As the summer travel season gets underway, strong domestic travel numbers may look like a sign of economic strength. But a Florida State University hospitality expert says they could also point to something more complicated: consumers choosing shorter, cheaper trips as inflation and high interest rates continue to squeeze household budgets.
Tarik Dogru, an associate professor at Florida State University’s Dedman College of Hospitality, is available to discuss what this summer’s travel patterns may reveal about consumer behavior. His research examines how travelers adjust vacation spending during economic shocks, including shifts toward lower-cost lodging, shorter trips and domestic destinations.
According to Dogru, high domestic travel numbers do not always tell the full story. Some households may still prioritize travel, but they may be trading international trips or luxury vacations for more affordable domestic options. That shift can make tourism numbers look strong while masking pressure on consumers’ real spending power.
Dogru can also discuss how economic uncertainty affects different segments of the hospitality industry, including independent hotels, economy-tier properties and peer-to-peer rentals, which may benefit when travelers trade down.
Media interested in contacting Dogru for an interview may reach out to him via email at tdogru@dedman.fsu.edu.
Tarik Dogru, associate professor, Dedman College of Hospitality at Florida State University
As the summer travel season approaches, economic instability is at the forefront. How can individuals’ financial instability actually accelerate travel and tourism?
The motivation to escape, socialize and/or experience nostalgia doesn’t disappear when during a pandemic or a period of economic uncertainty and geopolitical stress; rather, it becomes a crucial coping mechanism. For some people, macro-level economic goals, such as buying a home, might already feel unattainable due to high interest rates and high elevated prices in general and so consumers are likely to be redirecting their capital toward short-term subjective well-being, feeling good: travel/tourism/experience economy. They need the vacation to cope with the economic uncertainty. Therefore, travel demand remains highly resilient, not because consumers are wealthy necessarily, but because travel serves as a psychological necessity in an uncertain world especially after the post-pandemic era where travel/vacation has become a necessity for many. Revenge travel might have become a permanent way of life.
There is a chance that domestic tourism could increase this summer or stay at a strong level. But does a surge in domestic tourism always indicate a positive economic outlook?
During the pandemic, our research showed that the hotel industry is not a rigid industry that works in tandem within. That is, the pandemic shock adversely affected the luxury hotel chains, while economy, midscale and independent hotels were highly resilient during this time.
Look at how financial stress plays out in real life: a family facing a tight budget in 2026 doesn’t just stay home. Instead, they swap a $5,000 trip to Europe for a $2,000 domestic road trip. Economists call this the substitution effect wherein the travel plan stays, but the budget shrinks.
A surge in domestic tourism demand driven by inflation means consumers might be trading down. Our earlier research (again in the context of pandemic) showed that independent properties, economy tiers and peer-to-peer accommodations (Airbnbs) capture this downgraded demand. Therefore, in this context, high domestic tourism demand is likely to mask a broader macroeconomic contraction in consumer spending power in travel and tourism context.
How might the “migration effect” not always give an accurate portrayal of tourism numbers?
Raw tourist arrival numbers can be deeply misleading without examining per-tourist spending, destination quality and the reason for arrival.
An increase in domestic travel might sound great. But if that increase is mainly due to travelers who originally planned international trips but have migrated to domestic options due to financial uncertainty or geopolitical stress, then the increase in domestic tourism does not represent new demand entering the tourism economy. They represent displaced demand, recirculated domestically at lower per-trip values. Accordingly, in this context, both the inflation effect and the substitution effect operate simultaneously, inflating nominal spending numbers while the actual experience of economic benefit at the destination level might be declining.
When an American who would have gone to Paris, for example, instead takes a road trip to Miami, that substitution increases domestic tourism (and contributes to Miami’s economy to some extent), but removes the overall international travel impact in the global tourism economy. Therefore, this substitution generates significantly less total economic activity in the overall global tourism economy.