Q: How is the cost of living crisis affecting the way Australians spend on travel?
A: It is significantly influencing the travel spend of Australians. Both the travel statistics from the Australian Bureau of Statistics and our own sales data reveal a similar trend: Australians are travelling closer to home and for shorter durations in 2024.
While international travel is still occurring, Australians are prioritising destinations that offer the best value for money.
Long-haul destinations like Europe and the U.S. are less popular compared to closer destinations that provide better value due to favourable exchange rates, allowing the Australian Dollar to stretch further.
Q: If our trips are getting shorter, what kind of knock on effect could this have on suppliers, tour operators, attractions, etc.?
A: The effects will vary depending on the suppliers and attractions. Operators in regions like Asia, Indonesia and Japan may experience significant increases in business.
However, hotel operators might be negatively impacted as travellers opt for shorter trips. Some travellers might choose to maintain their trip length but downgrade from five-star to four-star accommodation.
Despite the cost of living crisis, Australians still prioritise travel as part of their expenditure because they value the memories created.
Consequently, activities while overseas may be less affected. Overall, Australians are spending less on travel, so all suppliers will be competing for a slightly smaller share of the market.
Q: Which destinations are “hot” right now and what’s driving this popularity?
A: In one word: Japan! Japan was gaining popularity even before COVID, but its growth in the last 12 months has been unbelievable.
The strength of the Australian Dollar against the Japanese Yen has reached record highs, making Japan more financially attractive than ever before.
Additionally, Indonesia, a long-time favourite among Australians, is also experiencing significant growth in popularity.
Q: Are there any popular destinations that Aussies aren’t visiting as before?
A: Long-haul destinations are the ones suffering the most. The UK, Europe and particularly the U.S. are seeing fewer Australian visitors.
The primary reason is the significantly higher cost of flights to these destinations. Additionally, I don’t believe we have yet seen a return to the competition or pricing levels that existed before COVID.
It’s not just flights, though – accommodation costs, food prices and the overall value are better across Asia compared to Europe.
Moreover, shorter trips with shorter flights are more appealing to travellers in the current economic climate. Having said all of that, our data suggests that Europe is starting to creep up again, in line with the Northern Hemisphere summer.
Q: Do we still like to take cash with us when we travel?
A: Yes. Our research indicates that 50 per cent of Australians use cash as a main payment method overseas, though data from a global consulting firm suggests this number is typically 70 per cent when looking at behaviour across the globe.
Cash offers security, particularly for those concerned about card acceptance in different countries. It is also useful for emergencies and smaller expenses like tips, taxis and markets.
It’s surprising how widely accepted cash still is outside Australia; even in big cities like Paris, cash is often preferred in many cafes and restaurants.
Interestingly, the biggest demographic for using cash is the under-25 age group. This trend is evident from both our research and sales data.
We believe the main reason for this is that younger travellers often visit more exotic or adventurous destinations, where relying solely on electronic payments might not be as feasible. They are not typically engaging in the more relaxed, “fly-and-flop” type vacations.
Q: Travel spending can sometimes get out of hand when you’re overseas. Is there evidence to suggest Australians plan their spending before travelling?
A: Our research shows that 77 per cent of consumers consider how they will spend overseas at least a few weeks before their trip, with 51 per cent starting to plan over a month in advance.
Those who pre-plan their spending tend to be the most satisfied with their travel expenses.
In contrast, the most dissatisfied travellers are those who withdraw cash at their destination or use credit cards, primarily due to costs and fees.
Despite a large percentage of people planning and budgeting, there is a noticeable difference between pre-trip and during-trip spending behaviour. Concerns about costs, fees and budgets are much greater before travel than during the trip.
Q: What tips do you have for keeping money safe when travelling abroad?
A: To keep your money safe when traveling abroad, we recommend using three payment methods:
Cash: While cash is universally accepted and useful for smaller transactions, it’s not advisable to carry large amounts of cash with you. Instead, bring a reasonable amount for immediate expenses and emergencies.
Pre-paid card: A pre-paid card, such as the Travelex Money Card, is an excellent way to manage your spending abroad.
You can load the card with the currency you need before your trip, avoiding conversion fees and unknown exchange rates when making purchases.
The Travelex Money Card is a Mastercard, so it is widely accepted. Additionally, Travelex does not charge ATM fees, allowing you to withdraw extra cash as needed.
This card helps with budgeting, as you can track your spending and remaining balance through an app. It is not directly linked to your bank account, so your savings are safe if the card is lost.
Plus, there is 24/7 global assistance to replace lost cards and transfer funds to the nearest Western Union outlet. The card can also be added to Google Wallet, with Apple Pay support coming soon.
Credit Card: Having a credit card is essential for larger emergencies and transactions that require a deposit, such as car rentals. This way, your cash or pre-paid card funds are not tied up in deposits, allowing you to use your budget more effectively.
By diversifying your payment methods, you can ensure greater security and convenience while traveling.
Q: What are your predictions for the future of the travel industry both domestic and international?
A: I think we all wish we had a crystal ball to answer that one. However, it’s safe to say that Australians value travel highly, both domestic and international.
The COVID period reminded us of the beauty and variety within our own country and I expect domestic travel to continue to thrive as people explore more of Australia.
For international travel, I predict that as interest rates eventually decrease and cost-of-living pressures ease, we will see a sharp increase in demand for long-haul travel.
Australians love visiting America, from Hawaii and Los Angeles to New York and beyond, and I believe this trend will bounce back, hopefully with reductions in flight prices. The upcoming elections in the U.S. may cause some volatility in currency rates, so that will be interesting to observe any changes in demand.
We are also seeing growth in currency sales for destinations like Vietnam and Korea. This trend is driven not only by economic factors but also by Australians’ adventurous spirit and desire to experience new cultures.
From a travel money perspective, I expect cash to remain relevant for many years, alongside significant growth in the use of travel-specific cards with digital payment capabilities.
The Interlude Hotel Competition Question 2:
How long did it take builders and engineers to dig out The Interlude’s subterranean relaxation pool?
