Travel Spending has Increased by $48 billion – So What are Travelers Spending Money On?

By Bojan Jokic | Nov. 19, 2015 |

Travel Spending has Increased by $48 billion – So What are Travelers Spending Money OnThe United Nations World Tourism Organization (UNWTO) recently released data on the spending habits of tourists in 2014, which put $1.2 trillion back into the global economy — an increase of $48 billion from the previous year. The same report revealed that receipts from international visitors spending on accommodation, food and drink, entertainment, shopping and other services and goods reached an estimated US$ 1,245 billion (euro 937 billion) in 2014, an increase of 3.7%.

The global business travel market generates sales worth hundreds of billion U.S. dollars every year and it includes both national and international travel, accommodation, additional transportation and many other amenities. A recent survey from Expert Market reveals business travelers spend up to $611 per day.

According to a study of 240,000 unique travelers by RocketFuel, luxury travelers make up to 18 purchases prior to a trip, compared to four for non-luxury travelers, and luxury travelers are 206% more likely to make a retail purchase at a luxury retailer than non-luxury travelers.

So when it comes to spending their hard earned money, what are travelers most likely to spend on before they go on a trip? According to an Expedia report, new clothes are the most common purchase when travelers are getting “vacation ready” at 43%. Other popular pre-trip expenses include:

• Haircut/style: 32%
• Phone package: 16%
• Waxing/hair removal: 14%
• Manicure/pedicure: 13%
• Dieting/weight management products/services: 10%

Once at their destination, travelers are equally motivated to make purchases for products and services. A Ulysses Mercer analysis revealed that a $300 average spend per person on 3rd party ancillaries is comprised of the following:

• Destination food & drinks – $114
• Transport at destination – $62
• Destination shopping – $41
• Travel accessories & care – $28
• Destination entertainment – $15
• Transport to & from airport – $12
• Other – $28

In contrast, some ancillaries are not so welcome by travelers. According to Expedia, for global travelers, the most aggravating travel fees, in order, are “taxes,” “baggage fees” and “booking fees.” The list features:

• Taxes: 41%
• Baggage fees: 36%
• Booking fees: 34%
• Seat selection fares: 27%
• Resort/hotel fees: 25%
• Tipping: 25%
• In-room WiFi: 23%
• Buying mobile phone package for out-of-network travel: 18%
• Travel/trip protection insurance: 15%

The travel industry has a huge opportunity to use data to personalize and improve the travel experience by offering products and not just charging fees. By offering what Epteca calls carefully curated and relevant “long tail” ancillaries (or products and services not traditionally offered by travel companies), which consumers want and need, travel companies and advertisers have opened up previously unrealized revenue streams. This combined with a strong customer service message post-booking through to the return from travel, adds value to every step of their customers’ journey and makes customers feel appreciated.

Bojan JokicAbout Bojan Jokic
Bojan Jokic has been a disruptive force in the travel technology industry since 1997. Fueled by his passion for innovation, Bojan went on to build a market first b2b travel booking engine for a travel management company at age 29. By 39, Bojan was instrumental in creating Europe’s first travel apps available on TV. Over the years, he has been the driving force behind multiple e-commerce solutions that are generating profitable revenues with millions of customers. Bojan studied air travel and transportation engineering and holds an MBA. He currently resides in Switzerland and serves as CEO and co-founder of Epteca, an emerging technology company bringing unique ‘smart selling’ marketplace ecosystem capabilities to companies and brands worldwide.
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Ivana Johnston
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Email: ivana@puzzlepartner.ca
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