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Slow recovery for US travel sector

The US Travel Association has warned that the travel sector is in for a slow recovery, predicting that total spending will not recover to pre-pandemic levels until 2026.

The USTA’s numbers provide more sobering data for an industry already struggling with rising costs, staff shortages and investors worried by growing volatility in global markets.

The USTA’s Fall Forecast predicts that total inflation-adjusted travel spending in the United States will rise from $1 trillion this year to $1.21 trillion in 2026. The report implies that hotel margins will remain under pressure, with a 13% increase in the price of ‘lodging away from home’ over four years only just beating an 11.3% increase in the cost of living.

In the short term, the survey predicts a sharp rebound this year, driven mainly by international leisure travelers up 116%, and domestic business travelers, up 71%.

The US tourism market has recovered slightly faster than the global average and is now close to pre-pandemic levels compared to just 65% globally, but few people expect the post-covid travel surge to persist.

In a report published late last month, PwC forecast the mid-year boom in domestic leisure travel would taper off.

“In 2023, we expect demand growth from individual business travelers and groups to continue to offset a softening in leisure demand, with outbound international leisure travel outpacing inbound, given the relative strength of the dollar,” PwC said in its US Hospitality Directions report.

The USTA has also said that the rebound in international travelers would be stronger if the US cut visa waiting times. Visa applicants in the top 10 markets — including Brazil, India, and Mexico – are now waiting 400 days on average to be granted permission to travel, rising to as much as 800 days in some places.

“Visitors in some of America’s most valuable markets are now waiting more than two years for an interview to visit the U.S.,” said USTA president Geoff Freeman. “We simply cannot afford to give travelers any reason to avoid visiting the United States.”

The Association says the US will lose nearly 7 million travelers and $12 billion in projected spending next year because of the delays.

The fall forecast contains some surprises. Many had predicted that transient business travel would remain subdued as companies seek to contain costs and cut carbon emissions while expecting growth in group travel to be stronger as businesses bought remote-working groups together for team-building exercises.

But the data indicate that transient travel will recover marginally faster than group travel over the next four years, with inflation-adjusted transient spending up to 93% of 2019 levels by 2026 against 89% for group travel.

The overall picture is of a resilient but slowing recovery as the industry comes off the highs of the post-pandemic travel boom. Long-term uncertainty over the economic recovery, and the fight against inflation, in particular, will keep sentiment soft and force hoteliers to compete even harder to maintain their market share.

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