More travelers are splurging in the air and scrimping on the ground.
A new study by American Express Business Insights finds that spending on first- and business-class airline tickets increased by 9.1% and 5.4%, respectively, in the third quarter. But on the ground, travelers spent more of their dollars — an additional 10.5% — on economy lodging vs. only 2.2% more on luxury hotel accommodations in that time.
The reason for the seemingly bipolar spending: A growing frustration with flying and an improvement in the quality of economy lodging, industry analysts and travelers say.
“It really speaks to the fact that (consumers are) so concerned about the airline experience that they’re willing to make the trade-off,” says Maryam Wehe, senior vice president of hospitality at Applied Predictive Technologies, a consulting firm.
The spending trend applies to traveling for business or leisure, the study indicates.
Frequent traveler John Harding, a family law attorney in Pleasanton, Calif., says he doesn’t mind paying more to fly business class. But when it comes to lodging, he’s looking to save.
“It’s a whole lot more miserable for me to spend five or 15 hours on an airplane in economy than for me to spend a couple of days in a budget hotel,” Harding says.
Harding follows the same pattern whether flying for business or pleasure. He recently spent $1,100 each for business-class tickets to Hawaii for himself, his wife and two teenage children. But he spent less than $200 a night for the hotel.
Usually, he says, he tries to keep the nightly hotel bill under $125. “The only time I spend in a hotel is when I’m sleeping,” he says. “I don’t need all the accoutrements.”
That seems to be the case among both affluent and average-income travelers. The American Express study found that midscale and even upscale hotels, the second-highest category, lost favor among all types of travelers, with declines of 3.4% and 3.9%, respectively.
“The most pronounced trend we’re seeing is ‘luxury or value,’ which also speaks to the barbell effect apparent in travel — and other sectors — wherein consumers selectively choose either high-end or low-cost options, squeezing out the midtier providers with flat or declining spending growth,” says Ed Jay, senior vice president of American Express Business Insights.
Other frequent business travelers say they’re doing the same thing.
“A good comfortable bed and shower, the ability to work and get food and drink when needed works for me,” says Stephanie Dickey, who lives in Richmond, Texas, and works as vice president of sales for an import company.
The upswing in business travelers opting for premium seats may also be attributed to companies loosening their policies on letting employees fly first or business class as the economy has improved.
According to a Global Business Travel Association report, just 42% of companies banned premium-class air travel this year compared with 47% last year.
And, analysts say, business travelers often may have had no choice but to upgrade their seats. In 2009, the economic downturn and high fuel costs forced airlines to cut flights.
Business travel has rebounded, but airlines have been slow to add flights, says Joel Wartow, senior director of the Solutions Group for Carlson Wagonlit Travel, a corporate travel agency.
Photo credit: smh.com.au
Via USA Today