Americans may be cutting back on their spending, but one thing they aren’t ready to give up yet is travel. Inflation-weary consumers have been less likely to pull out their wallet for discretionary purchases, several retailers reported this earnings season. That sentiment was echoed in a recent survey by KPMG, which found that consumers expected to spend a smaller percentage of their monthly household budget this summer across discretionary and essential categories compared with winter 2023. Furniture, toys and hobby supplies were expected to experience the largest drop in spending, the survey found. Yet despite all odds, 61% of those surveyed said they plan to travel this summer, up from the 49% who said the same in the summer of 2021. The KPMG Consumer Pulse Survey was fielded April 21 to April 26, with a representative sample of 1,003 consumers across the United States. “A lot of this travel and vacation was taken away from them for a two- to three-year period,” explained Matt Kramer, national sector leader for consumer and retail at KPMG. “They’re reluctant to pull back on those experiences and events that they treasure.” That’s translating into outperformance for some names in the travel sector. “You’ve definitely seen a lot of travel stocks benefiting from consumer spending this year,” said Sylvia Jablonski, CEO and chief investment officer of Defiance ETFs. The firm’s Airline, Hotel and Cruise ETF (CRUZ) is up about 12% so far in 2023, after losing 24% in 2022. For instance, Royal Caribbean is up nearly 58% year to date, after losing 35.72% in 2022. Carnival has gained about 36% so far this year, after losing nearly 60% in 2022. Online travel site Booking Holdings is also outperforming the broader market, up about 29% so far this year, and Marriott added 15% year to date. Meanwhile, United Airlines is up nearly 26%. The savvy traveler As consumer spending pivots from goods to services, fueling the post-pandemic travel recovery, they are also being savvy in the face of rising prices. “They’re just being thoughtful about how they spend and where they actually booked their accommodations,” Kramer said. “I think you’re going to see, just like in groceries where consumers are willing to trade down to lesser brands or private label, they’ll do the same thing with their travel planning.” In fact, price is the top consideration travelers are taking into account when they book a trip, according to a Morning Consult report on the state of travel and…
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