Consumers are quickly changing their spending habits as the pullback across the leisure and travel industry becomes more pronounced. We first asked this question in early May, "Is Consumer Travel Spending Easing?" - BofA Identifies New Trend As Travel Companies Miss Earnings.
With the Biden-Harris economy losing steam, recession risks are mounting as the labor market cools. Airlines, hotels, short-term rental platforms, and even theme parks are sounding the alarm bells about a consumer downturn.
Evidence of a consumer slowdown is widespread.
Goldman's Peter Callahan commented on this in a note to clients on Sunday, "Travel trends clearly deteriorating into July/2H (EXPE / ABNB 2H moderation, DIS Parks/Experiences saw a moderation of consumer demand, FOUR calling out restaurant weakness in July) – debate is if they are now 'de-risked' into 2H or if the market will need to wait to see if we go 'below' trend before normalizing (as many other categories impacted by COVID have done – e.g. e-commerce) .."
Discretionary downturn signs are everywhere.
Earnings Call Mentions Of "Consumer Downturn" Soar To Highest Level Since Financial Crisis
"Suddenly Recession Is On The Tip Of Everyone's Tongue... Wow, Did That Happen Fast!"
And in individual companies.
Airbnb Shares Plunge On Slowing US Demand As Consumer Downturn Worsens
Disney CFO Admits Lower-Income Consumers Are "Stressed & Shaving Time Off At Parks"
What's very clear is that pent-up demand for travel during the Covid era has evaporated as consumers struggle with elevated inflation and high interest rates, along with maxed-out credit cards and depleted personal savings in an economic environment that even VP Harris has admitted Bidenomics has failed.
Bloomberg cited new website tracking data from Similarweb, which shows consumer web searches for rooms, flights, and cruises have sharply declined in recent quarters.
From Airbnb to United Airlines, Delta Air Lines, Spirit Airlines, Frontier, Walt Disney, and travel platform Expedia Group, management teams of these mega corps have all been warning about a consumer slowdown.
Just last week, Expedia slashed its annual outlook for the second time this year due to worsening consumer softness.
Days ago, Hilton CEO Christopher Nassetta told investors, "The lower sort of half of consumers, maybe even the lower three-quarters, have less disposable income available and less capacity to do anything, including travel."
Although Bloomberg mentions that "demand for travel isn't collapsing," the fact that consumers have been pulling back for months is a very ominous signal that the economy is heading in the wrong direction.
