UAE: Flights, hotel rates go up by 30% but only 3% of residents may cancel travel plans

Multiple factors have sparked a surge in costs, but they have not dented consumers’ insatiable demand for post-pandemic globe-trotting

by

Sahim Salim

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Published: Thu 22 Feb 2024, 2:24 PM

Last updated: Thu 22 Feb 2024, 10:40 PM

About 77 per cent of travellers in the UAE have noted an increase in travel expenses, a survey has found. However, only three per cent would consider postponing or cancelling their trips, according to Visa's 2023 Global Travel Intentions Study. The survey found a “significant surge in travel activity with no signs of slowing down” even amid rising costs.

Mohamed Bardastani, chief CEMEA Economist at Visa, told Khaleej Times that travel expenses from airfares to accommodations have risen significantly post-Covid and remained “somewhat elevated for a sustained period without a meaningful retreat”.


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“There were several reasons behind this price surge — from global inflation pressures, rising geopolitical tensions, tightening energy markets, etc. But none of this has curtailed consumers’ insatiable demand for travel, with consumers increasingly prioritising and valuing their ‘me time’, especially their travel experiences. Our research shows while 77 per cent of consumers were aware of the rise in travel costs, 45 per cent said this is unlikely to change their travel plans."


A top executive from UAE-based online travel agency Musafir said all aspects of travel costs have increased. Raheesh Babu, COO of the travel management company, explained: "While travel expenses have undoubtedly increased compared to pre-pandemic levels, it's remarkable to witness the simultaneous surge in travel demand. Flight prices have climbed by 20-30 per cent, likely due to increased demand and capacity constraints. Similarly, hotel rates have experienced a 20-30 per cent rise, partly driven by the resurgence of business travel post-pandemic.”

According to the Visa survey, travellers took an average of two international trips for around 10 days in the last 12 months. India, Egypt, and Saudi Arabia were the top destinations. Travellers prioritise trips for relaxation (58 per cent), followed by the need to meet family and friends (42 per cent), exploring something new (33 per cent), and seeking adventures (33 per cent).

Babu said his online travel agency has seen a “shift in travel frequency from once a year to two-three trips annually”.

The Global Travel Intentions Study revealed that most travellers (61 per cent) prefer independent trips over packaged tours “as it provides greater flexibility and control over their travel arrangements in case of last-minute changes”. The study also showed that four in 10 travellers are willing to pay a higher price to enjoy the flexibility of accommodating changes in their trip plans.

Babu agreed: “Travellers are increasingly opting for premium experiences, with bookings in 4- and 5-star hotels and first/business class travel increasing by 10-12 per cent. This suggests a willingness to invest in quality experiences despite cost increases.”

Payment concerns

The Visa survey found that most travellers (85 per cent) had payment concerns before their trip. Among the top fears were those about card acceptance (29 per cent), the cost of currency conversion at the destination (26 per cent) and ATM withdrawal costs (24 per cent).

The study is based on a survey conducted among 1,101 UAE residents between the age groups 18-55. The respondents had travelled overseas for leisure in the past year and intend to travel further this year.

About 70 per cent respondents said digital wallets have become an “integral aspect” of spending. Nearly 85 per cent travellers used the same card that they do for domestic expenses in the UAE.

Families travelling with older kids are the biggest spenders (66 per cent) at destinations among all the demographic profiles. During travel, the largest spending categories include fashion-related transactions, restaurants or cafes, and accommodation.

Offsetting travel costs

According to data shared by digital travel platform Booking, most travellers from the UAE plan to slash their holiday bills by taking a vacation outside peak season. More than half (56 per cent) of those questioned in the UAE plan to take children out of school in 2024 to make their travel budget go further.

About 70 per cent of holidaymakers from the country will look to reduce the cost of their vacation by choosing destinations where day-to-day life is cheaper than in their home city. These travellers will also choose to avoid the expense associated with long-haul flights.

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