Written by 03:42 Business

America’s Divided Summer Economy Is Coming to an Airport or Hotel Near You

The travel industry is in the midst of another hot summer as Americans hit the road and make for the airport to take advantage of slightly cheaper flights and gas. But the 2024 vacation outlook isn’t all sunny: Like the rest of the American consumer experience this year, it is sharply divided.

Many richer consumers — always the lifeblood of the travel industry — are feeling good this year as a strong stock market and rising home values boost their wealth. While they have felt the bite of rapid inflation over the last few years, they are likely to have more wiggle room in their budgets and more options to ease the pain by trading down from name brands to generic, or Whole Foods to Walmart.

Poorer families have had less room to maneuver to avoid the brunt of high prices. Although the job market is strong, with low unemployment and wages that have risen especially rapidly at the bottom of the income scale in recent years, some signs of economic strain have been surfacing among lower-income Americans. Credit card delinquencies have risen, many lower earners report feeling less confident in their own household finances, and companies that serve lower-income groups report that they are under stress.

The gulf between higher- and lower-income consumers has been widening for years, but it is expected to show up especially clearly in travel this summer. Surveys show that richer households are more optimistic about their ability to take trips, and services that they are more likely to use — like full-service hotels — are flourishing. Budget hotel chains, by contrast, are expected to report a pullback.

“If you go to upscale, you’re actually seeing growth there,” said Adam Sacks, the president of tourism economics at Oxford Economics. “A lot of that has to do with the different financial situations of different income groups.”

Bookings, survey responses and spending trends so far suggest that the travel industry will see muted but healthy growth this summer and in 2024 as a whole. That growth is expected even after several years of breakneck vacationing as people took “revenge” for the trips they missed during the pandemic.

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Last modified: 6 July 2024
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