Consumer Insights

Consumer Travel Spend — Dark Days Ahead?

A new report from Piper Jaffray, a U.S. investment bank and asset management firm, suggests that consumer spending on travel-related expenses has peaked.

Although travel spending has been strong during recent years, particularly following the economic recession, that growth is projected to slow over the next few years.

So, what’s impacting that spend? Well, it all has to do with the economic factors driving consumer spending in this sector. What that breaks down to, as pointed out in one article, is the economic health of the consumers, as well as their outlook for the future. This includes factors like unemployment, wage raises and growth opportunities. All of that plays into how consumers determine how and when they will travel.

After all, travel is still a luxury to many.

But what has led to the peak in travel spending? According to Piper Jaffray’s data, overall travel has grown faster than GDP and wages. Because of that, there could eventually be a slowdown in how many consumers are traveling, as their wages and overall earnings aren’t keeping pace.

Overall, what the firm concludes is that middle-class consumers are simply hitting a wall on what they can allot for travel expenses. What the firm projects is that travel growth will dip to 5 percent by the end of 2016 and continue to drop even more next year. But what it also says is that online travel groups that enable cheaper travel are also seeing slowing growth.

Regardless of how the economics play out, what the data shows is that the appetite of the consumer might be changing, as is the way consumers are choosing to spend their money.

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