Bank of America economist expects ‘bumper year’ for travel

(TND) — This is shaping up to be a “bumper year” for travel, a Bank of America economist said Monday.

The Bank of America Institute recently released a report on travel trends as we enter the busy summer vacation months.

The report was based on Bank of America credit and debit card data, along with a survey that showed over 70% of people plan to travel this summer.

Household travel spending is up around 13% from 2019 levels. That’s a tick below last year, which was up around 15% compared to 2019.

“Last year, 2023, travel spending was supercharged, because people were really kind of unleashing their spending … after the pandemic,” Bank of America Institute Senior Economist David Tinsley said. “Really, to hold your own on spending this year, relative to that, is impressive.”

The increased spending compared to 2019 isn’t all about inflation, he said.

“I think a good bit of it is volume,” Tinsley said.

Domestic air travel is up. The Transportation Security Administration screened more than 206 million passengers in the first quarter of the year, up nearly 8% from a year ago.

Spring break air travel was up about 7% compared to last year, based on the TSA figures.

And the International Air Transport Association on Monday reported it’s expecting a record 5 billion air travelers in 2024.

Airline industry revenues are also expected to reach a historic high of $996 billion this year, the IATA said.

North America continues to be the most significant contributor to industry profits, according to the IATA.

The Bank of America Institute cited government figures that show tourism and travel within the U.S. contributes about 3% of the gross domestic product. Based on last year’s GDP of around $27 trillion, that’s over $800 billion infused into our economy by travel.

The International Trade Administration, citing 2021 data, said total travel- and tourism-related spending reached $1.7 trillion – $987.7 billion in direct spending and $716.3 billion in indirect spending.

Domestic tourism “is hugely important,” Tinsley said.

The Bank of America survey found that 67% of American travelers are staying in the states. Around 40% are planning to travel internationally.

Europe, Canada and Mexico were the top international destinations for American travelers.

More of the younger generations are planning to vacation internationally, while also planning to go for longer and spend more, according to Bank of America.

The top splurge categories include shopping, experiences and dining.

Cruise spending was up 12% and is now making up a larger share of overall travel expenditures.

Baby boomers make up around half of total spending on cruises, according to the Bank of America data.

“Cruises are doing extremely well,” Tinsley said.

Americans are eager to travel, with 81% telling Bank of America in the survey that they won’t postpone any of their travel plans. But high prices and a lack of savings are the top reasons given by the roughly 20% who are postponing.

Tinsley said the U.S. travel industry is showing strength.

“This year looks to be another solid year,” he said. “It’s been a bumper year relative to prepandemic. It’s still looking fairly solid relative to last year. And domestically, I think, there’s plenty of early signs of lots of travel throughout the U.S.”