72% of Americans plan to travel this summer, a Bank of America analysis finds. Bank of America’s Head of Consumer and Business Products Mary Hines Droesch, joins Wealth! with cost-saving vacation tips and analysis of the travel sector as a whole.
One of the pitfalls travelers face is not having or sticking to a budget, though 84% of people say they will have one, Hines Droesch says. She recommends that travelers lay out every aspect of the trip, from excursions to souvenirs, and then think about how to mitigate costs.
In April, 36% of Americans had already planned their summer vacation, Hines Droesch states. That means transportation and accommodation are expensive and inflexible at this point in the year, she notes. She notes that one popular destination this year is Japan, given the dollar’s strength relative to the yen. There is also a “tremendous” interest in cruises, with travel spending up 12% in the category.
As the “Great Wealth Transfer” approaches, Hines Droesch notes that young people who prioritize more expensive, “out-of-the-norm” vacation experiences may be able to continue undertaking this kind of travel.
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This article was written by Gabriel Roy
Video Transcript
We’re heading into Memorial Day weekend and into the summer when 72% of Americans plan to travel, according to a new Bank of America survey.
Joining Me Now in studio with some new financial insights into the summer trips.
We’ve got Mary Heinz Dros, who is the head of consumer products at Bank of America.
Great to have you here in studio with us.
Well, thanks for having me.
Absolutely.
Let’s into this.
I mean, huge expectations.
Everybody is just trying to make sure that they get some R and R get some vacation over the course of this summer.
But how can they do so?
And with the understanding of where they need to financially plan adequately, what are some of the expectations here?
Yeah, I mean, as you shared, 72% of Americans are going to have a summer vacation this year, according to the Bank of America Summer survey.
And in order to do that effectively, they need to have a budget because vacations are expensive, people wanna get out, and we have lots of suggestions on how to do that.
I mean, 84% of people say they’re going to have a budget.
But what’s hard is actually sticking to it.
And one of the ways that, um, you’re able to do it is really laying out all the different aspects of the vacation.
It’s not just about transportation and accommodations.
Think of excursions, souvenirs eating out, and then how can you mitigate some of the costs for things that are less important to you?
For example, dining can be really expensive.
So why don’t you save those expensive meals for night and be a little low cost on breakfast?
You know, you talk about within the survey planning the trip as early as possible.
Like what’s the What’s the best rule of thumb for people to adequately financially plan and plan as early as possible in terms of what that time span ahead of the vacation should look like?
Well, what?
Our survey showed that in April, 36% had already planned their vacation and what’s really important and planning tends to be transportation and accommodation.
Those are the things if you wait to the last minute get really, really expensive, but you can be a little bit more flexible on some of the other things.
Wait till you get to the location.
Decide what excursions that you wanna have.
Uh, but planning is just important, too, because some things also sell out.
You don’t wanna go to this dream place and not get to do the one thing you wanted to do.
And so the earlier plan the better.
And so where are we seeing the appetite for international versus domestic?
Right now, we have about two thirds of travel plans are in the United States and then about 38% outside of the United States.
And some people are doing both, as you can see, those add up to above 100%.
Um, when we look at international, what’s really popular right now is Japan, and that’s really when you look at the yen relative to the strength of the dollar, it’s making it really attractive on somebody’s budget.
Also continue to see tremendous interest in cruises.
Overall, according to the Bank of America Institute, travel spend this year over last year is down 1.5%.
However, cruises are up 12%.
These are especially pop popular with boomers, and it enables you to see a lot of international countries and islands at a really affordable rate.
You know, we talk often about the the great wealth transfer and where future generations are going to perhaps even change the fabric of the type of vacations that we’re taking.
What are some of the anticipations there two years out from now, how the types of vacation or experience economy at whole could shift as a result of new generations coming into more wealth?
Yeah, what’s interesting And this is a lot of the hangover from the pandemic.
People are prioritising experiences over everything else we’re seeing, you know, lower retail sales, lower electronic purchases.
It’s all about those memories that they can do with other people.
And when you look at our younger generation, they are more and more doing things in groups and really going to those out of the norm vacation something unique.
They can share on social media.
Right where they got a giraffe walking up to the window as they’re eating breakfast, things like that exactly.
And are climbing a mountain without ropes, like all sorts of crazy things, and that takes a lot of money.
And so the more that, um, you see that wealth transfer, the more enables it.
There’s also some great ways even before that wealth transfer, that things can be more affordable for the younger generation.
You know, I mentioned like 28% of people take their trips with friends by doing things in groups.
You can share the cost.
You know, instead of having individual hotel rooms rent a house together, it makes it a lot more affordable.
Just lastly, Mary, while we have you here, there’s ways to tap into credit card benefits, too.
I mean, you build up the rewards for a reason.
So how many people are actually putting those points to work correctly as they’re planning their vacations out?
Oh, I mean, it’s really tremendous.
Um, we see in our own data that the vast majority of rewards redemption is going towards travel.
You know, about 70% of people say that they will use credit cards while they’re travelling, and about a third are prioritising their travel rewards card.
I’m going to Greece for two weeks with my family, and I am using those reward points to offset my travel purchases that you know, I earn those points on our customer cash rewards card, and it just makes you feel it’s not free because right you had to spend to get them.
But it just makes it you feel like you’ve really gotten a great discount and and then you, you know, have a much nicer vacation.
If you guys need a, uh, vacation photographer or something like that, I got three lenses.
I could toss them in the bag.
Oh, done.
Deal done.
Deal.
Got you covered.
Mary Heins.
She was the head of consumer products over at Bank of America.
Great to see you.
Thanks for having me.