Visa survey: holiday shoppers pick physical gifts over travel

Consumers want travel and experiences this holiday season but are spending on physical gifts instead, as higher airfares and inflation force trade-offs, CNBC reported.

More than half of respondents put travel and live events at the top of their wish lists, but only 15% plan to prioritize spending on experiences for others, while 27% favor physical gifts, according to Visa’s survey of roughly 4,660 U.S. adults.

The gap between aspiration and action is the story of this holiday season. Consumers want to travel, but airfares are up more than 22% year-over-year, and general inflation is driving up the cost of everything. The result is a holiday season where wish lists and shopping lists diverge, and the retail sector benefits from travelers who stay home.

The travel cost barrier

Airlines have hiked ticket prices as fuel costs have risen by billions of dollars due to the Iran war. Fares are up more than 22% in September compared with a year earlier, according to the consumer price index. Even if fuel prices drop, executives have said fares are likely to stay high, because the industry has learned that higher prices do not meaningfully reduce demand.

The airfare increase is the mechanism by which the Iran war reaches the holiday shopping season. The war disrupted Middle East oil supplies, pushing crude prices higher. Jet fuel is a refined product derived from crude, and its price has roughly doubled. Airlines pass the cost to consumers through fares, and consumers respond by staying closer to home and spending on gifts instead of trips.

Michael Brown, Visa’s principal U.S. economist, framed the dynamic. “If I’m traveling more, I’m probably going to be gifting those physical goods less, so this is really the broader context,” he told CNBC. Visa expects more people to celebrate the holidays “a little bit closer to home” than in the past.

The income divide

The travel pullback is not uniform across income groups. Only households with an income above $200,000 spent more on trips departing between November 1 and early next year compared with the prior year. Many other income groups pulled back on travel spending.

The affluent segment is insulated from the inflation pressure that constrains the rest of the population. “If you think about that segment, a lot of them own equities, and the equity market runup over the last several months has created a lot of positivity among that specific affluent demographic,” Brown said. The stock market rally has offset the inflation cost for high earners, allowing them to maintain their travel spending.

Less affluent shoppers are making different choices. Visa’s consumer survey from October showed that roughly one-third of consumers with an income below $100,000 plan to switch to lower-cost brands or stores when shopping for holiday gifts. The trade-down behavior is the consumer response to inflation: same gift, lower price, different store.

The income divide has implications for retailers. Luxury and premium brands will see strong holiday sales, because their customer base is not feeling the inflation squeeze. Mass-market retailers will see volume growth as trade-down consumers shift to their stores, but margin pressure as they compete on price. The middle is where the pressure is greatest: mid-tier brands and department stores face both trade-up and trade-down, losing customers at both ends.

The inflation illusion

Visa is projecting a 4.5% year-over-year increase in holiday sales growth. The number sounds healthy, but it is mostly inflation. Without price increases, sales are expected to rise just 1.1% this year, down from 1.3% during the 2025 holiday season.

The 1.1% real growth figure is the one that matters. It means the economy is producing slightly more goods and services for the holiday season than last year, but the improvement is marginal. The 4.5% nominal figure overstates the health of the consumer economy because it counts price increases as growth. Consumers are spending more, but they are getting less.

Brown acknowledged the dynamic. “Consumers are internalizing higher prices of things, and I think that’s why they’re reporting higher anticipated spend this year,” he said. “I think these numbers just need to be looked at through the lens of the inflation and particularly consumers’ perception of where inflation is going to go.”

The inflation illusion has a feedback effect. Consumers expect to spend more because prices are higher. Retailers see higher sales and project strength. But the real volume is barely growing, and the gap between nominal and real growth widens as inflation persists. The holiday season that looks strong on the surface is weaker underneath.

What I think

The Visa survey captures the holiday season’s central tension: consumers want experiences but buy goods. The trade-off is rational. Airfares are up 22%, and a family of four facing $400 more in travel costs will redirect that money to gifts. The retail sector gets a windfall from grounded travelers, which is the silver lining of the Iran war’s impact on fuel prices.

The income divide is the part that should concern policymakers. Households earning above $200,000 are traveling more, buoyed by stock market gains. Households earning below $100,000 are trading down to cheaper brands. The middle class is squeezed from both directions, and the holiday season exposes the strain. A recovery that only works for the top is not a recovery.

The 1.1% real growth figure is the number to watch. Nominal sales growth of 4.5% will generate headlines about a strong holiday season, but the real figure tells the truth: consumers are buying slightly more than last year, but the improvement is barely above zero. The retail sector is not growing in real terms, and the gap between nominal and real growth will widen if inflation persists.

The travel industry should be worried. If consumers are choosing physical gifts over trips because of airfares, the preference may stick even after fares fall. Habits formed under constraint often persist after the constraint lifts, because consumers discover that staying home and exchanging gifts is satisfying. The travel industry could lose a cohort of holiday travelers to the gift market, and the loss would be permanent.