Visa: Physical gifts beat out travel in holiday budgets

U.S. consumers are prioritizing tangible items over travel experiences for the upcoming holidays, even though trips and live events dominate their wish lists, according to a Visa report released on Thursday.

The data reveals a distinct disconnect between desire and spending. While more than half of surveyed adults listed travel and experiences as their top preference, only 15% plan to allocate funds for those items. In contrast, 27% intend to spend on physical gifts. Michael Brown, Visa’s principal U.S. economist, attributed this shift to rising travel costs and a general focus on value.

Airfare expenses have surged this year as airlines pass on higher fuel costs linked to the Middle East conflict. The consumer price index shows that September airfares climbed more than 22% compared to the same period last year. Executives indicate these prices are likely to remain elevated, prompting Brown to suggest that more households will celebrate the holidays closer to home.

Income levels heavily influence this spending pattern. Visa data shows that only households earning above $200,000 increased their travel spending for trips departing between November 1 and early next year compared to the previous cycle. Brown noted that this affluent group benefited from recent equity market gains, which boosted their confidence to spend.

Shoppers in lower income brackets are reacting differently. An October Visa survey found that roughly one-third of consumers with incomes below $100,000 plan to switch to lower-cost brands or stores for holiday purchases. This group is pulling back on travel and focusing on budget-friendly alternatives to manage their finances.

Visa projects a 4.5% year-over-year increase in holiday sales, but Brown cautioned that much of this growth reflects inflation rather than higher volumes of goods purchased. When adjusted for price increases, sales are expected to rise only 1.1%, a decrease from the 1.3% growth seen in the 2025 holiday season.

The shift toward physical goods may provide a boost to retail sectors that have faced pressure recently. Brown stated that consumers are internalizing higher prices, which influences their reporting of anticipated spending. He described the current environment as one where shoppers balance aspirations for experiences with the economic reality of rising costs.

The survey covered approximately 4,660 U.S. adults ages 18 and older. The results illustrate how macroeconomic factors, such as energy costs and consumer sentiment, directly shape holiday purchasing decisions.