A local banking crisis, rising interest rates, and inflation combine to form an unsettling economic trifecta. The triumvirate has most definitely accomplished that, based on the number of corporate layoffs announced since last fall.
Yet, the U.S. travel industry continues to be an outlier in a generally unsure economy, particularly as foreign tourism begins to recover.
According to a recent report from the U.S. National Travel and Tourism Office, neither domestic nor international travel from the United States has returned to its pre-pandemic levels. Even still, as you delve further into the facts, there is much to enjoy.
A 128% rise from 2021, when borders were closed for a large portion of the year, saw close to 51 million visitors arrive in the United States last year.
Although there is still room to increase to pre-pandemic levels, this is a significant point of pride for significant hotel chains. On recent earnings calls, the CEOs of major hotel chains enthusiastically remarked that they still have the opportunity to boost hotel rates due to demand generators that are still recovering.
On an earnings call earlier this year, Hilton CEO Christopher Nassetta stated that "the overseas markets are opening up." People are beginning to travel, not just to the United States but all across the world.
As international travel hasn't yet reached 2019 levels, hotel rates will probably rise considerably more after travelers push occupancy rates at establishments both domestically and abroad even higher. Even before the busy summer travel season, foreign visits to the United States were at approximately 75% of pre-pandemic levels in December.
The performance of luxury hotels in the U.S. this month was already 24% higher than 2019 levels, while the industry as a whole was 10.4% higher than pre-pandemic performance, as reported by STR. Given that overseas travel is expected to pick up later this year, bargains are doubtful.
Additionally, hotel chains like Accor, which are more widely distributed worldwide, can rejoice. The 8.3 million Americans who traveled abroad in December were nearly pre-pandemic levels. Just 6% separated it from the demand level witnessed in December 2019. It is expected that the remaining gap will be closed once Chinese tourists return home.
"In terms of the quantity of [international] tourists, America, and China are the two greatest emission markets. There are around 150 million Americans that go abroad, and there was roughly the same number of Chinese in 2019.
Sébastien Bazin, CEO of Accor, stated during an investor call earlier this year that many Americans had returned. Many of China's 150 million citizens will likely travel [abroad] once more, and it will probably happen in sequence.
What inflation?
According to the World Travel & Tourism Council's Economic Impact: 2022 Global Trends research from July of last year, 60% of passengers predicted that inflation will affect how they traveled in the second half of 2022.
Hence, it's impressive that travel is continuing to show signs of strength into the new year.
According to the WTTC, the travel and tourism industry in the US is expected to increase by 3.9% yearly, which is nearly twice as fast as the national economy.
Additionally, it projects that by 2032, the industry will account for 9.2% of the entire GDP.
In 2021, the U.S. economy as a whole accounted for 5.5% of travel and tourism.
The WTTC also cites a Trip.com report from December 2022 that shows tourists from North and Latin America are interested in visiting domestic locations as well as other countries like Brazil, New Zealand, China, Japan, Thailand, Malaysia, Qatar, and the United Kingdom.
It's crucial to understand, though, how much of that travel enthusiasm will probably stay in the United States before moving on to any other overseas locations.
In 2021, domestic travel accounted for almost 95% of all travel and tourism expenditures in the country.
Data for 2022 will be made public late in the following month.
There are still travel industries rebounding from pandemic lows, whether they are domestic or international.
The demand is still recovering, so rates at hotels won't be dropping any time soon.
Booking now will save you money.
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