Hotel rooms at over US$500 a night too much – even rich travellers
EVEN high-end travellers are pulling back on their holiday spending.
They want to pay no more than US$500 a night for a hotel, and they are not interested in paying extra for greener or fancier options, the latest MLIV Pulse survey found.
The findings may be a reflection of diminishing consumer confidence or complaints that inflated pricing has not been accompanied by a proportionate increase in service quality. They also come during what should be one of the busiest periods for travel booking. March is when most people start to finalise summer plans and early birds get a jump on year-end holiday reservations.
The survey had 465 respondents, a little more than half of whom were from the US and Canada, and a quarter from Europe. Participants in the poll included traders, portfolio managers, senior managers and retail investors.
Some 69 per cent said their maximum budget per hotel room night was US$500, while 24 per cent were willing to spend up to US$1,000. Still, 5 per cent set their limit at US$2,000, and 2 per cent continued to entertain spending US$3,000 per night or more.
Although US$500 to US$1,000 per night for a room might sound high, that range eliminates the fanciest hotels in most major markets, let alone suites or larger rooms at mid-tier properties.
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Google data shows that typical prices for five-star hotels in New York City in April and May range from US$523 to US$999 per night. In Paris, that number is higher, ranging from US$707 to US$1,382. In St Barts, where late spring constitutes the tail end of the season, the typical price range for a top-end hotel stretches up to US$1,451.
The results of the survey suggest that luxury hotels, restaurants and airlines will face increasingly irritated consumers this summer.
Bank failures, fast inflation, elevated mortgage payments and a softening labour market, especially in high-income sectors such as tech, could nudge tourists towards keeping discretionary spending in check. Travellers are watching their wallets, even after personal incomes rose faster than prices in the 12 months through February.
Limited appetite for excessive spending will probably also make some travellers baulk at elevated airfares. Some airlines, including Deutsche Lufthansa, deliberately kept capacity in check, hoping that pent-up, price-agnostic tourists would be willing to pay through their noses to get to their desired destinations.
More than half of professional investors said negative economic factors, such as a recession, would undermine airline stocks in the next 12 months. Retail investors were more optimistic, with 60 per cent predicting positive momentum in the sector. European respondents were more likely to see positive drivers for airline shares than US and Canadian ones.
Another trend busted by the findings of the survey was the continued growth of “bleisure” travel, in which travellers tack vacation days onto a work trip to enjoy their business destination at leisure. Among professional investors, 62 per cent said this was not something that they would be doing more of this year. A smaller proportion – 56 per cent – of retail investors said the same.
It may not be surprising to see that retail investors have more ongoing flexibility for remote work than banks and Wall Street firms, but it is noteworthy that both groups are generally staying away from extended absences. In fact, a majority of respondents said their habits had recalibrated to pre-pandemic norms overall.
Only 10 per cent said they found themselves making greener travel choices, contradicting industry reports. Half said their spending had returned to pre-pandemic levels.
For those travellers, the days of so-called revenge spending as the pandemic passes are over, if they happened at all.
The number of people “splashing out” on their next holiday was exceedingly small, at just 7 per cent. A quarter said they would possibly upgrade things one notch. Among the 18 per cent that said they would reduce spending, 72 per cent were professional traders and 28 per cent worked on the retail side.
One facet of travel that has remained unchanged since 2019 is consumer sentiment about major aviation hubs. When asked which airport they dreaded the most, respondents coalesced around New York’s John F Kennedy International Airport and London’s Heathrow, followed by Los Angeles International and Newark Liberty International Airports.
And an electric flying taxi seems far in the future, if ever. Almost half of respondents said they thought they would fly in one from 2030 onwards, while 37 per cent said never.
MLIV Pulse is a weekly survey of Bloomberg News readers on the terminal and online, conducted by Bloomberg’s Markets Live team, which also runs a 24/7 MLIV blog on the terminal. BLOOMBERG
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