The MacroMonitor Market Trends Newsletter from Consumer Financial Decisions (CFD) highlights topical news and trends of interest to you and your colleagues.
Taking a vacation has well-documented rejuvenating benefits, such as promoting both mental health and higher work productivity. Benefits to the US economy outside the travel industry are less well known. For example, in 2014, the US Travel Association reports that travel generated $2.1 trillion in spending, 8 million jobs, and $41.5 billion in tax revenue.
The United States continues to lag behind European countries in the number of employer-paid vacation days per annum and in the number of vacation days that US workers take. Three conditions are necessary before the majority of households can contemplate a vacation or staycation (a stay-at-home vacation): paid vacation time, coordinated vacation schedules, and the ability to afford vacation expenses. GfK MRI's fall 2014 Survey of the American Consumer reports that in the past 12 months, only one-third of US adults took a vacation.
The incidence of households that save for a vacation continues to decline— from 47% in 1998 to 31% in 2014. The largest declines in vacation saving and borrowing (between 2008 and 2010) are direct results of the recession and job insecurity. Employed household heads younger than age 40 are more likely to save than to borrow; employed household heads between the ages of 40 and 50 are the most likely to borrow.
The MacroMonitor shows that one in five households with between $200 and $500 in monthly disposable income are willing to borrow money to take a vacation. Once a household has $1,000 or more in disposable monthly income, it is more likely than average to be interested in saving for a vacation.
Although most financial institutions offer savings programs, not all offer a savings plan earmarked specifically for a vacation. The time is ripe to resurrect an old-fashioned vacation-savings account. A direct-deposit vacation-savings plan or automatic transfer into a vacation-savings account (enhanced by technology) could benefit both customers and institutions. Despite the fact that money in one account is no different from money in another account, consumers continue to think of their needs as "buckets"; they often don't consider using money from one bucket for another. For example, many consumers maintain high-interest-rate credit-card balances while saving in an account with a very low interest rate. Behavioral economists point out that consumers don't always act in their own best interests but, with a nudge in the right direction, they will likely do so.
If this market segment is important to the future of your business:
From their CFD client-landing page, MacroMonitor subscribers may:
- Access the August 2015 Segment Summary, Households That Save for a Vacation.
- Schedule a full presentation about these households, including a customized and proprietary Q&A session. Contact Us to schedule your presentation.
If you are not a MacroMonitor subscriber but would like more information about Households That Save for a Vacation, please Contact Us.