Revenge is Sweet

Revenge is Sweet

Update: 2021-05-05
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Using historic data to predict the future seems to be getting more and more difficult. It used to be the case that you could rely on recent history as a predictor of near term demand. But that’s become increasingly difficult.


On today’s show we’re talking about a new phenomenon that has become so common there is actually a phrase that is used to describe it.


We’re talking about revenge spending.


Revenge spending is not a new term. It’s often associated with a spending spree that happens when a member of a couple is mad at their partner. This podcast is not about marital troubles. We’re not talking about that kind of revenge spending.


The kind of revenge spending that is trending in 2021 is pandemic revenge spending. This is the feeling that somehow we have missed out on treating ourselves for the past year. That somehow the universe owes us something.


We’ve put up with no celebrations, no dining out, no concerts, no vacations by the beach, no new clothing and so on.


People have the urge to go out and splurge on themselves, almost as a reward for being locked down over the past year.


Revenge spending is going to take many different forms. People are spending money on luxuries, but not just in North America. All over the world.


For many this is going to mean vacation travel in the second half of the year. So instead of just revenge spending, it’s going to be revenge travel.


I’m talking with many people who have their finger on the mouse button, just waiting to purchase their airfare. I also know several who had travel booked for the Spring and have cancelled their plans. It’s still a little too soon in a number of locations to travel.


Some countries have stated that they’re willing to accept tourists who are fully vaccinated. But even the global cruise industry is still on life support. In 2019, that industry brought in $57B in revenue and served 29.7M passengers. That’s a lot of vacations that are seeking alternate forms of vacation this year, and possibly into next. It’s going to be some time before the global cruise industry recovers to pre-pandemic levels.


The pandemic has caused a number of people to rethink their priorities. Some have quit their jobs. Others have separated from their spouse after being locked up for a year with them. Some have decided to start a new business.


One thing that we can easily predict is that the velocity of change in 2021 will be unlike any other year in recent memory.


Supply chain shortages are testing the whole notion of supply elasticity of demand. Prices are being bid up across the board.


This is true in real estate as well. We are continuing to see white hot market conditions in multiple markets. I have not moved to control as much land in a single time period as I have since the emergence from the pandemic began.

The recovery is exposing those who are out of position. The examples are everywhere. The car rental companies had to reduce the size of their fleets in order to survive. Now they have a shortage of cars on holiday weekends. Business travel has not returned, and the demand is coming from the leisure sector. But here too, the demand is changing week by week.


The emergence from the pandemic slowdown will be chaotic and exhilarating. It will also be frustrating for those who are out of position. It will be downright dangerous for those who forecast the spike in short term demand to continue.


Revenge spending is an isolated event and not a long term trend.

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Revenge is Sweet

Revenge is Sweet

Victor Menasce