Half of millennials would rather save for holidays than a house

Experience economy is ‘at an all-time high’ as holiday season approaches

Skydiver jumps from the top of the Kuala Lumpur Tower (AFP)

Easter is around the corner, the tourist season is on the starting blocks.

The final bargains of the winter holiday sales are being snapped up and even the weather has got in on the act this week with a bonus blast of sunshine to get us in the mood for the holidays.

While some of us are still paying off Christmas debt after buying an array of physical possessions for our nearest and dearest, the nation’s attention is rapidly turning to spending on much more intangible assets.

Almost 40 per cent of UK adults, around 19 million people, say travelling is their top priority for their savings, up from only 14 per cent in 2018, according to research by peer-to-peer currency exchange business WeSwap. Among millennials, the figure rises to 50 per cent.

Experience, it seems, is more important than splashing out on expensive possessions, having a reassuring rainy day savings pot and even stashing away cash for a property deposit.

But that doesn’t mean we’ll be blowing the budget on A-list accommodation this year. The poshest pool won’t float our boat and the endless pursuit of luxury is a bit last year.

More Britons than ever are allocating their budgets to the experiences that make our holiday memories rather than the thread count of sheets in a plush hotel.

In 2019, the average UK adult will spend about £680 per person for their main holiday, with Londoners rounding that figure up to £1,000 each.

This season, travellers will set aside more than 60 per cent of that cash to spend on everything from quality restaurants to bungee jumping.

Age irrelevant

Millennials may be embracing the experience economy but some of them weren’t born when the phrase was first coined back in the Nineties.

These days, if you’ve got the spare cash and the spare time to invest in experience, you’re often in your sixties or older.

The over-65s spend £5bn a year in the first five years of retirement on their experience-driven lifestyle – almost four times as much as millennials on activities such as exotic or extended holidays, festivals and other big-ticket experiences, according to research from financial services provider OneFamily.

Despite economic uncertainty, a fifth of all over 65s plan to spend more than ever this year.

Can’t take it with you

As traditional retailers continue to struggle, businesses are gearing up to cash in on the biggest summer of experience yet as consumers in all age brackets push demand for everything from spa days to scuba diving.

The subject even came up at the World Economic Forum (WEF) at Davos earlier this year.

“In our overpopulated world, stuffed with an ever-growing stockpile of products, offline experiences have become key to personal fulfilment,” a report by forum experts explained.

“While 78 per cent of millennials choose to spend money on a desirable experience over something material, the trend extends beyond just young people, to every age bracket and socioeconomic class.”

But why?

According to academics researching the relationship between wealth and happiness, the benefit of experience over possession is that they can be cashed in over and over again.

Professors Thomas Gilovich and Amit Kumar of Cornell University found that “experiential purchases, such as vacations, concerts and meals out, tend to bring consumers more enduring happiness than material purchases, such as high-end clothing, jewellery and electronic gadgets”.

Experiences create more lasting happiness because they are more open to positive reinterpretation; they tend to become more meaningful parts of one’s identity; and they do more to foster social relationships, the WEF explained in their report – released to coincide with the Davos event.

Experiences help us learn, grow and connect with each other, so it’s no surprise we choose to spend our money and time on them.

Changing the world

The idea of a shift towards valuing experience over possessions isn’t a new one. What seems to be changing is the number of people re-evaluating – consciously or not – what they consider valuable enough to spend their money on, even at a time of increasing global economic uncertainty.

If this really does turn out to be a fundamental and widespread shift in our collective attitude towards material goods, those experts at the WEF believe we could even be changing the world for the better.

“This tidal wave is already having extreme effects on the global economy and traditional business models,” the report added. “It requires a fundamental shift in how we look at everything, from revenue growth to personal happiness.

“Ultimately, the shift to an experience economy has the power not only to change how we spend our time and money, but also to promote inclusion and democratise happiness.”

At a time when we are increasingly aware of just how much “mindless consumerism” is damaging our environment and society, the feel-good currency driving the experience economy is clearly a many-layered thing.