Economy Lodging, Airline Spend Sees Q2 Lift

September 1, 2011

american-express-consumer-spending-on-lodging-q2-2010-v-2011-sept11.gifUS economy lodging and airline spending both saw increases during Q2 2011, according to [pdf] American Express Business Insights. Total individual consumer spending on lodging was flat in the quarter, but economy lodging spend grew close to 26% compared to Q2 2010.

Furthermore, spending on luxury accommodations jumped 6.1%, but the mid-tiers saw slight declines, revealing a “barbell effect” where the cheapest and most expensive options both saw the largest growth. American Express analysis reveals ultra-affluent consumers increased spend on economy lodging by 51.8% in Q2, as compared to average consumers, who increased spend by 19.8% on this class of lodging.

Conversely, ultra-affluent consumers increased spend in the luxury category by 2.6% and average consumers increased spend by 3.3% during Q2.

In addition, large businesses posted a significant 59.1% gain in spending on economy lodging in Q2, which American Express says demonstrates that conservative spending patterns have become normal among corporate travelers. In contrast, large business spending on moderate lodging increased 0.9%, and remained flat for upscale lodging.

Airline Passengers Pass on First Class

american-express-consumer-spending-on-airlines-q2-2010-v-2011-sept11.gifAirline spending in Q2 2011 was mixed, but one pattern across all consumer and business groups was a year-over-year decline in first class ticket purchases. Business class tickets were preferred slightly by small and large businesses and ultra-affluent consumers, while average consumers posted a notable 4.8% increase in economy fare spend.

Despite overall airline transaction volume decreasing 3.7%, average transaction size was up 5.1%, resulting in an overall total spending increase of 1.2% for airlines in Q2 2011. The average transaction size for first class tickets rose 14.5% in Q2, as compared to business class at 2.1%, and economy at 8.3%.

With a 4.5% increase, large businesses were the only group to increase overall spend on airfare in Q2, as compared to decreases by small businesses of 2.9%, ultra-affluent consumers of 1%, and average consumers of 0.8%.

Consumer and Small Business Car Rentals Slow

american-express-consumer-spending-on-car-rental-q2-2010-v-2011-sept11.gifLarge businesses reported a slight year-over-year increase in spend of 0.4% on car rentals (and 74.1% renting vehicles three or more times) during Q2 2011. In contrast, small businesses decreased overall spend by 0.8%, average consumers by 2.7%, and ultra-affluent consumers by 4.4% in Q2.

The volume of total car rental transactions decreased 2.2% in Q2, while the average transaction size increased 1.2%, resulting in overall total spend rising 1.2%. In addition, May was the only month in which consumers posted an overall increase in spend over the year prior, of 0.9%, compared to decreased spending in both April and June of 3.5% and 5.1%, respectively.

Cruise Activity Remains Calm

amex-cruise-spend-q2-11-sep-11.JPGWhile most groups refrained from year-over-year spend increases on cruises in Q2 2011, large businesses posted a 5.3% increase in total spending for this category compared to the same period last year, led by an 11.2% jump in transaction volume.

That said, overall cruise spend and transaction volume were both down 0.3%, while overall average transaction size remained flat. Individual consumers held back on cruising, as ultra-affluent spend decreased by 2.6%, and average consumers decreased by 0.9%.

On the other hand, businesses got on board, with small businesses increasing spend by 1.2%, and large businesses increasing spend by 5.3%. June proved to be the most popular month to spend on cruises as overall spending increased by 3.4%, followed by a spending increase of 0.6% in May and a decrease of 4.4% in April.

Harris: US Vacationers Dream of Italy

When American adults were asked where they would choose, if they could spend a vacation in any country in the world outside of the US and not have to worry about cost, the country named most often for the second year in a row was Italy, according to a July 2011 Harris Poll. Italy has been a top pick for American vacationers for some time; it has ranked as either the first or second choice for the past eight years.

This year Great Britain comes in at the number two spot, followed by Australia in third. This is the lowest ranking Australia has seen since this question was first asked in 1997; last year and in 2008 Australia was second on the list and every other year until now it has been 1 st. Rounding out this year’s top five are Ireland and France.

About the Data: American Express Business Insights examined US consumer and business spending patterns at tens of thousands of travel merchants in the US. The data shown are derived from transactions on the American Express payment network projected to reflect the general population in the industry, consumer and business segments shown. The data do not represent American Express’s own performance in the industry segments shown and do not represent the spending behavior of American Express cardmembers overall or in any particular cardmember segment.

Average consumers are all consumers regardless of spend living in the US, while ultra-affluent are the highest spending US consumers.

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