Why will 33 million people forgo travel this holiday season?

Although it figures to be a busy holiday travel season overall, with nearly two-thirds of adults planning a trip away from home this winter, according to a recent survey, financial concerns are keeping millions of would-be travelers grounded through New Year’s.

Out of the 36% of people who don’t plan to travel this winter, WalletHub’s 2018 Winter Travel Survey found that only about one-quarter don’t feel like it. Nearly 6 in 10 winter 2018 staycationers say they can’t afford to travel or need to save money instead.

This might seem strange to some, considering all the news of record highs in the stock market, record lows in the unemployment rate, and overall economic strength. Or, it might make perfect sense, as it’s no secret that the economic recovery has not borne fruit for everyone. Either way, there are a few important explanations you may not have considered.

For one thing, 2018 is expected to be a record year for holiday shopping, with U.S. consumers set to spend $717 billion to $1.1 trillion, according to industry reports. So there may be less money left over for holiday travel. That seems even more probable when you consider that credit card debt, already at record levels, becomes more and more expensive with every Federal Reserve rate hike.

Because of recent rate hikes, “U.S. consumers will be shelling out billions of dollars in extra charges they otherwise could be spending on other things such as travel,” said Mark A. Bonn, director of the resort and vacation rental management program at Florida State University. “This makes it difficult to travel now, let alone after the holiday spending has ended.”

Unfortunately, with credit still relatively easy to come by, many people see debt as a means to enjoying holiday travel. According to the survey, 37% of people say travel is worth getting into debt for.

So you have to hope that the 16% of people who plan to apply for a new credit card to save on winter travel are doing so with rewards, not financing, in mind. However, millennials are 12 times more likely than baby boomers to be planning to apply. So what can we learn from that?

“One reasonable explanation is that millennials have far fewer savings than baby boomers, because millennials are younger, said Irina A. Telyukova, senior vice president of analytics at Mulligan Funding. “Thus, they are earlier in their careers and life cycle.”

But it’s not that millennials are broke and looking to borrow for the wrong reasons, other experts say. Millennials may just be outsmarting boomers, in the sense that a good credit score and reasonable spending habits can get you credit card deals with signup bonuses of $500+ these days.

“Millennials are savvy when it comes to traveling on a budget,” said Nizar Hussein, an instructor in the department of marketing and hospitality services at Central Michigan University. “They take advantage of reward programs offered by credit card companies and open new credit card accounts to earn points. Many are learning the value of reward points if they pay off the credit cards in a timely manner.”

Finally, you have to wonder whether people who choose not to travel over the holidays are outsmarting us all – at least financially. The survey found that more than 90% of people believe airlines rip off consumers over the holidays. Fortunately, there are plenty of ways to save on travel, from credit card rewards to price alerts. You just need to do some planning and be opportunistic for the best results.

“Savvy internet shoppers set up smart phone alerts to find and select the lowest fares – well in advance of the highest price points (as the holiday draws nearer),” said Frederick J. DeMicco, visiting professor of hotel and healthcare management at Colorado State University.

source: eTN