Wealthy millennials are busy booking tickets and packing their bags.
High-income millennials are set to drive the post-pandemic travel boom, according to a new survey from Accenture and TripAdvisor that polled 1,000 Americans. It defined millennial high earners as those raking in at least $100,000 a year. This cohort is most likely to spend big on travel this year, comprising the highest rate of luxury bookings (trips costing at least $5,000) among all other generations surveyed.
Driven by a desire for self-care and relaxation, 37% of high-earning millennials have already booked or are planning to book a luxury trip, and 32% are planning to increase travel spending in 2021, nearly double the average respondent.
In fact, the survey found that high-income millennials are most likely to spend their pandemic savings on travel. It’s an on-brand finding for this demographic of the generation, who prefer to spend on experiences like travel and have saved up to $3,000 a month during lockdown last year.
After a year in lockdown, they’re looking to travel further and stay away longer, according to the survey. “Whether it’s a domestic or international flight, young travelers are going the distance and heading to beaches, cities, and even on cruises,” it reads.
Luxury travel spending bodes well for the economy
That high-earning millennials are willing to spend on this sector is an optimistic sign for travel’s comeback. While more Americans intend to travel as the weeks go by, it’s still a hole in the economy that needs to be filled.
Luxury travel spending is also a good sign for the economy overall. Economists are predicting that a lockdown lift will see the biggest boomtime in a generation, potentially ushering in a new era in the US economy. Moody’s Analytics expects the US economy to grow 6.4% in 2021 after shrinking 3.5% in 2020.
But the US’ economic fate will depend on whether Americans view their $2.6 trillion in excess savings as wealth or deferred income, BofA’s head of North America Economics, Ethan Harris, wrote in March. Much of that is in the hands of higher-income households, who have more of a propensity to spend.
Consumer spending accounts for 70% of the American economy, and half of that is from the top 10% of American households, per estimates from Goldman Sachs and Deutsche Bank, respectively. That means about one-third of US GDP comes from spending by the top 10%.
It also means that, as UBS strategist Keith Parker wrote in a March note, “higher-income households are key to driving the recovery in consumption.” Those earning over $80,000 annually expect to increase their spending more than low- and middle-income earners, per a follow-up UBS note.
BofA Research has separately found that spending among lower-income households continues to run the strongest as the economy reopens. High-earning millennials shelling out on luxury travel could help turn the tides toward increased spending among the wealthy, which would help get the economy back on its feet.