According to the latest report by Bank of America Institute economists Taylor Boily and Joe Wardford, international travel has become a key driver in increasing travel expenditure for American households. The report shows that although overall travel spending has decreased compared to 2023, it is still 10.6% higher than in 2019, based on an analysis of Bank of America's credit and debit card data from January to mid-August this year.
Boily and Wardford pointed out that international travel remains one of the strongest areas of growth. A recent survey by the Conference Board showed that in June, approximately 17% of American consumers plan to travel abroad for vacation within the next six months, higher than the roughly 14% seen in 2018 and 2019.
Haley Berg, Chief Economist at travel website Hopper, believes this demand will continue to remain strong. She pointed out that the decline in airfare prices has partly supported the growth in international travel demand. For example, round-trip airfare to Europe this summer averaged about $950, down from over $1,000 in the past two years, while off-season flights to Rome this fall were around $600, significantly lower than the peak price of $1,300 during the pandemic.
According to Bank of America's data, Europe was the major destination for US travel spending from May to July, accounting for 43% of total spending. Canada and Mexico followed at 21%. Meanwhile, travel spending in Asia saw the fastest growth, increasing by 11% compared to 2023, whereas Europe only grew by 3%, partly benefiting from favorable exchange rates.
Despite strong international travel spending, most American consumers' travel is still concentrated domestically. McKinsey's analysis indicates that about 68% of trips remain within the United States. McKinsey also noted that as more American tourists choose to travel abroad, domestic travel demand has slightly slowed.
The Bank of America report further shows that high-income households (with annual incomes exceeding $125,000) are driving the trend in international travel. High-end luxury hotels are performing better than standard hotels, indicating that high-income groups are more resilient and have greater spending power in travel expenditure.
McKinsey's analysis also mentioned that despite the concerns of "cost-restricted" travelers about inflation during the pandemic, most still plan to continue traveling, only adjusting their travel habits, such as choosing off-peak times or booking in advance.
