Recent research by the Bank of America indicates that travel spending among American households has exceeded pre-pandemic levels, with a particular emphasis on international trips. While overall travel spending has slightly decreased from 2023, it remains significantly higher than in 2019, showing a 10.6% increase per household.
According to the Bank of America economists, international travel is a key area of strength, with 17% of Americans expressing an intention to vacation abroad in the next six months. This is up from approximately 14% in 2018 and 2019, as reported by a recent Conference Board survey. The demand for international travel has been on the rise as Covid-19-related concerns diminish and countries lift their travel restrictions.
One significant factor driving the surge in international travel demand is the drop in prices for airfare. Average round-trip fares to Europe have fallen to around $950 this summer, making it a more affordable destination for U.S. tourists. This decline in airfare prices has been a key driver in boosting demand for international travel, particularly to popular destinations like Europe.
Europe continues to be the top destination for American travelers, accounting for 43% of spending from May to July. Canada and Mexico combined hold the second spot at 21% of spending. However, Asia has seen the fastest growth in spending, with an 11% increase relative to 2023. Exchange rates have played a significant role in driving spending in this region, according to the Bank of America.
While international travel spending remains robust, the majority of Americans still opt for domestic vacations. About 68% of trips starting in the U.S. are within the country’s borders. However, there has been a slight softening in domestic demand as more American travelers are venturing abroad. Higher-income households, earning over $125,000 annually, appear to be leading the trend towards international travel.
Despite concerns about increased inflation rates, most cost-constrained travelers are still planning to travel. Many are adapting their behavior by booking trips during off-peak periods or securing travel plans well in advance. This flexibility is helping travelers navigate the challenges posed by the pandemic and inflation spikes.
The trends in travel spending among American households reflect a strong interest in international trips, with demand continuing to rise. While domestic travel remains popular, more Americans are exploring opportunities for overseas vacations. Factors such as lower airfare prices and advantageous exchange rates have contributed to the growth in international travel spending. As the travel industry adapts to evolving consumer preferences and economic conditions, understanding these trends is crucial for businesses and travelers alike.