Our research shows travelers are willing to spend more this
summer than last. U.S. Thematic Strategist Michelle Weaver
explains how this will impact the airline, cruise and lodging
industries.
----- Transcript -----
Welcome to Thoughts on the Market. I’m Michelle Weaver, Morgan
Stanley’s US Thematic Strategist. Along with my colleagues
bringing you a variety of perspectives, today I’ll talk about the
summer travel trends we’re expecting to see this year.
It’s Thursday, May 16th at 10am in New York.
With Memorial Day just around the corner, most of us are getting
really excited about our summer vacation plans. We recently ran a
survey, and our work shows that nearly 60 percent of US consumers
are planning to travel this summer. This figure though skews
significantly higher for upper income consumers. 75 percent of
consumers making $75,000 to $150,000 are planning to travel and
this figure rises to 78 percent for those who make more than
$150,000.
And travel remains a key spending priority for higher-income
consumers. They place travel as one of their top priorities when
compared to other discretionary purchases. This picture reverses
though when you look at lower-income consumers making less than
$50,000 a year. Travel tends to be among their lowest priorities
when they are thinking about their discretionary purchases.
What really matters for companies though is if consumers are
going to spend more this year than they did last year. And
consumers who are planning a vacation are inclined to spend more
this year, with 49 percent expecting to spend more and 16 percent
intending to spend less. So that yields a net plus-32 percent
increase in spending intentions for summer travel.
And what does this mean for key players in the travel industry?
For starters, let’s look at airlines, where demand no longer
seems to be a market debate within the space. It’s remained very
resilient so far in 2024, contrary to what many had feared when
we were going into this year. Our Transportation Analyst also has
a positive view of US Airlines, especially Premium
carriers. And the reason: This category
caters to high-end consumers who are more likely to fly
regardless of the state of the economy. Since the pandemic,
Premium air travel has been one of the fastest growing and likely
most resilient parts of the US Airlines industry, with premium
cabin outperforming the main cabin consistently.
And then what’s in store for cruise companies this summer? The
outlook seems to be broadly positive, according to our analysts.
The largest cruise operators source the majority of their guests
from the US. And these companies provide leisure travel – as
opposed to business travel – almost exclusively, so their
revenues are closely tied to the health of the US consumer. Of
the 60 percent of consumers who are planning to travel this
summer, 6 percent are planning a cruise. That’s a little bit
lower than pre-COVID, but cruise passengers tend to skew older
and more affluent. So, they take more than one vacation
frequently. This keeps the outlook broadly supportive for cruise
companies.
Finally, let’s think about Gaming and Lodging. These are your
hotels and casinos. Investor sentiment is generally cautious for
this space, but our analyst believes the data is encouraging.
Yes, there’s been a slowdown in demand, compounded by continued –
but moderating – labor inflation. This has created margin
pressure for companies with higher operating leverage but the
data suggests that upscale and luxury operators are outpacing
midscale and economy ones. In addition, the Las Vegas strip,
which tends to skew higher end, has outpaced regional casinos.
And even when you look within the Las Vegas strip, baccarat is
outpacing slot demand and luxury properties are outpacing more
affordable options.
So, all in all, the summer looks bright for travel operators,
especially those who have more exposure to the high-end
consumer.
Thank you for listening. If you enjoy the show, please leave us a
review wherever you listen and share Thoughts on the Market with
a friend or colleague today.
Kommentare (0)
Melde dich an, um einen Kommentar zu schreiben.