Travel spending is on the rise for card companies

American consumers’ leisure life is currently working hard for card companies.

American Express AXP -1.85%

on Friday reported that spending on travel and entertainment on its cards in March was roughly in line with pre-pandemic 2019 levels. While spending on major business travel and international consumers has still not returned to these levels, US consumers are not being held back by world conditions these days and have contributed to the recovery: they spent 20% more on T&E in the first quarter, adjusted for exchange rate movements, than in the same quarter of 2019, AmEx reported.

Soaring prices could squeeze people at the pump, but it doesn’t seem like a huge deterrent to buying longer trips just yet. US Bancorp reported earlier this month that issuance volume for airline tickets was flat in March 2022 from 2019, the first time the bank has seen a recovery to pre-pandemic levels. Bank of America said card spend on gasoline rose 42% year over year in the first quarter — second only to the 57% increase in travel and entertainment.

AmEx results show that it’s not just higher prices that are driving higher volumes, but also the pace of activity. U.S. consumer travel bookings increased nearly 50% from 2019. AmEx also noted that part of the increase was due to a return to higher-value hotel and restaurant purchases. The company’s Resy restaurant booking service had one of its busiest months ever in March, with reservations up 16% from February.

It could be the case that consumers need to spend more cautiously to prepare for inflation, or out of fear of the economy in general once the itch to travel and go out again is scratched. But much of the momentum is coming from key categories that could be more resilient.

At AmEx, total spending led Millennials and Gen Z consumers, up 56% year over year in the first quarter. Overall, net currency-adjusted card fees — or membership fees — at AmEx rose 16% year over year in the first quarter. It takes a certain level of confidence in one’s economic sustainability to be willing to pay to access future card benefits. The younger cohort tends to be more likely to use card benefits: For example, AmEx found that Millennials and Gen Z cardholders are twice as likely to use $200 hotel credit benefits as other age groups.

Business trips are also still in recovery mode. This tends to be less price sensitive and generally has much larger purchase volumes. If Zoom fatigue continues to boost companies’ conference or travel plans, it could help sustain volume numbers even if consumers slack off a bit. Across all customer types, including large global corporations, T&E billing for AmEx in January was 75% of 2019 levels as the Covid-19 Omicron variant impacted decisions — it was 99% in March.

Investors have certainly noticed the momentum, as shares of American Express are up over 12% so far in 2022, and other card company stocks like Capital One Financial and Discover Financial Services are down far less than banks as a whole. First quarter results so far show that consumer spending is still buoyant for now.

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