UBS Evidence Lab inside: First Time With Most Ready To Travel Now

UBS Evidence Lab has surveyed 5,000-10,000 people on a weekly basis since April 2020 about their inclination to travel. Survey results have suggested people had become polarized into one of two groups — those who are 'ready to travel now' and those who are 'not ready for 6 months or more.' The reading this week shows for the first time that the majority of people – 55% of respondents - are “ready to travel now.” The survey also marked the lowest point since the survey began for respondents – at 20% of total - stating that they are “unlikely to travel for 6 months or more." In addition, the survey indicates that 68% of respondents are willing to travel within a two-month timeframe.

This week, the segment that is ready to travel (and/or go on vacation) now stands at 55%, which is a significant improvement vs. 50% in the last reading and represents an all-time high since the pandemic began. This group previously peaked in mid-September at 36% and drifted down until a marked drop beginning in early November. It stabilized at around 20% in late November and remained there until starting to improve again in late January.

The share of people waiting 6+ months to travel was reduced to 20% this week, better than the 24% reading last week. And the 20% of people waiting 6+ months to travel is the most optimistic percentage since the pandemic started. The percentage who will not be ready to travel for 6 months+ had been largely stable at ~45-50% from late June until late January and declined by 30 percentage points since then.

The high and middle income cohorts both saw a ~2.6pp decline in vacation/travel spending expectations, with a 3.6pp drop for 55+ y/o consumers. 25% of respondents actually expect to decrease spending on vacation/travel vs 22% in March 2021. Restaurant/ bar spend expectations also took a 2-3pp hit across all income and age cohorts. Events/ leisure intentions weakened too, albeit from a low ranking in the March 2021 survey.

The survey results suggest that spending in COVID hit areas may come back more slowly than hoped after the recent bounce and consumption habits may be stickier than many anticipate. The massive and growing capacity for US consumers to spend keeps us positive on the reopening theme, but the survey is a reminder that many aspects are still uncertain. The relatively muted expectations for COVID-hit areas in the survey would support having broader exposure to the inflection in consumption, and not overly concentrated in hard hit industries. Our work shows that the low quality rally is very far along. Thus we would look to move up the quality spectrum for the reopening theme as well given uncertainty remains.