‘Revenge travel’ to sustain sector’s robust recovery in coming months

TRAVEL recovery has been robust this past year and despite the current economic volatility, intra-regional travel in particular is expected to pick up further.

That people are engaging in “revenge travel” does not come as a surprise, said Jacquelyn Tan, head of group personal financial services at UOB.

In fact, travel spend across Asean rose by nearly 240 per cent year on year and is now at close to 90 per cent of pre-Covid levels.

This increase in spending on travel far outstrips that of dining (up almost 50 per cent year on year) and retail (25 per cent).

This strong pent-up demand for travel likely resulted from consumers making up for the last few years of not being able to leave the country, she said.

The bank’s total year-to-date billings in Asean grew by almost 30 per cent year on year in September as borders reopened. This is more than 10 per cent higher than pre-Covid levels in 2019, she added.

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According to UOB’s Asean Consumer Sentiment Study which was launched in September, respondents from the five countries surveyed (Singapore, Malaysia, Thailand, Vietnam and Indonesia) indicated an increased optimism towards the resumption of international travel.

Of the five countries, respondents from Singapore, Thailand and Vietnam indicated they are spending more on travel. The Vietnamese led the pack, with 53 per cent indicating they are spending more on trips, followed by Thais (41 per cent) and Singaporeans (33 per cent).

For Singapore specifically, year-to-date spending on cards posted nearly 30 per cent growth year on year, recovering to surpass pre-Covid levels by over 20 per cent.

Average spend on airline bookings from April to October this year rose 30 per cent compared with the same period in 2019, with average hotel expenditure up by 8 per cent in the same period as well.

On average, Singaporean consumers are estimated to spend US$3,468 on international travel over the next 12 months – on par with the US$3,547 average spend in 2019.

Data from booking platform Trip.com corroborates this trend of increased travel. The booking platform further notes that increased demand for overseas travel coupled with flexible work schedules is driving up year-round demand to many destinations which were traditionally more popular in the summer months or during school holidays.

Flight searches for travel within Asia Pacific for instance, was up 27 per cent in October compared with September.

Searches for flights from Singapore to the Philippines and Maldives were up by 34 per cent and 32 per cent respectively.

Bookings were also up. Across select Asian destinations, flight bookings on Trip.com rose by 19 per cent in October 2022 compared to the previous month.

Bookings for flights within Asia-Pacific, as a whole, were up by 15 per cent, with flight bookings to Maldives increasing by an average of 12 per cent.

Shifting spending patterns

Even as inflation drives up costs, UOB’s Tan does not expect consumption in the region to drop.

“With a stabilisation in savings as bank deposits in Asean return to pre-Covid growth rates, regional consumption should continue its recovery trajectory, spurred by reopening economies and a more mobile population post-pandemic,” she said.

“Paired with pent-up demand for high-touch services such as international travel, we expect travel recovery to remain robust in the coming months despite current economic volatility,” she added.

“As regional vaccination rates continue to rise and more Asean countries ease their pandemic restrictions, intra-regional travel should pick up further and accelerate the region’s rebound.”

For Singapore specifically, she said the bank expects discretionary spend in categories such as travel to continue growing through this quarter until early February 2023 in light of upcoming festivities and the school holidays.

Overall spend will likely “normalise” following the festive period.

But even as consumers spend more in areas such as travel, how they choose to transact is changing.

According to the bank’s sentiment study, more than half (56 per cent) of respondents from the region prefer to pay by credit or debit card to earn the associated rewards.

This is especially so in Singapore, which saw a 6 per cent year-on-year increase in card payments.

Based on the bank’s latest data, the number of miles redemption transactions conducted by UOB cardholders for October was at over 80 per cent of pre-Covid levels.

The bank is also working with partners across the region, including exclusive tie-ups with brands such as Singapore Airlines, The Michelin Guide, Club 21 and Shopee.

Unsurprisingly, use of e-wallets is also up, with seven in 10 in the region using their e-wallets at least once a week.

In Singapore, billings on e-wallet top-ups have gone up by over 220 per cent year to date as of July 2022.

“Customers have realised that they get more value with digital payments – for instance, they can triple dip and earn e-wallet points, get discounts and redeem card-associated rewards with their transactions,” said Tan.