The start of summer brings with it many things: warm weather, summer break, and, for many, travel. Yahoo Finance sat down with experts and executives in the travel industry to discuss how the consumer is feeling about the summer travel season.
“Travel still seems to be healthy and moving forward,” Priceline CEO Brett Keller explains. “Travel has historically been a highly prioritized part of the consumers’ budget. And so, we continue to see that now,” as pullbacks are present in areas like some commodities and hard goods.
Hopper Lead Economist Hayley Berg notes the “generational shifts in how people are thinking about paying for these bigger ticket items.” Many Gen Z and millennials are “expanding their travel wallets,” as over 30% of Gen Z and millennials are using alternate payment methods, like buy now, pay later, for travel purchases.
“Customer demand is holding up” Priceline CEO Brett Keller says, largely due to the price of airline tickets “being down year over year by as much as 15%. And that’s really helping… to spur more airline traffic.”
In the hotel industry, “hotels have been able to keep their prices higher,” Keller notes, as “capacity continues to be added at a very slow and steady pace… so there’s not a lot of new opportunity for hotels.”
This post was written by Mariela Rosales.
Video Transcript
Travel has historically been a highly prioritized part of the consumer’s budget.
And so we continue to see that now, even though where some commodities and other hard goods people have pulled back there, travel still seems to be healthy and moving forward.
I think what will happen is you’ll see suppliers start to really pull their prices back, which will open up more travel opportunities, more deals for consumers.
So they’ll be spending less to take the same kinds of trips.
We’re really seeing generational shifts in how people are thinking about paying for these bigger ticket items.
Traditionally, the path has been, you start with a debit card, you build a little wealth, you open a credit card.
But for Gen Z and millennials, more than 30% of travel purchases are actually coming from alternate payment methods like buy now pay later.
So they’re expanding their travel wallets with these different methods at a rate more than double what we see from Boomers and even Gen X, though we’re seeing the adoption of these payment methods that do help travelers spread payments.
We’re still seeing deal seeking behavior and price sensitivity.
So travelers aren’t just blowing their budget on something that they can’t quite afford out of pocket.
Consumer demand is holding up.
And I think that’s largely in part to airline ticket prices actually being down year over year by as much as 15%.
And that’s really helping I think to spur more airline traffic in the hotel industry capacity continues to be added at a very slow and steady pace about, you know, 1% a quarter here.
And so there’s not a lot of new opportunity for hotels.
So hotels have been able to keep their prices higher, whereas the airlines have been adding capacity to pretty heavy rates.
I think what’s happened is really, people are falling into a more normal state of travel and doing a little more work to really find what fits their budget for them.