According to a report published by global payment solution Splitit Payments, consumers want to pay for travel expenses in interest-free monthly installments and, if given the option to do so, would make travel purchases farther in advance and spend more on upgrades, food and entertainment. The report also reveals that younger consumers are highly debt-conscious and prefer paying for travel expenses in cash more so than any other age group.
With summer on the horizon, the average American is $38,000 in debt. Splitit’s report found that while 54% of respondents plan to travel and a third of individuals expect to spend more than $500 on flights and lodging, financial anxieties pose a major obstacle to consumers’ dream vacations. Travel merchants vying for consumers’ hard-earned dollars will struggle to generate more revenue unless their offerings reflect travelers’ personal finance priorities.
Findings reveal that the ability to pay for travel expenses in interest-free monthly installments is a huge incentive for travelers, enabling them to buy tickets sooner, upgrade their travel arrangements, and spend more while on vacation.
“Plagued by financial anxieties”
Gil Don, CEO and Co-Founder of Splitit, said: “Summer is high time for exploring new places and relaxing on vacation, but in reality, many would-be travelers are plagued by financial anxieties that make vacations less feasible.
“It’s up to travel merchant to offer consumers innovative solutions that will stretch their horizons, not their budgets, enabling them to afford travel expenses without racking up debt. Flexible payment solutions are a highly effective way for merchants to ease eager travelers’ budget woes.”
Highlights from the report
Splitit’s report revealed that US consumers are receptive to installment plans for their priciest travel expenses. If given the option to pay in interest-free monthly installment payments, 56% of respondents would buy flight tickets and 42% would purchase lodging this way. When asked what factor would be most helpful when paying for expensive flight tickets, over 40% of respondents chose interest-free monthly installments, compared to 28% who chose complementary travel insurance.
Nearly 70% of respondents said they would book flights and/or hotels up to one year in advance if they could pay for them at a lower price in interest-free monthly installments.
Consumers are also able to make more of their existing summer travel budgets when paying in installments. When asked which travel expenses they would be more likely to spend more money on if offered the option to pay in interest-free monthly installments, 30% of respondents said they would upgrade their hotel room, 23% said they would upgrade their airline seat, 37% said they would spend more on entertainment, and 28% said they would spend more on food.
The report contains data from a survey, conducted in March 2019, which was jointly carried out with Google Consumer Surveys based on a representative sample of more than 1,000 respondents from the United States, aged 18-65+.
To see the full report, click here.