Photo: Getty Images/Jeremy Poland
Falling coronavirus case levels and fewer restrictions drove a strong recovery in spending on experiences (i.e., travel, dining out, live events) in 2022 and they appear to be continuing to take significant discretionary dollars away from retail.
Mastercard SpendingPulse found in-person dining grew 15.1 percent from November 1 through December 24, as co-workers, friends and family held long-delayed gatherings. That’s double the 7.6 percent gain in U.S. retail sales.
Steve Sadove, Mastercard senior advisor, said in a statement, “Retailers discounted heavily but consumers diversified their holiday spending to accommodate rising prices and an appetite for experiences and festive gatherings post-pandemic.”
The shift back to spending on experiences follows record spending on goods earlier in the pandemic as people huddled in their homes.
According to a study released in October by the American Hotel & Lodging Association (AHLA), U.S. hotel leisure travel revenue was expected to expand 14 percent in 2022 versus 2019 levels. In September, U.S. restaurant reservations surpassed pre-pandemic levels, according to OpenTable.
In August, concert promoter LiveNation reported second-quarter attendances across its venues advanced over 20 percent versus the comparable 2019 quarter.
The economy’s reopening has resumed the broader shift towards the “experience economy” that has seen consumers seeking out memories in favor of material possessions.
A global survey from Momentum Worldwide conducted in October 2019 found an overwhelming majority (76 percent) would rather spend their money on experiences than products. The study found “inspiration and meaning” as the most sought-after quality in brands, a 200 percent increase in those attributes versus a 2012 survey.
According to U.K.-based data provider Refinitiv, hotels, restaurants and leisure is expected to be the only consumer-related industry to see positive growth in the fourth quarter as job concerns weigh on overall spending.
“Consumers have moved away from splurging and are going towards experiences,” Jharonne Martis, Refinitiv’s director of consumer research, told CNBC last week. “Not only do they want to go and eat out but fine dining and casual dining are outperforming quick service. So they want to go in the restaurant, have an experience, and pay the higher prices despite inflation.”
- Mastercard SpendingPulse: U.S. retail sales grew 7.6 percent* this holiday season – Mastercard
- Analysis: 2022 Hotel Leisure Travel Revenue Projected To Be Up 14% Over Pre-Pandemic Levels – American Hotel & Lodging Association
- The restaurant industry in recovery – OpenTable
- Live Nation Entertainment Reports Second Quarter 2022 Results – Live Nation
- Consumers are spending money on experiences rather than going to the mall, says Refinitiv’s Jharonne Martis – CNBC
- Restaurants rebound while food delivery becomes a post-pandemic norm – Kantar
- As the Pandemic Ebbs, Americans Are Shifting Their Spending from Goods to Services and Travel – Observer
- Welcome to the Experience Economy – Harvard Business Review
- 76% of Consumers Prefer to Spend on Experiences than on Material Items, New Study Finds – Momentum Media/PRNewswire