Is inflation really impacting travel plans this year? Industry experts and travel agents weigh in

By Cindy Sosroutomo

TORONTO — We’ve all griped about the price of chicken in recent months. Lettuce cost an arm and a leg for months, gasoline prices remain well above average, and don’t even get us started on mortgage rates.

Record-high inflation rates in Canada, which reached their peak in June 2022 at 8.1%, have impacted just about every facet of daily life, from groceries to gasoline to housing. And though the annual inflation rate fell to 2.8% in June 2023, a sizable decline from May’s 3.4% rate, Canadians are still feeling the burn of the high cost of living, forcing many to forego little luxuries and alter their travel plans.

A recent Ipsos poll conducted on behalf of Global News found that six in 10 Canadians (62%) are scaling back their vacation plans due to inflation, while 24% say there’s just no way they can afford to vacation at all this summer. But in a twisted Catch-22, the more Canadians stress over inflation, the greater the need for them to go on vacation. Seven in 10 (71%) say they really need to get away, particularly those with kids (83%), but only six in 10 (58%) think it’s likely they’ll be able to.

“It’s clear that from discussions with suppliers and travel advisors, inflation is indeed affecting travel plans for 2023,” says Heather Baker, National Marketing Manager, Independent by Flight Centre. “The concerns about rising costs for transportation, accommodation and other expenses related to travel have been expressed by many. The high cost of living is having an impact on travel budgets this year, prompting people to make adjustments in their trip planning and budgeting.”

Baker adds, however, that despite limited budgets, Canadians are still finding a way to get away, a clear indication of just how highly they value travel.

“Individuals are recognizing the significance of travel experiences and are continuing to embrace them, even if it means making sacrifices in other areas of their lives. This unwavering determination to pursue wanderlust is a testament to the transformative power of travel and its enduring influence on our lives,” says Baker.

Case in point, Uplift, a leading provider of ‘Buy Now Pay Later’ (BNPL) travel payment and credit products.

According to Denise Heffron, Managing Director, Commercial, business has been progressively increasing and continues to look good into the winter, which means Canadians are doing whatever’s necessary to book their much-deserved vacations.

“With the extended COVID pause for travel in Canada, it appears as though Canadians are continuing to make up for lost time and travel,” she tells Travelweek. “At Uplift, our Q2 business in Canada was up considerably year-over-year, and the trend for Q3 is excellent as well. Overall in the market, business is robust but the increases we are seeing could be partially due to travellers’ increasing adoption of monthly payments for their budgeting.”

Valerie Styger, Travel Agent Distribution Manager at Expedia TAAP, Expedia Group, is seeing a similar trend in traveller sentiments, telling Travelweek that although the rising cost of everyday life is a growing concern for travellers, findings from the company’s 2023 Traveler Value Index shows that they are not reducing their travel budgets.

“In fact, nearly half said they are increasing travel budgets this year. While inflation is a consideration – a majority of consumers listed inflation as the biggest factor impacting their travel plans for the next 12 months –people still value travel and are willing to invest in these experiences, if they feel they are getting the best value for their money,” says Styger.

Even more surprising is the fact that luxury travel continues to flourish during these inflationary times. Zeina Gedeon, President and CEO of Trevello Travel Group, tells Travelweek that the luxury market has shown “remarkable resilience” and that the trend of “hyper-personalization” has become increasingly important to luxury travellers.

“Travel remains a top priority for discretionary spending, prompting people to cut back in other areas to accommodate travel expenses,” says Gedeon. “The impact of the pandemic has ingrained a deep appreciation for travel, leading consumers to be reluctant to sacrifice it despite tough economic times.”

Budget Tips For Travel Agents

Úna O’Leary, General Manager of Virtuoso Canada, says that she’s seeing a shift from ‘revenge travel’ – the global phenomenon of people booking big trips to make up for lost time during the pandemic – to experiential travel, a trend where travellers splurge on meaningful, immersive experiences.

“According to our Virtuoso network survey, 74% of Virtuoso travellers say that ‘creating a travel experience that best fits my expectations is more important than price’,” she says.

But how do travellers do this without breaking the bank, particularly when everything costs so much?

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Write to Cindy Sosroutomo at cindys@travelweek.ca