Vacation Bonus Report 2021
Approximately 30 billion euros is expected to land in the hands of consumers this week with the payout of the vacation bonus typically done in May; but after over a year of uncertainty what will consumers be spending on? What role does the COVID-19 pandemic play in that spending? And how much leeway do employers have to adjust the vacation bonus scheme? PwC worked with retail experts Q&A to survey more than 1,700 people to gauge consumer sentiment on the vacation bonus scheme. Here are the highlights from our inaugural Vacation Bonus Report 2021.
Holiday close to home
Findings from our report show that the vacation bonus lives up to its name with 43 percent of respondents selecting ‘going on vacation’ - this is the most common answer. The uncertainty surrounding the COVID-19 pandemic continues to influence the type of holiday that Dutch people plan to take. For example, 42 percent of those going on vacation say they will remain in the Netherlands. 'As long as COVID-19 is still running rampant, I won't get on a plane’, says one respondent.
The influence of the pandemic likely extends to the choice of accommodations as well with a private vacation home being the most popular choice, with a score of 34 percent. Other accommodations, which also limit exposure to other vacationers, such as Bed & Breakfasts and motorhomes, were also popular choices. 22 percent of respondents going on vacation will still opt for a hotel.
These results are in line with the first pulse of the Global Consumer Insights Survey 2021 presented by PwC in March. In it, more than half of the respondents said they did not expect to take any international trips or stay in hotels in the next six months.
Saving, but not for the long term
After ‘going on vacation’, savings is the other often chosen destination for the vacation bonus. 38 percent of survey respondents will put some of the money in a savings account. If the COVID-19 pandemic continues to interfere with vacation plans this summer, then most respondents find putting the money in savings to be the best alternative.
While saving is popular, 84 percent of respondents expect to spend the vacation bonus within the next twelve months and 70 percent do so within six months. Here too, the uncertainty surrounding COVID-19 and the possible end of the pandemic may play a role. For example, one respondent states: 'I think the risks are still too great to go on holiday. I'd rather save up and enjoy a more extensive holiday some other time.'
Seven percent of respondents invest their vacation bonus. Bitcoin's media-grabbing rate jumps are also reflected in how vacation bonus is spent - the cryptocurrencies are almost as popular as stocks, which are still number one.
Products in and around the house remain popular
Sixteen percent of respondents intend to spend part of their vacation bonus on home goods. This product group really took off during the COVID-19 period because people spent more time at home. With the vacation bonus distributed in May, it would seem that the good times for retail companies specialising in garden items, furniture and home decor will continue for the time being.
Vacation bonus primarily seen as a perk
Although the vacation bonus for the vast majority of respondents comes in every year, more than three quarters of them consider it a perk. 22 percent need the money to make ends meet. Debt repayment is third on the list of spending - seven percent of vacation bonus is used for this purpose.
Employers: vacation bonus can be done differently
The annual payout of vacation bonus amounting to around eight percent of base salary is a recurring, large item of expenditure for employers, which can cause headaches in economically uncertain times. How much flexibility can they count on if they want to adjust how the vacation bonus is distributed?
Almost all respondents receive an annual, one-off vacation bonus and 80 percent prefer this. Twenty percent prefer a monthly payment or have no preference. If it helps the employer, about half of the survey respondents would be willing to accept a staggered or even deferred payment. This willingness is particularly strong among respondents over the age of 30, likely because their financial buffers are greater than those of younger people.
The traditional vacation bonus scheme has already changed for some of the respondents. The vacation bonus has been included in an individual choice budget (IKB - Dutch acronym) that can be used according to their own needs, for example for leave, pension, payout, training, a bicycle or a trade union contribution. This gives employees more freedom of choice and spreads the costs for the employer.
This research is in collaboration with retail experts Q&A.
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