China has overtaken the US for paying for flights and holidays on the ‘never never,’ a global study of 12,000 travellers found.
Almost three quarters (72%) of Chinese travellers questioned by Worldpay revealed that they paid for their last holiday using a credit option, such as a credit card or bank loan, rather than their savings.
The findings challenge long-held global assumptions about China’s savings culture, according to the payments company.
Travellers in the US were second most likely to go into debt when planning to get away with 64% of Americans saying they had funded for their last holiday using credit.
By contrast, Germans were the least likely to fund their holidays on debt, with only half of the country’s travellers choosing to fund a flight or holiday using credit. No data was available from the UK.
Globally, 75% of travellers wanted the choice to pay for their next holiday in installments rather than as a lump sum, and 56% would opt to spread the cost of their flights this way.
This suggests that many travellers want to pay for a holiday in the same way they might pay for ‘big ticket’ items such as cars or white goods, via a credit agreement brokered with the vendor, according to the research.
Among Chinese and US travellers, the trend towards credit-funded holidays was most pronounced among ‘late millennials’ and younger Gen-Xers – 73% of 26-35 year olds and 77% of 36-45 year olds in China admitted they had gone into debt to pay for their last holiday, compared to 69% of 26-35 year olds and 71% of 36-45 year olds in the US.
However, there is a huge gulf between the two countries in terms of the payment types holidaymakers use for flights and holidays.
The US remains the home of the credit card, with 81% of respondents saying they would pay for their next holiday on plastic, compared to just 44% of Chinese travellers.
A more an even split between credit cards and alternative payment methods emerged in China, with 32% of respondents saying they would book their next flight or holiday using an e-wallet and 10% would use China’s UnionPay domestic debit card.
Nevertheless, US travellers showed that they were prepared to consider alternatives to credit cards. Sixty per cent of US debit and credit card users said they would pay for their next flight or holiday using an alternative payment method like PayPal if they were given that option.
Worldpay airlines and travel vice president, Thomas Helldorff, said: “These findings show that – at least when it comes to flights and holidays – China is now very much the consumer-driven economy, and is beginning to challenge the US in terms of spending power.
“Yet the real learning for airlines and travel companies who want to tap into the passion for international travel means recognising, while everyone wants to go on holiday, the way they pay for it varies remarkably from country to country.
“The businesses which are best prepared to benefit from consumer demand for flights, hotels, holidays and other travel experiences are those with the right systems in place to support both locally preferred and internationally-recognised payment methods.”
He added: “More than this, holidaymakers are looking to the travel industry to innovate and provide alternative ways of funding their next holiday that aren’t tied to traditional payment methods.
“Whether it’s the option to pay for a beach break using PayPal, or an instalment plan that spreads the cost of a round-the-world air ticket, travellers all over the world are hungry for more ways to pay.”