Americans are looking forward to holiday travel this winter but overspending and uncertainty could spoil the fun – CNBC

The travel industry might get a much-wished-for gift this holiday season, if the latest predictions about year-end travel turn out to be true. Pandemic-weary Americans seem to be ready to take trips for Thanksgiving, Christmas, New Year’s and other winter celebrations, several studies have found.

AAA is predicting that this Thanksgiving will see travel volume rise to within 5% of 2019 levels, with some 53.4 million people taking to the air, roads and rails. That’s a jump of 13% from last year; the rebound in air travel alone will be even greater, up 80% over 2020.

Thanksgiving travelers will be sharing planes, trains and highway lanes with about 6.4 million more people this year, and should brace for crowds, according to Paula Twidale, senior vice president at AAA Travel.

“This Thanksgiving, travel will look a lot different than last year,” she said, in a statement. “Now that the borders are open and new health and safety guidelines are in place, travel is once again high on the list for Americans who are ready to reunite with their loved ones for the holiday.”

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Mike Daher of audit, consulting, tax and advisory firm Deloitte agreed.

“This holiday season, sweaters are nice but what people really want is a warm embrace from family or loved ones,” said Daher, vice chair, U.S. transportation, hospitality and services leader of non-attest services at Deloitte. “So they’re going to take to the skies and the roads to make that happen.”

In its November Holiday Travel Survey of 6,512 Americans, Deloitte found that 4 in 10 respondents will travel for the holidays, and 1 in 3 will take a flight or stay at paid lodging.

“And we think they’re going to spend roughly about the same as they did in 2019 — pre-pandemic times,” Daher said.

Being able to travel when and where we like — time and treasure permitting — is a hallmark of normalcy, so getting back on the road for holiday trips can feel like the good old days.

Andrew Custage, head of analytics for Sense360 by Medallia, said the consumer research firm found 34% of consumers questioned Oct. 8 to Oct. 11 for its Holiday Plans Survey said the holidays will feel “more normal” than 2020, if not completely, and 15% think the season will feel just like it did before the pandemic.

The firm found people in the Northeast, at 35%, and West (31%) are most likely to travel, compared to Southerners (28%) and Midwesterners (27%). According to Custage, the discrepancy may be due to the facts that both the Northeast and West are not only stricter, in general, about Covid regulations but are also home to more transplants who’ll likely travel back to other regions for the holidays.

Travel-organizing app TripIt from Concur’s data, meanwhile, shows that 53% of the service’s users plan to travel in the next three months, with about 20% taking Thanksgiving trips and 1 in 4 taking a trip later in the winter holiday season, according to Jen Moyse, senior director, product at TripIt.  

“A lot of our travelers did report being more comfortable now with traveling, in general,” she said. “They really want to get out there.”

Traveling means spending, and personal finance site Nerdwallet found that 43% of those surveyed planned to put money towards travel during the holidays — up from just 20% last year. The average amount they plan to spend on air and hotels is $1,800.

(Seven out of 10 will put some travel expenses on a credit card — charging $1,471, on average — Nerdwallet found, but 21% of them say they will pay off that balance with their first statement.)

“This year is different,” said Sara Rathner, travel expert at Nerdwallet, which had The Harris Poll survey 2,026 U.S. adults Sept. 13 to Sept. 15. “People are getting out more, possibly feeling safer doing so.”

That may be because most people didn’t have access to Covid vaccines yet at the same time last year, she noted, while they now do. (As of Oct. 30, 67.1% of the U.S. population had received at least one dose of a coronavirus vaccine, according the Mayo Clinic.)

Yet vaccine or no vaccine, Covid is still impacting some Americans’ holiday travel plans, with 57% of survey respondents who are not planning to spend any money on either airfare or hotels saying the decision is at least partly related to health concerns.

“A lot of people are still unsure about what to do,” Rathner added. “For those who are unsure, 77% say their reason is because of the pandemic.”

Even some of those who will travel have altered their holiday trips post-pandemic. About one-quarter told Nerdwallet they were looking at different means of transportation — “possibly driving instead of flying,” said Rathner — and 22% will stay at a different type of lodging, whether a private vacation property rental or the homes of family or friends.

Deloitte, in comparison, found a similar interest in road trips but more travelers said they drive because they like it, at 38%, than because of Covid fears (12%). And interest in private accommodations rentals dropped to 16% from 23% for the holidays compared to summer leisure travel, likely because more year-end trips are shorter jaunts to cities, the firm said.

Seventeen percent of survey respondents, meanwhile, told Sense360 by Medallia they’d drive to another city or town, up from 12% last year and 15% in 2019, and 8% will fly, compared to 4% and 7% in 2020 and 2019, respectively. Another 6% will take a train or a bus, up from just 3% in each of the previous two years. In all, Medallia found around a net change of 10% of Americans surveyed who expect to go from “non-traveler to traveler” this year.

For its part, TripIt has seen “heavy” car rental reservations, too, but it’s also tracked a different behavioral pattern around holiday travel, said Moyse — a tendency to wait longer before even thinking about booking. “About 28% of our travelers said they were going to wait and see on Thanksgiving travel and are planning a little bit closer to their departure dates,” she said.

That could be due to a combination of bargain hunting and wariness around the recent surge of the delta variant of Covid. (Deloitte, too, saw a pattern of waiting in its survey, with half of travelers still having not booked any aspect of their holiday trip as of September.)

Indeed, TripIt found that, of app users who had to change or cancel travel plans due to the delta surge, 27% lost money — some as much as $5,000, according to Moyse. “We’re assuming that that has some impact on their future plans,” she said, noting that 37% of travelers told TripIt that having to possibly cancel or reschedule holiday trips was a top concern. Twenty-six percent said they’d booked trips they’re already prepared to cancel if necessary.

It’s no surprise, then, that policy sales at online travel insurance marketplace Squaremouth are already ahead, year-to-date of where they were in 2019, months before the pandemic hit U.S. shores. “We know travel at large isn’t completely back yet but we think the travel insurance space has [captured] a larger share of that market than it did before,” said chief marketing officer Megan Moncrief, adding that the typical customer now skews younger than they once did.    

“Travelers have more confidence than earlier this year or last year, but even with that, they still feel that vulnerability,” she added. “And in some cases, there’s a requirement to have travel insurance now.” (For example, major cruise lines such as Carnival, Celebrity Disney and NCL now require most if not all passengers show proof of Covid vaccination in order to sail.)

In fact, 60% of app users told TripIt they carry proof of vaccination with them on trips (15% using a vaccine passport app) and nearly 30% had to take a Covid test for recent travel. “You can’t travel without ID,” said Moyse. “You’ve got to think about your passport, your Real ID and other documents.

“Now, you also need to have vaccination cards,” she added, pointing to international travel regulations. “It’s changing day by day, so the advice we’ve been sticking to is to keep an eye on those requirements.”

Americans itching to travel also might have a little more money burning holes in their pockets, so the extra cost for insurance may be doable. Despite widely reported national grumpiness about rising prices and a scarcity of goods, some (mainly wealthier) people actually have some extra cash saved up thanks to lockdown curbs on travel, government stimulus checks and more. In fact, Custage at Sense360 by Medallia said travelers holding off on booking their holiday travel earlier seem to be more worried about safety than cost.

“It does seem to be a little more common for people to cite concern about Covid, than it would to be to cite financial concerns, like the price of flights,” he said. To wit, while 22% of those surveyed by Sense360 cited Covid as a factor in delaying bookings, compared to 15% pointing to high prices.

That may also be because it’s mainly higher-income travelers who are most ready, able and willing to pack their bags, noted Daher at Deloitte. “Those who are more affluent … plan to spend even more this holiday season,” he said. “Out of that 4 in 10 who will travel, most are making over $100,000 — and that does bode well for the travel industry.

Not surprisingly, the less well off are less likely to travel this winter. Deloitte found lower-income households are nearly three times more likely to avoid travel due to cost concerns than higher-income ones, at 31% vs. 12%. And wealthier travelers are twice as likely to raise their travel budget this season, while 1 in 4 lower- and middle-income travelers are reining in spending on trips.

Overall, 32% of those earning less than $50,000 a year will travel for the holidays, compared to 46% of those making $50,000 to $100,000 and 53% of those with income above $100,000, Deloitte found.

The firm also found that new employer flexibility around remote work for those who able to do their jobs from outside the office is having a positive impact on holiday travel bookings.

“Workplace flexibility is going to drive more demand for airline and hotels this holiday season,” Daher said. “People are extending their trips by a few days … [and] choosing to work as part of their holiday trips.”