Industry Update
Opinion Article18 November 2015

Travel spending has increased by $48B – so what are travelers spending money on?

By Bojan Jokic, Epteca Co-founder & CEO

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The United Nations World Tourism Organization (UNWTO) recently released data on the spending habits of tourists in 2014, which put $1.2 trillion back into the global economy — an increase of $48 billion from the previous year. The same report revealed that receipts from international visitors spending on accommodation, food and drink, entertainment, shopping and other services and goods reached an estimated US$ 1,245 billion (euro 937 billion) in 2014, an increase of 3.7%.

The global business travel market generates sales worth hundreds of billion U.S. dollars every year and it includes both national and international travel, accommodation, additional transportation and many other amenities. A recent survey from Expert Market reveals business travelers spend up to$611 per day.

According to a study of 240,000 unique travelers by RocketFuel, luxury travelers make up to 18 purchases prior to a trip, compared to four for non-luxury travelers, and luxury travelers are 206% more likely to make a retail purchase at a luxury retailer than non-luxury travelers.

So when it comes to spending their hard earned money, what are travelers most likely to spend on before they go on a trip? According to an Expedia report, new clothes are the most common purchase when travelers are getting "vacation ready" at 43%. Other popular pre-trip expenses include:

  • Haircut/style: 32%
  • Phone package: 16%
  • Waxing/hair removal: 14%
  • Manicure/pedicure: 13%
  • Dieting/weight management products/services: 10%

Once at their destination, travelers are equally motivated to make purchases for products and services. A Ulysses Mercer analysis revealed that a $300 average spend per person on 3rd party ancillaries is comprised of the following:

  • Destination food & drinks – $114
  • Transport at destination – $62
  • Destination shopping – $41
  • Travel accessories & care - $28
  • Destination entertainment - $15
  • Transport to & from airport – $12
  • Other - $28

In contrast, some ancillaries are not so welcome by travelers. According to Expedia, for global travelers, the most aggravating travel fees, in order, are "taxes," "baggage fees" and "booking fees." The list features:

  • Taxes: 41%
  • Baggage fees: 36%
  • Booking fees: 34%
  • Seat selection fares: 27%
  • Resort/hotel fees: 25%
  • Tipping: 25%
  • In-room WiFi: 23%
  • Buying mobile phone package for out-of-network travel: 18%
  • Travel/trip protection insurance: 15%

The travel industry has a huge opportunity to use data to personalize and improve the travel experience by offering products and not just charging fees. By offering what Epteca calls carefully curated and relevant "long tail" ancillaries (or products and services not traditionally offered by travel companies), which consumers want and need, travel companies and advertisers have opened up previously unrealized revenue streams. This combined with a strong customer service message post-booking through to the return from travel, adds value to every step of their customers' journey and makes customers feel appreciated.

Bojan Jokic

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    About Epteca

    Epteca is the pioneer of context marketing in the world of merchandising of branded products and ancillary services within the aviation and travel industry, a USD 280 billion market. The unique end-to-end platform with predictive algorithms matches customers context and intent, creating new service opportunities while enhancing the customer experience in all the phases of their journey. Since 2013, Epteca has been working with over 60 leading travel and consumer brands helping engage and inspire their customers with contextual, highly relevant and timely information and offerings. Epteca can accurately anticipate not only what customers require, but also what they are likely to want or do during their trip. Epteca delivers on what until now has been an elusive dream: the right offering, presented to the right customer, at the right place and the right time – guaranteed.

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