How does a U.S. presidential election affect travel? Conventional wisdom says that travel decreases in these years—and new research by Virtuoso, shared with media at Virtuoso Travel Week, seems to back that up.
What do the numbers say?
The luxury travel network examined data from its warehouse of $49.5 billion in transactions to gauge the impact of the last three American presidential elections on travel bookings. What they found was, on average, sales grew by 14.3 percent in the U.S. in the years before an election year (2007, 2011 and 2015); however, during election years (2008, 2012 and 2016), sales dropped significantly, growing by just 2.9 percent on average. (These sales include bookings made prior to and during the specific years for travel in that year.)
U.S. markets reported the following growth:
- 2007: 8.8 percent / 2008: 3.3 percent
- 2011: 18.8 percent / 2012: 5.7 percent
- 2015: 15.4 percent / 2016: -0.2 percent
Why is this the case?
The last election year was the only that saw no growth (although sales were down by just a fraction of a percent); perhaps this was due to the tumultuous nature of the 2016 election. David Kolner, Virtuoso's senior vice president, global member partnerships, noted that, for U.S. sales, 2012 was the highest. He says this could be due to there generally being less concern during incumbent election years.
"Whether it’s the distraction of elections or uncertainty that’s driving it, people become more conservative in their spend, both inside the US and abroad (during election years)," Kolner says. "The good news is that it’s not all doom and gloom during election years. Spending may slow—and it’s good to know it could potentially happen again next year—but with the exception of the last election cycle, we typically don’t see negative growth. More than anything, we want our members and partners to be aware of this cyclical history and have sufficient time to adjust accordingly."
Could 2020 see a rebound or another decrease?
2019 has been a good year for bookings, Virtuoso reports, with sales up 11 percent from 2018. Kolner adds that Virtuoso is "seeing some positive momentum" at the moment in terms of bookings. With that said, the outlook for 2020 remains uncertain.
"Advanced bookings for 2020 are up right now," Kolner tells us. "There are indicators that we may start to see a softening in the market, but we don’t appear to be there yet."
In other words, things are looking good but it is still possible that 2020 follows the trend of slower years. It's also good to note that bookings to tend to rebound in the years following an election, meaning the election-year drop-offs don't go beyond that one year.
How do American elections affect non-U.S. markets?
Interestingly, bookings in markets outside the U.S. showed a similar pattern to American markets: Sales increased by 36.1 percent the year before an American presidential election and 18.4 percent the year of an election. Despite the decrease in growth, non-U.S. markets didn’t see as drastic a decrease as the U.S.
Non-U.S. markets reported the following growth:
- 2007: 37.9 percent / 2008: 28.3 percent
- 2011: 39.9 percent / 2012: 11.7 percent
- 2015: 30.6 percent / 2016: 15.3 percent
What can advisors do to keep bookings up?
"There is a certain degree of psychology that comes into play here," Kolner says. "If an advisor is aware that their clients might pull back on their travel for next year, they can start working more proactively to lock in plans now. In a way, they can even use it to their advantage by explaining to clients that there could be more and better availability in certain destinations, and encouraging them to take advantage of it."
So, while the trends show 2020 could be a slower year than those of late, you have the tools to help plan ahead and mitigate some of the potential concerns among travelers.
This story originally appeared on www.luxurytraveladvisor.com.