Crowds, long wait times, Park Passes selling out – we’ve seen it ALL. But could big spending on travel be coming to an end?
With the 4th of July festivities around the corner, you can expect some seriously busy days in Disney World and elsewhere. But some Americans may be done facing those high flight prices and spending big buck in other areas too.
According to The Washington Post, Some Americans are starting to hold off on spending their money on things like booking flights, building pools in their backyards, replacing their roofs, and even getting haircuts.. In the past weeks, some households have hit “pause” on certain purchases, due to price increases and other factors.
Some of the data now shows that households are also starting to hit “pause” or at least “Tap the breaks” on things like vacations, eating out, manicures, appointments to clean their homes, and haircuts.
It has not been a full stop in some cases. Some are trying to negotiate lower prices, others are putting off some services (like those household cleaning services), and some have stopped tipping.
What’s impacting these decisions? Business owners suggest these changes are a result of rising prices, a loss of personal savings, and “concerns of a souring economy.”
Consumer spending actually makes up 2/3 of the US economy, and had been holding on strong through April, despite high inflation. But the changes in recent weeks could point to a shift in this situation.
Retail sales have also slowed down. That’s the first time they’ve slowed down in 2022. That change was mostly driven by a 4% drop in car sales. Bookings for flights in the US have also seen a decline (a drop of 2.3% in May compared to the month before).
According to an analysis of credit card data from Barclays, the slowdown in spending looks like it’s mainly concentrated in services (not goods). In its analysis, Barclays shared, “All through 2022, the narrative has been that as COVID faded, households would ramp up spending on services… that narrative has been true for much of this year. But…services spending seems to be slowing considerably. ”
Spending on things like travel and restaurants was growing more than 30% compared to 2021 rates, but that has since slowed. The pace on spending in those areas is now about half of what it was before.
One hair salon reported lower sales and lower percentages when it comes to tips. The owner of one salon said, “People are cutting back left and right…They’re saying, ‘I’m sorry. I can not afford this anymore. ‘”
Up until now, the hope had been that Americans would splurge more on things like eating out, manicures, vacations, and other services they had not really had full access to during the pandemic (as opposed to stocking up on goods like cars and furniture). ).
Flight searches are down on Kayak, the number of people eating out at restaurants (according to data from Open Table) is down, and travel spending is going down.
It could be a number of factors at play here. One thing is inflation and how that has impacted prices on many things. Gas prices have increased, flight costs are up, costs of certain hotels are up, and the cost of certain essentials has increased too.
Another factor potentially at play is simply the loss of value in investments. Some Americans are watching their stocks and home values lessen, which may prompt them to be a bit more restrictive in their spending.
Over the past several weeks, we’ve seen Disney’s stock values plummet to a new low for 2022, and noted how the situation with the stock market and warnings of a bear market could be impacting things. As stock values change, folks with heavy investments in the market may need to pull back on spending to adjust to the changes.
Credit card debt has also hit some all-time highs recently, which may force individuals to be much more particular about how they spend their money.
But, some do not expect things to “fall apart” all at once. Douglas Duncan, the chief economist at Fannie Mae, shared “The consumer is coming under stress… We see that in decreasing retail sales and in rising credit card usage. We do not expect things to fall apart immediately, though. It’ll be a slower decline. “
Interestingly, despite the slowdown in spending in the service sector, inflation, and high gas prices, at least some Americans are still planning to travel this summer.
According to Yahoo! Finance, many Americans booked their travel last year or early this year for upcoming summer dates. Since some of those trips are nonrefundable, many of those plans are going forward. Yahoo Finance Contributor Vera Gibbons also shared that there’s a sort-of “live in the moment” attitude, prompting some to go through with those plans, despite the situations with the economy.
CNN reports that AAA expects a record number of Americans to hit the roads for a road trip of 50 miles or more around the 4th of July weekend. It’s anticipated that 42 MILLION Americans will take a road trip during that weekend, again despite those rising gas costs.
But, only 3.55 million people are expected to fly over the holiday weekend, which is the lowest percentage (just 7% of travelers) since 2011, so some places are feeling the impact of a slowdown in spending.
According to Forbes, a survey from The Vacationer showed that 80% of American adults intend to travel this summer, with 45% saying they plan to travel more than once. Overall, the survey showed that at least 35 million more Americans plan to travel in the summer of 2022.
So while spending on vacations, travel, and services may be down for some, it is not slowing down for all individuals, or at least it is not slowing down in the same way for everyone. Perhaps a slowdown in travel spending for some means a trip cancellation, while for others it means trip modifications to make sure they’re spending less. It might mean swapping that trip to Hawaii for a trip to a more local spot that’ll be cheaper to get to, but it might not necessarily mean a total end on the travel plans.
What should you do if you decide that you do want to hit “pause” on your travel plans to Disney World or elsewhere? First, triple check those cancellation and modification policies. Learn exactly how to cancel your reservation and by what time you need to cancel to get the greatest amount of your money back.
If you do not want to fully cancel your trip, but you need to make adjustments due to a change in your budget, see if any deals or discounts can help, or if you could swap to other hotels and dining arrangements that could help you. save some cash. Maybe it means swapping that moderate hotel reservation for a reservation at a value resort? Or canceling table service meals and opting for quick service meals instead?
Of course, travel trends are subject to change. We’ll keep an eye out for more updates and let you know what we find.
Will crowds ultimately go down in Disney World as some Americans reconsider their vacation spending? Well… it’s complicated. As we noted above, some sources show a slowdown in spending in vacations and travel, but others point to lots of travel coming for the 4th of July weekend and summer.
We have seen some BIG crowds in Disney World, and with the summer and 4th of July on the way, we anticipate more of the same. So do not necessarily expect this “slowdown” to equal a Disney trip with no lines! But if spending on vacations truly slows in a significant way for places like Disney World, individuals decide to stick to trips closer to their homes, or individuals cancel their Disney trips altogether, we could see some changes. Only time will tell.
Stay tuned for more tips and tricks for your vacations.
Click here to see the big reasons you are not traveling this summer
Are you rethinking your spending on vacations, restaurants, or other things? Tell us in the comments!