Most Travel Spending Is Close to Home

31.05.2024 - 18:59 / skift.com / Elizabeth Casolo

Despite some record-breaking numbers for international travel, most travel spending still stems from domestic trips. Tourism within regions is growing, too.

A McKinsey & Company report released this week breaks down global tourism and hospitality trends. McKinsey estimated domestic travel spending will reach $6 billion in 2030, followed by the $1.7 billion estimated for travel within a particular region.

“Revenge travel,” with tourists going abroad after the pandemic lockdowns, sounds popular. Still, roughly three-quarters of travel spending in 2023 came from domestic trips. McKinsey predicted that, by 2030, domestic trips will match prepandemic proportions of travel spending. 

“The pandemic also created an opportunity for people to really explore what’s in their backyard,” said McKinsey Associate Partner Jasperina de Vries, who specializes in travel and contributed to the report.

While the pandemic was one driving force behind closer travel, sustainability could be another factor.

“People say that sustainability is important — and not necessarily do [it] — but, at the same time, we see that awareness is growing, and travelers are starting to act on it,” de Vries said. “We, for example, learned that 20% of travelers are actually reporting cutting down on travel in the last year in an effort to be more sustainable. So, all in all, I think these trends combined are driving a significant increase in nearby travel.”

The U.S. has the biggest domestic travel market, followed by China.

“Now the borders have opened up and international travel is much easier, but I think the habit of consuming travel experiences domestically is a trend that’s here to stay,” said Kuok Hui Kwong, chair of hotel company Shangri-La, on luxury travelers in the report.

While still relatively small, the Indian, Southeast Asian, and Eastern European source markets are growing rapidly. New tourists from countries with increasing GDP and spending power fuel this boost.

“We see a high correlation between GDP development and the development of outbound travel spend,” de Vries said.

McKinsey projected India will have annual travel spending growth of 9% ahead of 2030. The country’s travel brands — like IndiGo — are racing to meet this demand by bolstering their portfolios. International companies are also joining in.

Within India, the country is looking beyond its busiest areas to carry capacity. 

“Development focus has shifted away from major metropolises such as Mumbai and Delhi and toward fast-developing, smaller cities such as Chandigarh and Hyderabad,” the report said.

The Eastern European and Southeast Asian markets’ travel spending are each predicted to grow by 7% per year until 2030. With reciprocal visa waivers, China is hoping to