ORLANDO — Travelers this year are spending more money on in-destination experiences while taking longer trips with smaller groups of friends and family, according to recent findings from travel research firm Arival, which projects the higher-spend trend to continue into 2024.
But while travelers across the board continue to invest in experiences over material goods, they are booking fewer trips in 2023 than in previous years.
“Overall spend is way up, but there are not as many trips,” said Douglas Quinby, CEO and co-founder of Arival, who presented the findings this month at the company’s Arival 360 conference here. “On average, they’re doing seven experiences on a trip, which is extraordinary. That’s seven tours, activities and attractions over the course of a single trip, which is a lot of potential spend.”
Affluent travelers earning upward of $150,000 per year and younger travelers, including millennials and Gen Zers, regardless of income, are spending the most on travel experiences and day tours this year, Quinby said.
But their spending habits differ in terms of dollar amount and types of purchases.
The affluent represent a fifth of all travelers but nearly half of all spend on experiences. They are more likely to book private experiences — though not the most expensive ones, which Quinby characterized as a kind of “millionaire next door” phenomenon.
Younger travelers, he said, use more of their disposable income on travel experiences than affluent travelers.
Travel advisors say they are seeing clients willing to spend more on experiences.
“I’m definitely noticing a trend for privatized local guides, which does translate into higher spend for local activities because it’s a more curated experience,” said Christina Turrini, a Frosch Travel advisor based in Larkspur, Calif. “We still have issues with museums being closed, flight changes and other unscheduled changes, so private guides are really a way around those pitfalls because they’re able to pivot on the fly.”
Food and travel attract high spenders
Food and travel both top the list of categories high-spend groups are willing to spend on.
A McKinsey consumer report that tracked spending intentions of high-spend groups over the summer found that 40% of Gen Zers and millennials planned to splurge on restaurants, while 45% of baby boomers said they intended to splurge on travel, more than on any other category for that age group.
Continued higher spend on in-destination experiences has prompted some day-tour operators to enhance their offerings — at a price premium — to capture more of these high-spend groups.
“We’ve recently raised our prices [$4 across the board], and we’ve added premium customization add-ons like alcoholic drink packages to the tickets that about 30% of our customers have started purchasing,” said Shannon McRae, general manager of Key West Food Tours, of a new $17 drinks package add-on.
Suppliers and advisors know what experiences their clients are spending money on. They also want to know the reasons those travelers choose experiences and how they find out about them.
Social media stimulates the imagination
Arival data shows that social media factors more prominently early on in the travel-planning process among high-spend groups, motivating them to go from seeing those travel experiences online to actually booking them.
“With younger travelers, particularly 18 to 34, we’re seeing a shift where they’re thinking more about experiences earlier in the travel-planning process,” Quinby said. “Half of them say the experiences are influencing their destination decision.”
And social media is hardly the only driving factor.
“All they have to do is watch anything on Netflix or HBO,” said Turrini. “Inspiration for travel is everywhere, in multiple movies and series. It’s almost like we don’t have to market as much.”
