Travel and hospitality spending rises

Australian consumer spending showed resilience in May, driven by a significant rebound in discretionary categories such as travel and hospitality. According to the latest NAB Consumer Spend Trend report, total spending rose 1.1 percent for the month, effectively reversing a decline seen in April. This trend is particularly significant for the travel and hospitality sectors as it suggests that households are maintaining their demand for experiences and dining out despite ongoing cost-of-living pressures.

Data from the National Australia Bank (NAB) indicates that hotel, travel, and transport spending surged by 9.7 percent in May, a sharp recovery from the previous month’s pullback. Overall discretionary spending rose by 2.4 percent during the same period, supported by increased activity in hospitality and other service-based sectors. On an annual basis, total spending was up 6.5 percent, while spending excluding fuel costs saw a 6.6 percent year-over-year increase, signaling a steady appetite for non-essential services.

The hospitality sector specifically benefited from this uptick, with cafe and restaurant spending rising 2.9 percent in May to reach a level 7.6 percent higher than the previous year. In New South Wales, the performance was similarly robust, as spending at cafes, restaurants, and pubs grew by 7.1 percent over the year. These figures suggest that consumers are prioritizing social and leisure activities even as broader economic conditions remain challenging for many households.

Gareth Spence, NAB’s Head of Australian Economics, noted that the monthly lift reflects a resilient household demand that has not yet seen the sharp pullback many anticipated due to inflation. While spending growth has slowed compared to the rapid pace observed late last year, the data suggest households have not pulled back sharply. These findings provide a positive outlook for visitor economy businesses, aligning with Destination NSW’s goals to support and promote the regional tourism market.