Study: Rising Airline Spending To Boost Holiday Travel

By Pete Rizzo (@pete_rizzo_)  

Rising airline fares have emerged as the key driver of increased holiday travel spending this season, new research from MasterCard revealed on November 25.

The finding is the result of the New York-headquartered card network’s latest U.S. SpendingPulse holiday travel report, which analyzed data across several travel industry subsets to reveal new insights into how travel spending in September and October could shape purchasing for the upcoming holiday season.

“While the dollar amount of [airline] purchases has grown, the number of actual purchases made has declined for six straight months – evidence that sales growth has been driven by higher prices,” MasterCard wrote in a November 25 release.

Sarah Quinlan, senior vice president at Market Insights for MasterCard Advisors, cautioned that the data only refers to tickets that have been purchased or booked, not used. As such, Quinlan indicated its findings are a leading indicator of consumer travel plans and their confidence in purchasing discretionary items.

For more insights and analysis into the trends shaping consumer holiday travel spending, we break down its latest November SpendingPulse report.

Airline Spending

The study found that airline spending recorded its strongest year-over-year growth since August 2012 in September and October. The driving factor behind the boost, the report suggested, was the consumer pre-purchasing of holiday travel tickets.

MasterCard indicated that the government shutdown has also had an influence on airline purchases.

“While the end of the government shutdown seems to have eased some consumer concern for now, what we’re seeing so far points to holiday travelers driving instead of flying, and staying close to home,” the report said.

Hotel Spending

The lodging industry also saw a sizeable bump during September and October in both dollar spend and the number of transactions. MasterCard noted that this boost bodes well for the industry heading into the holiday season, as spending typically doesn’t escalate until after October.

The report did mitigate its outlook, however, noting that the popularity of “staycations” – where consumers chose to stay at home instead of traveling – over the summer is likely to continue through the winter months. Year-over-year lodging sales are expected to rise 4.5 percent above 2012’s numbers.

Gasoline Prices

MasterCard suggested that gasoline prices will play an important role this holiday season in boosting spending for the lodging industry, a contrast to years past where it has had the opposite effect. The report cited figures from AAA, which reported on November 19 that gas hit a multi-year low of $3.18 per gallon earlier this month.

“As prices come down, we expect to see stronger growth in gasoline, which could also spur on consumer shopping in other retail sectors,” Quinlan said.

For more data on consumer travel discretionary spending, learn how you can obtain a free copy of MasterCard’s latest SpendingPulse report here.