In 2024, the travel sector has been breaking boundaries. Through March 2024, consumer spending on travel remains strong, and passenger traffic has soared. Mastercard Economics Institute anticipates this momentum will continue as consumers prioritize meaningful experiences and allocate more of their budgets to travel. More than ever, consumers are empowered by a strong labor market to embrace experiences with travel at the top of the list.
We found that travelers are extending their trips by an extra day over the 12 months ending March 2024 compared to the same period in 2019, highlighting a growing desire for more immersive and meaningful travel experiences. In addition to air travel, vacationing by cruise has experienced extraordinary growth, surpassing 2019 records.
Despite challenges like fluctuating exchange rates, climate concerns and varying levels of affordability, the desire to travel remains strong. People are becoming more strategic about how, when, and where they travel, with 2024 seeing significant shifts in travel patterns.
In the Mastercard Economics Institute's fifth annual travel report, "Travel Trends 2024: Breaking Boundaries," we explore these evolving trends and the state of travel in 2024 and beyond.
Global
Breaking Boundaries, Smashing Records
Globally, nine out of the last 10 all-time record spending days in both cruise and airlines have happened in 2024. 1
2024 has kicked off with strong growth in the travel industry – in terms of spending but also the number of people traveling. The year started with strong momentum, and the Mastercard Economics Institute expects it to continue:
Some noteworthy examples of this strength in 2024:
- Passengers traveling: An all-time high of about 15.9 million Americans traveled internationally in Q1 2024 while Japan welcomed over 3 million passenger arrivals in March 2024 2
- Consumer spending: As of March 2024, nine out of the last 10 record-setting spending days in the global cruise and airline industry were in 2024 3
- Leisure for longer: Tourists spend more time on vacation, by about one extra day relative to pre-COVID trends, particularly for lower-cost destinations
- Traveling for events: Memorable events are driving travel trends, whether it is for concerts or sporting events - look out for a rush of travelers to Munich for the opening game of the European Championship
- Top gainers: Japan, Ireland and Romania experienced the strongest growth in share of spending from tourists relative to last year
Analyzing aggregated & anonymized Mastercard transaction data, we find that records are being broken in the travel economy, as illustrated by the chart below. We can thank the solid economic backdrop - the healthy labor market around the world is allowing consumers to spend more on travel.
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Leisure for Longer
Worldwide, travelers are extending their trips by about a day on average.
We found that tourists are spending more time on vacation – about one extra day relative to what was normal pre-COVID. Longer stays in destinations generally translate to longer spend per trip, too, which benefits local businesses.
The Middle East and Africa (MEA) region and Europe have been benefitting the most from this trend, both with roughly two extra days spent while in destination. Conversely, the United States has benefitted less from this new trend, having seen a smaller increase in extended trip lengths. 4
In the last section of this report, we dive deeper into why this has been happening.
Eventful Economy
This year, Munich, Germany, ranks as the top trending destination due to the European Championship.
Consumers are traveling for memorable events ranging from Solar Eclipses to Taylor Swift shows, Carnival in Brazil, and the Cricket World Cup. These events provide strong incremental spending lift to businesses near and adjacent to the area. For example: 5
- The spending lift from tourists during the 2024 Carnival in Rio de Janeiro at restaurants, bars and grocery stores increased 156% above what would have happened without the event.
- During the US solar eclipse, hotel sales within the path of totality experienced a 71% sales boost over normal business.
- Restaurant sales within 2.5 miles of the Taylor Swift concerts in 2023 gained an incremental 68% above regular business.
The rest of 2024 is earmarked with a range of notable events that the Mastercard Economics Institute expects to attract record numbers of travelers from around the world. In the “trending destinations” section, we highlight the destinations showing the greatest shift in demand from June 2024 through August 2024. Among the top of the list? Munich, Germany, where the opening game of the European Championship will occur.
Pricey Push & Pull
Prices remain elevated, but the travel industry is well positioned with a resilient consumer.
In the travel & leisure industry, consumer prices – especially in the hotel industry – remain elevated relative to pre-pandemic levels. 6 With elevated price levels, we’ve found a growing number of consumers seek out wallet-friendly travel options. Why are prices in the travel industry still elevated?
In economics, the terms “cost-push” and “demand-pull” are sometimes used to describe why inflation is happening. For this year, both concepts are happening.
Cost-push inflation is the type of inflation that is caused when the cost to provide a service like flying or lodging goes up. In the travel & leisure hospitality, there are many such pressures. A mix of constrained capacity, supply shortages and elevated labor costs are contributing to “cost-push” inflation in 2024. Examples relevant to 2024 include plane shortages, pilot shortages, and broad increases in real wage growth.
The other type of driver of inflation – demand-pull – happens when there are more people who want to travel than there are available seats or rooms, prompting higher prices. The Mastercard Economics Institute expects to continue seeing many such occurrences of demand-pull inflation throughout the course of the year, in part due to the experience economy and extremely high extent of travel intentions. For example, when more people want to attend their favorite sporting event than there are available rooms, accommodations services providers can increase prices and remain fully occupied. While it is relatively more painful to shell out extra money for consumers, the rooms will still be fully booked, and this serves as a relief to hotels & motels, which were among the most severely impacted due to protracted shutdowns in 2020-2022. The pent-up demand has been providing a breath of fresh air to the hospitality industry in 2024.
The result? Prices remain elevated in the travel, leisure & hospitality industry – but not worryingly so – globally, the Mastercard Economics Institute expect continued real disposable income growth to serve as a tailwind in 2024. Paired with a strong willingness to travel and greater ease of doing so, the Mastercard Economics Institute expects continued momentum in the space in 2024 and beyond.
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