced interest in luxury accommodations. It should go without saying that the nation has not entirely recovered from 2008, and that we have only began to move out of pandemic’s 2020 economic fallout. And yet, in the face of an uncertain economic future, Americans are choosing luxury and leisure, perhaps rewarding themselves for making it through the pandemic and all its disruptions, perhaps finally shouting “YOLO” and having some fun, or perhaps saying “restrictions are eased, fuel up my private jet”.
Regardless of motivation, it is worth noting that this luxury travel surge is not occurring in 2006’s economic reality but in our own, more complicated one. And this means that the luxury travel segment, full of aspirational and actual wealth alike, is leading the travel sector’s pandemic rebound.
In the coming weeks, we will be looking at what all of this means for consumers’ forthcoming budgets and spending priorities. How will retail, dining, and other claims on consumers’ savings accounts fit into 2021 budgets, and what are different groups’ purchasing priorities and limitations?
There is much market research and vicarious living to come, but for the time being, do what I’m doing: find out what you need to do to get into that treehouse.