Canadians are booking their summer getaways in record numbers, but the good times may be coming to an end.
Driving the news: Per a new RBC report, dwindling savings and the rising cost of debt will force many middle-and-low-income earners to start pulling back on travel plans by next year.
Yes, but: That’s next year. For now, flight cancellations, luggage mishaps, and soaring prices have done little to get in the way of Canadians and their post-pandemic travel plans.
- Between January and April, over 10 million Canucks returned from trips abroad, up 7% compared with the last pre-pandemic travel season.
- Travel spending is also up almost 30% compared with pre-pandemic levels, fuelled by the relatively low unemployment rate and leftover pandemic savings.
What else is happening?
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More Canadians are opting to fly over driving, but high prices, work-from-anywhere arrangements, and the return of business travel, are driving people to the US.
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They’re also prioritizing quality over budget, with Google searches for “best” travel options far outpacing “cheap” ones, per an RBC analysis of Google Trends data.
- Domestically, travel preferences have shifted. Searched for Newfoundland and Labrador, PEI, and Nova Scotia have surged since the beginning of the year.
Bottom line: A growing number of economists are now expecting the Bank of Canada to raise interest rates next week, in response to hotter-than-expected economic growth. That would further limit future spending as more people face rising debt payments.—SB