Australians spending up on road trips instead of air travel amid cost of living pressures: KPMG

Holiday parks across the country are set to be packed out this summer as inflationary pressures see many to turn to the humble road trip.

A growing number of Australians will be holidaying at holiday parks or camp grounds amid mounting cost of living pressures. Picture: G'day Group

Mounting cost of living challenges and a weaker dollar have spurred a boom in road trips by Australian families with stretched budgets looking to take a break this summer.

KPMG analysis shows the road-trip comeback during the pandemic is here to stay, with domestic trips continuing to prove a popular substitute for international travel. Operators report a 20 per cent uplift in bookings this Christmas since cost of living constraints first emerged in late 2022.

KPMG Urban Economist Terry Rawnsley said while air travel spending was down more than 30 per cent compared to pre-Covid levels, road trips remain stronger than ever. His analysis of tourism data from the Australian Bureau of Statistics shows spending on fuel for holidays is up 70 per cent from before Covid, train travel has lifted 60 per cent and holiday rentals are 30 per cent higher in regional areas.

“If you have two or three kids then an overseas trip certainly adds up, particularly with a weak dollar, whereas if you bought the camping gear during Covid, you may still get your value for money out of it with a road trip,” he said.

KPMG urban economist Terry Rawnsley says the humble road trip is here to stay as households seek out better value. Picture: Supplied

“The classic tourism spots such as the south coast of NSW, Margaret River, the Great Ocean Road region and the Sunshine Coast are all big winners from a renewed interest in road trips and are getting an economic boost.”

Road trips ware considered more flexible than international travel. The boom follows a rise in four-wheel drive, camper van and camping equipment purchases during the pandemic.

“A road trip is a cost-effective way to have a good time with friends and family on a limited budget,” Mr Rawnsley said.

“People have had a tough year keeping their budgets under control and while they might have loved to fly to Bali it would cost too much money. Many now are saying ‘let’s just go down the coast’. It is another indicator how cost of living issues are shifting people’s behaviour to save a few dollars.”

Spending on fuel for road trips has increased by about 70 per cent.

Summer was the busiest time of year for G’day Group, which operates 280 holiday parks across Australia, including Discovery Parks and G’day Parks. Total nights sold over the December- January holiday period are expected to be up 5 per cent and 20 per cent from 2022.

G’day Group chief executive Grant Wilckens told The Australian that cost of living challenges were forcing people to holiday closer to home, with strong demand for destinations within a two-three hour drive of major capital cities. “Aussies are trading down due to inflationary pressures, but this has benefited our business and the industry, as we have a huge diversity of product available catering to a wide variety of budgets and traveller demographics,” he said. “Budget-conscious travellers also have greater control over their expenses when road tripping and staying in holiday parks. Our parks offer barbecues and communal ‘camp kitchens’ where you can prepare your own meals, reducing the reliance on eating out.”

Mr Wilckens said a holiday park stay as part of a road trip offered a variety of accommodation options for varying budgets but with the same access to amenities. He added that Australians had reconnected with regions during the pandemic and were nostalgia about road trip holidays in recent years.

MasterCard chief economist David Mann said the weak Australian dollar, which fell to a two-year low this week, was not likely to weaken the overall desire for international travel, which had increased since the pandemic, but it would make people reconsider their destination.

“There will be some people who will say let’s not do that European trip this year, let’s maybe do a road trip instead, or go somewhere domestically. The recent falls in the dollar will certainly play a role,” he said.

“But we know there is a desire for international travel and we’ll still see plenty of demand for Bali, Japan and those places which have been less impacted by the FX challenge, and we are seeing that in our MasterCard data.”