International Holidays 33 Percent More Expensive Than Pre-COVID
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International Holidays 33 Percent More Expensive Than Pre-COVID

But higher costs are not dampening Australians’ desire to travel abroad

By Bronwyn Allen
Fri, Dec 29, 2023 11:06amGrey Clock 2 min

Travelling overseas is significantly more expensive than before the pandemic, and the cost has risen at a much faster rate than domestic travel. New Finder research shows domestic holidays are 19 percent more expensive than pre-COVID, while international holidays now cost 33 percent more.

Australians are spending an average of $6,765 on international trips, according to Finder. Accommodation is the most expensive component at $2,343 on average, closely followed by flights at $2,153. Finder’s travel expert, Angus Kidman said higher demand had pushed prices up. “International travel has become more costly as pent-up demand and the peak European summer season coincide.” Other factors that have made international travel more expensive in 2023 include higher jet fuel prices, staff shortages at airlines and airports, worldwide inflation and airlines being slow to return all their planes to the sky following their fleets’ grounding during COVID-19.

But higher costs have not deterred people from heading abroad. Australians are making up for lost time, with ‘COVID revenge travel’ prompting many to head overseas this year. According to the Australian Bureau of Statistics, leisure dominated overseas travel intentions in FY23, with 53 percent of travellers going overseas for a holiday, 32 percent travelling to visit friends and family and only 6 percent heading overseas on business.

Government forecasts show Aussies will keep travelling overseas in 2024 despite the significantly higher costs, and demand is expected to reach pre-pandemic levels by the end of the new year. However, there are signs that the cost-of-living crisis is starting to bite, and 2024 may the last big year of revenge travel before Australians tighten their belts. According to the Tourism Forecasts for Australia 2023 to 2028 report: “In 2023, 9.8 million resident returns are expected, which would be 86 percent of the pre-pandemic level. This increases to 11.3 million resident returns in 2024, which is nearing parity with the number of resident returns in 2019. Looking forward, cost-of-living and budget pressures in Australia are expected to weigh on outbound travel growth. Compared to last year’s forecasts, the profile for outbound growth is very similar. However, high global travel costs and reduced household savings in Australia have had a mild dampening effect.”

Finder says 54 percent of Australians intend to travel in the new year, with 15 percent heading overseas, 14 per cent intending to travel both overseas and domestically, and 25 percent planning to holiday only in Australia. Online travel agent KAYAK says searches for 2024 flights are up dramatically. “As Aussies, travel is in our DNA and despite macroeconomic uncertainties it looks like many Aussies are still struck by the travel bug, with searches for flights to both international and domestic destinations up 47 percent for travel over the next 12 months compared to last year,” said brand director Nicola Carmichael.

Top 10 overseas destinations for Australians in 2023

  1. Indonesia
  2. United States
  3. United Kingdom
  4. Italy
  5. Thailand
  6. France
  7. New Zealand
  8. Japan
  9. Singapore
  10. Vietnam

 

Source: Finder Travel Inflation Report



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Only 5% of U.S. Foundations Invest for Impact, Study Finds
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Few of the U.S.’s philanthropic foundations invest their endowment assets—totalling an estimated US$1.1 trillion—to create positive social and environmental change in addition to high returns, potentially limiting or even counteracting the good such organisations do.

Exactly how few isn’t precisely known. But Bridgespan Social Impact, a subsidiary of the New York-based Bridgespan Group along with the Capricorn Investment Group, a Palo Alto, Calif.-based investment firm founded by Jeff Skoll , the first president of eBay, and the Skoll Foundation, also in Palo Alto, attempted to “get the conservation started,” with a study of 65 foundations with a total of about US$89 billion in assets, according to Mandira Reddy, director at Capricorn Investment Group.

The top-line conclusion: 5% of the primarily U.S.-based foundations surveyed invest their assets for impact. Most surprising is that 92% of these organisations, which have assets ranging from US$11 million to US$16 billion, are active members of impact investing groups, such as the Global Impact Investing Network and Mission Investors Exchange.

“If there’s any pool of capital that is best suited for impact investing, it would be this pool of capital along with family office money,” Reddy says.

The study was also conducted “to draw attention to the opportunity,” she said.

“We want to redefine what philanthropy can achieve. There is massive potential here just given the scale of capital.”

Foundations are required by the U.S. Internal Revenue Service to grant 5% of their assets each year to charity; in practice they have granted slightly more in the last 10 years—an average of 7% of their assets, according to Delaware-based FoundationMark, which tracks the investment performance of about 97% of all foundation assets.

The remaining assets of these foundations are invested with the intention of earning the “highest-possible risk-adjusted financial returns,” the report said. Those investments allow these organizations to grant funds often in perpetuity.

Capricorn and Bridgespan argue that more foundations, however, need to “align their capital with their missions,” and that they can do so while still achieving high returns.

“Why wait to distribute resources far into the future when there are numerous urgent issues facing the planet and communities today,” argue the authors of a report on the research, which is titled, “Can Foundation Endowments Achieve Greater Impact.”

The fact most of the foundations surveyed are very familiar with impact investing and yet haven’t taken the leap “highlights the persistently untapped opportunity,” the report said. It details some of the barriers foundations can face in shifting to impact, and how and why to overcome them.

Hurdles to making a shift can include “beginner’s dilemma”—simply not knowing where to start—and a misperception on the part of large foundations that impact investing is “too niche,” offering opportunities that are too small for the amount of capital they need to allocate. Other foundations are too stretched and don’t have the resources to add capabilities for making impact investments, the report said.

One of the biggest concerns is financial performance. Some foundation leaders, for instance, worry impact investments lead to so-called concessionary returns, where a market rate of return is sacrificed to achieve a social or environmental benefit. Those investments exist, but there are also plenty of options that offer financial returns.

The authors make a case for foundations to “go big,” into impact to realize the best outcomes, and to take a portfolio approach, meaning integrating impact principles into how they approach all investments. To make this happen, foundations need to incorporate impact into their investment policy statements, which determine how they allocate assets.

It will be difficult for foundations that want to shift their assets to impact to pull out of investments such as private-equity or venture-capital funds that can have holdings periods of a decade. But with a policy statement in place, a foundation’s investment team can reinvest this long-term capital once it is returned into impact investing options, she says.

“The transition doesn’t happen overnight,” Reddy says. “Even if there is a commitment for an established foundation that is already fully invested, it takes several years to get there.”

The Skoll Foundation, established in 1999, revised its investment policy statement in 2006 to incorporate impact. According to the report, the foundation initially divested of investments that were not in sync with its values, and then gradually, working with Capricorn Investment, began exploring impact opportunities mostly in early-stage companies developing solutions to climate change.

“As the team gained more knowledge and experience in this work, and as more investment opportunities arose, the impact-aligned portfolio expanded across different asset classes, issue areas, and fund managers,” the report said.

As of 2022, 70% of the Skoll Foundation’s assets are in impact investments addressing climate change, inclusive capitalism, health and wellness, and sustainable markets.

Capricorn, which manages US$9 billion for foundations and institutional investors through impact investments, constructs portfolios across asset classes. In private markets, this can include venture, private equity, private credit, real estate, and infrastructure. There are also impact options in the public markets, in both stocks and bonds.

“Across the spectrum there are opportunities available now to do this in an authentic manner while preserving financial goals,” Reddy says.

Of the foundations surveyed, about 15, including Skoll, have 50% or more of their assets invested for impact. Others include the Lora & Martin Kelley Foundation, the Nathan Cummings Foundation, the Russell Family Foundation, and the Winthrop Rockefeller Foundation.

Though not part of the study, the California Endowment just announced it was going “all in” on impact. The organisation has US$4 billion in assets under management, which likely makes it the largest foundation to undergo the shift, according to Mission Investors Exchange.

Although the researchers looked at a fairly small sample set of foundations, Reddy says it provides data “that is indicative of what the foundation universe” might look like.

“We cannot tell foundations how to invest and that’s not the intent, but we do want to spread the message that it is quite possible to align their assets to impact,” she says. “The idea is that this becomes a boardroom conversation.”

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