Leisure travel heats up; hotels see benefits
 
Leisure travel heats up; hotels see benefits
03 AUGUST 2015 7:42 AM
Recent consumer research shows American consumers are more willing to travel and spend more for leisure travel to the benefit of destination hoteliers.
REPORT FROM THE U.S.—American leisure travelers are looking to take more trips, have longer stays and spend more money on travel and accommodations, according to research by Phocuswright. 
 
“We now have the largest pool in the U.S. of leisure travelers since prerecession,” Marcello Gasdia, director of consumer research at Phocuswright, said during a webinar discussing the company’s soon-to-be-released research data on leisure travel. “We’re projecting the pool now at more than 140 million. That’s the biggest it’s been since 2009.”
 
Gasdia said 66% of U.S. adults in 2014 took part in some sort of leisure travel, defined in the research as an overnight trip of 75 miles or more away from their homes involving at least one night of paid lodging or a flight. 
 
The percentage of leisure travelers hit a high water mark just before the recession with 71% of adults in 2008 before plummeting to 61% in 2009. But leisure travel has seen steady growth for the past two years, according to the research. That trend is likely to continue with consumer confidence and discretionary income both on the rise.
 
Richard Millard, chairman and CEO of Trust Hospitality, said the consumer outlook is tied to improvements in the hotel and travel industries.
 
“They’re as good as they’ve been in my 51 years in the business,” Millard told Hotel News Now during a phone interview. “I think the product in America, and the destinations, have become so much better.”
 
That growth is buoyed by younger travelers, Gasdia said. Millennials are the most likely to engage in leisure travel, with more than 70% in 2014. But the 34- to 45-year-old demographic has shown the most recent growth, he said.
 
The flipside of that good news is that leisure travel continues to lag among baby boomers and seniors.
 
“You’re looking at almost 50% skipping out on vacations every single year,” Gasdia said. “If we’re going to push that number back to where it was prerecession, we really need this demo to travel. But they’re feeling the most pressure, thinking about retiring and thinking about savings. They’re the quickest to cut travel.”
 
Travelers open to being swayed
Phocuswright’s data didn’t just show an increase in the pool of leisure travelers but a change in how they approach travel that could work out in the favor of enterprising hoteliers.
 
The research showed a steady increase in what is referred to as “independent destination selection.” That metric denotes people who use their time and budget on the trips and hotel stays of their dreams as opposed to traveling to see family or friends or meet other obligations.
 
“We want to see that number go up because in the travel industry, as (online travel agencies) or hoteliers, these are the travelers you have more influence over,” Gasdia said. “It’s purely discretionary cash that’s up for the taking.”
 
Tim Michaud, GM for the International Palms Oceanfront Resort in Cocoa Beach, Florida, said he’s definitely noticing consumers more willing to spend, and not just on rooms but on food and beverage and experiences.
 
“We’ve actually noticed that it’s our more expensive and higher-end rooms that sell out first,” Michaud said during a phone interview. “That’s where people think they’re getting more value—larger rooms with ocean views, for example. They want more, and if they’re able to get it they’re more willing to spend for it.”
 
Michaud said his hotel thrives on family travel, which is one of the biggest growth segments, according to the Phocuswright data. Gasdia said those trips tend to be the most expensive.
 
Household spending on leisure travel grew to $3,441 in 2014 from the low of $2,720 in 2009. The length of travel also has increased with weeklong vacations growing from 30% to 34% of all trips in that same period.
 
Going forward
Sources have a general sense of optimism that the growth in leisure travel will continue for the next few years.
 
“I think this trend is going to continue for a while,” Michaud said. “We see our bookings are strong into the future and have been up year after year. The rest of 2015 looks strong, and 2016 should continue in that mode.”
 
The consumer confidence surveys back up that claim at least for the near future. According to the Phocuswright data, 30% of consumers want to take more trips and 25% want to spend more on travel, as opposed to 15% who want to travel and spend less.
 
But Millard said it’s important not to count too much on sunny projections for the future.
 
“It’s all about the worldwide economy,” he said. “We’re enthusiastic, but what goes on in China and Europe in the next year and a half and the next election will have a huge impact. The Chinese economy is extremely questionable.”
 

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