by WEX Travel
A strong U.S. Dollar, greater competition among international airlines, and an increased desire for authentic travel experiences are all contributing to a boom in international travel from the U.S. According to the International Trade Administration, Americans took more than 72 million trips outside the country in 2016, an 8% overall increase from the previous year. With many industry experts seeing the trend continuing, U.S. travel companies have increased opportunities to expand their business and their customer bases through international bookings.
Why are Americans Taking More International Trips?
With the value of the U.S. Dollar higher than it’s been in over a decade, travelers seem eager to take advantage of their greater buying power while it lasts. Plus, falling prices for international flights are making international travel even more attractive. Where a few years ago it was difficult to find a flight to Europe for less than $1,000, new lower-cost airlines such as WOW Air have cut the price in half or more. Confirming this trend, the Travel Leaders Group reported that the cost of international business airfare decreased 17% in the last three years, while domestic prices have continued to increase.
Although Mexico, Canada, and European destinations remain the most popular destinations, Americans are using their greater spending power in less traditional destinations as well. Driven by an increase in the popularity of adventure travel, trips to South America increased by nearly 9% last year, and trips to Oceania increased by over 11%.
Participation in travel programs such as TSA PreCheck and Global Entry are also increasing. Global entry, which has a five-year membership duration, was up by 3% last year, showing that travelers are committed to international travel for the near future.
An Opportunity to Attract New Customers
This is, of course, good news for U.S. travel companies, especially those who offer a wide range of international options. It’s also an opportunity for travel companies to attract new business from those who have previously eschewed professional travel services. According to the Long Haul Travel Barometer, 45% of Americans booking a European trip are planning on using a travel agent rather than plan the trip themselves. Consumers, especially those new to international travel, are looking for a trusted source to help them plan complicated itineraries, advise them of visa requirements, and to find the best deals on hotels and flights.
These new customers offer an opportunity for travel companies to prove their worth. The right supplier payment method can take the hassle out of paying international suppliers allowing travel companies to focus on delivering great customer service and an attractive range of booking options.
Virtual payments or Virtual Card Numbers (VCNs) are the leading travel industry technology for international payments. Single-use VCNs work just like traditional credit cards but offer greater fraud protection, easier reconciliation and a host of benefits for paying international vendors. VCNs help travel companies avoid foreign exchange rate markups and cross-currency fees by paying suppliers in their local currency and can be used worldwide, in 210 countries and over 150 different currencies. With virtual payments from WEX, travel companies can even choose to be billed directly in 21 currencies, which helps avoid currency fluctuation risk. And since VCNs are globally accepted through the Mastercard® networks, there is no set-up work required to accept payment.
Will the International Trend Continue?
While it’s unlikely that the value of the U.S. Dollar will remain strong indefinitely, there are other indicators that Americans’ love affair with international travel will continue. As the world becomes smaller and consumers look for authentic travel experiences, they will continue to seek out new destinations. An AARP travel survey indicated that 13% of millennials and 8% of Generation X travelers are planning trips abroad, while 5% of baby boomers have international trips planned. The adventure travel market continues to grow each year, and lower international airfare remains an added incentive to those looking to travel abroad.
Americans seem committed to expanding their horizons, and travel companies who can provide a convenient and seamless experience to these travelers are positioned well to take advantage of the trend.