Households saving less and spending more than had been indicated in earlier numbers prompted economists to warn the Reserve Bank may delay cutting interest rates despite the data showing economic growth slumping to 1.1 per cent in the year to March. Especially as most households budgets will get a boost when stage three tax cuts kick in on July 1.
Finance manager Mr Hwang, 38, was one of hundreds of thousands of Australians who holidayed abroad this year. In the 12 months to March 2024, more than 934,000 residents travelled overseas on a short-term trip, Australian Bureau of Statistics data shows. That was 29 per cent higher than the year before.
Mr Hwang said he would probably use his tax cut to build up his mortgage buffer, as he had felt the full force of the RBA’s 13 rate hikes.
“You definitely think a little bit more about what you’re spending your money on,” Mr Hwang said. “You can still go out for coffee, but you don’t go out all the time, and you choose the places that you want to go to.”
He told AFR Weekend the rising cost of living was a reason his family chose Japan over more expensive destinations in Europe. Not only was it cheaper to eat out and buy clothes in Japan, thanks to the weak yen, but the shorter flights also meant they could go on a shorter trip without travel time eating into too much of their holiday.
His parents alleviated some of his financial concerns by covering accommodation costs for him and his brother, as the semi-retired couple had already paid off their mortgage and were therefore unaffected by higher interest rates.
“They can literally save everything,” Mr Hwang said.
The familial assistance speaks to a broader trend across the economy: that of mortgage-free retirees earning higher returns on their nest eggs and spending big on everything from high-end art to overseas travel.
In the first three months of the year, the only cohort to record spending that outpaced the rate of inflation was people aged 65 or older, Commonwealth Bank customer data shows.
Qantas chief executive Vanessa Hudson told the Macquarie Australia Conference in May that “a disproportionate share” of the airline’s customers were “homeowners probably not exposed to high interest rates”.
“The propensity of those customers to travel and travel in premium classes is stronger than ever,” Ms Hudson said, adding it was a global trend.
Adam Schwab, chief executive of online travel business Luxury Escapes, agreed Baby Boomers were travelling in great numbers. But they weren’t the only drivers of the overseas travel boom.
“We hear a lot about the cost-of-living crisis, and that absolutely is a real thing,” Mr Schwab said. “But there’s plenty of people, including Millennials and Gen X, who have got heaps of cash in the bank.”
Mr Schwab said his business and the overseas travel industry more broadly had a strong start to the year because airfares had come down significantly as airlines increased their capacity. Favourable exchange rates helped, too, with overall sales at Luxury Escapes more than doubling since before the pandemic.
“This calendar year so far has been incredible, and it just keeps getting better,” he said.
“We were selling flights to the Maldives for $900 return, which is incredible; Bali, $600 return. This makes it a super economical trip for Australians to go offshore … You could have paid three or four times that last year, at times.”
Skyscanner’s Jarrod Kris said the booking company had also observed a significant uptick in international bookings made by Australians.
“When it comes to international travel, compared from December 2023 to December 2022, our data shows that Australia has seen a substantial 44 per cent increase in flight bookings,” Mr Kris said.
Over the year to March, the top 10 destinations for Australians were New Zealand, Indonesia, Japan, the US, India, Thailand, Vietnam, China, Singapore and Fiji.