Mastercard report shows demand for experiences amid resurgence in international travel

Newly released insights from the Mastercard Economics Institute reveal that consumers are prioritising leisure travel and pioneering new corridors around the world.

Released this week, Travel Industry Trends 2023 delivers key insights about the global state of travel, punctuated by shifting economic landscapes, persistent consumer demands and a reopening of mainland China.

In the face of a changing economic landscape, post-pandemic preferences for experiences over things and a consistent demand for leisure travel are shaping the 2023 outlook.

The report advises that business travel found its footing in the latter half of 2022, especially in nations and among businesses that prioritised workers returning to their offices and face to face meetings.

Mastercard Economics Institute also estimates that with an uncertain economy providing some cross-market turbulence, mainland China’s reopening is expected to bolster growth globally with concentrated impact in Asia Pacific.

Key findings include:

Leisure and business travel are growing at the same pace
Driven by the long-awaited lifting of travel restrictions in Asia, global leisure travel remains robust, with flight bookings up roughly 31% in March 2023 compared to the same month in 2019.

In the second half of 2022 into early 2023, corporate flight bookings caught up to leisure flight bookings driven by regions with a strong return to office culture.

Global leisure and business travel are now growing at the same rate
Mastercard's insights show demand for in-person meetings, with the most significant growth in commercial travel and entertainment expenses being led by Asia Pacific and Europe up 64% and 42%, respectively, in the January to March 2023 period.

Mainland China’s reopening benefits global and Asia Pacific tourism
China’s reopening following tight COVID regulations comes at a time when it will likely have a positive impact on the experience economy as pent-up demand for travel is expected to drive strong tailwinds. By March 2023, spending on experiences was notably 93% of where it was in 2019 despite minimal travel last year.

Economies in the Asia Pacific region could be obvious beneficiaries of China's opening, given their strong ties to international trade, tourism and geographical proximity.

Travellers establish new corridors
As consumers are enjoying higher incomes and returning to some level of pre-pandemic comfort, they’re also starting to venture further from home to new locations.

For travellers from the Asia Pacific region, the USA and Australia remain favourite destinations for spring and summer journeys. Meanwhile, Thailand stands as one of the top 10 destinations within the region, offering its unique allure and experiences, ranked by share of inbound travel across Asia Pacific.

Beginning in late 2022, visitors to Hong Kong started to increase, with the destination edging its way into the top 10 list and soaring to #3 in February 2023. Luxury travel experiences, such as splurging on high-end accommodation and luxury travel in places like France and Italy, will likely entice Chinese tourists emerging from a zero-Covid environment to rejoin the experience economy.

Tourists continue to prioritise experiences
Preference for experiences over things persists, and travellers are demonstrating new demand for the unique. Potentially influenced by social media and entertainment, travellers are landing in lesser-known destinations in search of cultural immersion. As of March 2023, global spending on experiences was up 65% while spending on things is up 12% compared to 2019.

Experience-oriented spending is surging in certain corridors where pandemic lockdowns have expired, but Chinese tourists who traditionally over-index on luxury retail compared to other tourists could provide a boost to goods spending across markets.

Thailand, in particular, has emerged as a hot spot for travellers seeking to experience new cultures and destinations, as well for those looking to reconnect with the familiarity of this enchantingly mesmerising and vibrant destination. The country has seen a significant increase in spending on experiences, up 40.5% compared to 2019, with spending on things possessions up by 24%.

David Mann, Chief Economist for Asia at the Mastercard Economics Institute, explains "in 2023, travel came roaring back in Asia as China re-opened its borders and other markets eased the last of their pandemic-era travel restrictions.

"As people around the world prioritise experiences over things, the strong demand for travel is expected to last far beyond the initial ‘revenge travel’ bump. As we look ahead to the peak summer travel season, the big question is whether flight and accommodation supply can keep up with demand.

Click here to view the full Travel Industry Trends 2023 report.

Image: Bungy Jump at the Zhangjiajie Glass Bridge in China's Hunan province.