A survey conducted by Visa’s 2023 Global Travel Intentions Study reveals that approximately 77 percent of UAE travelers have observed a surge in travel expenses. Despite the increased costs, the study highlights that only 3 percent of respondents would contemplate delaying or canceling their trips. The findings indicate a notable upswing in travel activity, demonstrating resilience even in the face of rising expenses, with no apparent signs of slowing down.
Mohamed Bardastani, Chief CEMEA Economist at Visa, noted a substantial increase in travel expenses, ranging from airfares to accommodations, in the post-COVID era. These costs have stayed “moderately elevated for an extended length of time without making a significant pullback,” indicating a prolonged period of higher travel expenditures.
“The surge in travel prices can be attributed to various factors, including global inflation pressures, escalating geopolitical tensions, and constricting energy markets. Despite these challenges, consumers exhibit an insatiable demand for travel, placing a high value on their personal “me time,” particularly their travel experiences. According to our research, although 77 percent of consumers acknowledge the rise in travel costs, a significant 45 percent express that this increase is unlikely to alter their travel plans.”
Raheesh Babu, COO of the UAE-based online travel agency Musafir, highlighted a comprehensive increase in all facets of travel costs. Despite the undeniable escalation in travel expenses compared to pre-pandemic levels, the notable observation is the concurrent surge in travel demand. Flight prices have seen a substantial rise of 20-30 percent, attributed to heightened demand and capacity constraints. Similarly, hotel rates have experienced a parallel increase of 20-30 percent, influenced in part by the resurgence of business travel in the post-pandemic landscape.
As per the Visa survey findings, travelers, on average, embarked on approximately two international trips lasting around 10 days each within the past 12 months. Notably, India, Egypt, and Saudi Arabia emerged as the top destinations of choice. The survey highlighted that travelers primarily prioritize trips for relaxation, with 58 percent expressing this as their main objective. Following closely, 42 percent indicated the need to meet family and friends, while 33 percent cited the desire to explore something new and seek adventures.
Babu, the COO of the online travel agency Musafir, observed a notable shift in travel behavior, noting that his agency has witnessed a change from an annual travel frequency to an increased rate of two to three trips annually. This shift underscores a trend where travelers are opting for more frequent travel experiences, reflecting evolving preferences and a heightened appetite for exploration and relaxation.
According to the Global Travel Intentions Study, a majority of travelers (61 percent) express a preference for independent trips as opposed to packaged tours. This inclination towards independent travel is driven by the desire for greater flexibility and control over travel arrangements, especially in the event of last-minute changes. The study further highlights that four out of 10 travelers are open to paying a higher price to avail themselves of the flexibility that allows adjustments to their trip plans.
Babu concurred, noting a discernible trend among travelers who are progressively gravitating towards premium experiences. Bookings for accommodations in 4- and 5-star hotels, as well as first/business class travel, have witnessed a noteworthy surge of 10-12 percent. This shift underscores a growing willingness among travelers to invest in premium and high-quality experiences, demonstrating a prioritization of value and comfort over potential cost increases. Despite the rise in expenses, the data suggests that a significant segment of travelers places paramount importance on the overall quality and luxury of their travel experiences.
Addressing Payment-Related Issues
As per the Visa survey, a significant majority of travelers, comprising 85 percent, expressed pre-trip concerns related to payments. The foremost anxieties revolved around uncertainties regarding card acceptance, with 29 percent of respondents highlighting this as a primary fear. Additionally, 26 percent expressed concerns about the costs associated with currency conversion at their destination, while 24 percent were apprehensive about ATM withdrawal expenses.
The study, conducted among 1,101 UAE residents aged between 18-55, focused on individuals who had engaged in overseas leisure travel within the past year and expressed intentions to undertake further travel in the current year. By shedding light on these payment-related concerns, the survey offers valuable insights into the apprehensions faced by travelers and highlights areas of focus for addressing these pre-trip anxieties.
The survey revealed that approximately 70 percent of respondents consider digital wallets to be an integral aspect of their spending habits. Moreover, nearly 85 percent of travelers utilize the same card for international expenses as they do for domestic transactions in the UAE.
Notably, families traveling with older children emerged as the demographic group with the highest spending propensity at destinations, constituting 66 percent of the respondents. During travel, the primary spending categories include transactions related to fashion, expenditures at restaurants or cafes, and accommodation costs. This insight provides a comprehensive understanding of the evolving payment preferences and expenditure patterns among travelers, shedding light on the pivotal role of digital wallets and the significant impact of family dynamics on spending behaviors during trips.
Mitigating Travel Expenses
Data provided by the digital travel platform Booking reveals that a considerable number of UAE travelers are strategically aiming to reduce their holiday expenses by opting for vacations outside of peak seasons. A significant 56 percent of respondents in the UAE expressed their intention to take their children out of school in 2024 as a means to extend their travel budget and make the most of their vacation plans. This trend indicates a deliberate effort among travelers to navigate around peak travel times, showcasing a proactive approach to optimizing travel costs and maximizing the overall value of their holiday experiences.
A substantial 70 percent of holidaymakers from the UAE are poised to curtail vacation expenses by opting for destinations where day-to-day living costs are more economical than in their home city. This strategic decision reflects a conscious effort among travelers to select locations that offer a cost-effective daily lifestyle, contributing to overall savings during their holiday. Additionally, these travelers are inclined to bypass the expenses associated with long-haul flights, demonstrating a practical approach to minimize travel costs and make their vacations more budget-friendly. This trend underscores a thoughtful and strategic mindset among UAE holidaymakers in their pursuit of enjoyable yet economically prudent travel experiences.
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