Leisure budgets are set to grow 9% over the 2024, primarily fuelled by the Baby Boomer generation, fuelling the recovery in the travel sector. However, younger travellers with smaller budgets are more likely to take trips abroad, presenting notable challenges for international carriers.
During the early stages of the pandemic, international lockdowns saw many airlines slip into crisis mode. With demand suddenly drying up entirely, many companies were forced to beg for state bailouts, or face collapse. In the years since, huge inflationary pressures have slowed the recovery from this – but travel has finally returned to pre-pandemic levels in 2024.
Now, a new study from Simon-Kucher suggests that the average budget relating to leisure and travel is heading for 9% growth. The Travel Trends study polled more than 5,400 consumers across the UK, France, Germany, the Netherlands, Spain, the UAE and US, with representative quotas for age, gender, living area, education level, employment status and income.
Source: Simon-Kucher
According to the research, this growth is disproportionately being driven by people aged over 58 years old. Demand is expected to rise by 19% among the Baby Boomer demographic, compared to 7% among Gen X, 10% for Millennials and 1% among Gen Z. As encouraging as the growth might be in the short-term for travel providers, then, there are some issues to take into account.
Particularly, it may be a worry that most of the sector’s growth is being driven by the oldest consumers, rather than those who have the longest part of their lives still ahead of them. But also, that the groups most likely to spend are least likely to spend on more lucrative international travel. The youngest travellers in the Millennial and Gen Z demographics, who typically have less average budget per trip – were three times more likely to seek international trips than Baby Boomers and Gen X.
Source: Simon-Kucher
At the same time, not every market was enjoying the same rate of growth. The US – which is the size of a continent, and with a population of 333 million – did best with its average leisure spend rising by 15.2%, possibly because it has so much to offer the older generation of its travellers who are only looking to visit places within their own borders.
In contrast, the UK saw much more modest leisure budget growth of just 2.8%. The situation for French and German travel firms was even worst, though – with their average budgets sinking by 3.9% and 3.5% respectively. This may also be because the largest amount of growth in summer leisure trips is also occurring among the lowest-spending demographic. While Baby Boomers are completing just 0.9 domestic trips per year, members of Gen Z commit to 2.8, due to their more budget-friendly nature.
Source: Simon-Kucher
When it comes to planning for the future, then, it seems that travel companies need to do more to appeal to younger consumers – both at home and abroad. But how? While many of the top criteria are the same across all generations, Simon-Kucher did find that Gen Z and Millennials both had heightened desires for sustainable travel, and experiences offered during trips – offering ways to court them specifically as customers.
“The travel industry is experiencing significant changes, influenced by diverse traveller preferences and evolving economic conditions” said Ana Morillo, senior director at Simon-Kucher and study leader. “Our research reveals that travellers are becoming increasingly discerning, seeking value and unique experiences. The demand for sustainable and spontaneous travel, along with a rising interest in luxury, is reshaping the industry landscape. Companies that adapt to these emerging trends will exceed traveller expectations, fostering loyalty and achieving incremental growth in this competitive market.”