By Mark R. Smith, Contributing Writer
It’s not hard to recall the state of the tourism market during the darkest days of the COVID-19 shutdown: few events, an evolving restaurant market, limited air travel, lack of labor, empty hotels, etc.
That was the broad view of Tourism 2020 on the heels of a 2019 that was among the strongest years in recent memory: people not only moved about the country, but the world; ample leisure time was tacked on to business trips, airline and hotel prices were more reasonable and there was an ample labor force on hand.
This brings us to 2023 and, happily, a domestic market that bears a strong resemblance to that of 2019, though the business and international travel markets still have not returned to pre-pandemic levels.
So, where is the tourism market heading during the last half of 2023? Despite a mercurial economy steeped in inflationary and workforce issues, many observers are cautiously optimistic, but still concerned about what lies ahead.
Today, the good news is that nothing seems to be stopping anybody who has plans.
While some organizations feel that inflation is at least having some effect on the traveling trends of the general public, that isn’t so much the case at AAA. “What we’re really seeing is that perhaps a given traveler will (cut corners and) embark on an alternate trip,” said AAA spokesperson Aixa Diaz.
This summer, air travel demand “is expected to be the strongest since pre-pandemic and potentially the strongest ever,” said Karyl Leigh Barnes, president/tourism practice of New York-based Development Counsellors International. Why? Barnes explained that more than a quarter of Americans plan to increase the amount they are spending on leisure travel during the next three months to 26 percent, up from 19 percent in the first quarter, according to the U.S. Travel Association.
Barnes also pointed out that Airlines for America expects the airlines will carry more than 250 million travelers between June 1 and Aug. 31, a one percent gain from robust 2019. That, despite the expectation that “flight capacity is expected to be down roughly 11 percent due to operational constraints, including new aircraft delays and air traffic controller shortages,” she said.
She noted that more than half of Americans (52 percent) say they would travel more for leisure in the next six months – provided the travel experience was not as much of a hassle, which is significantly more than the first quarter (29 percent). That view of the market has largely been “spurred by flight delays, cancellations and sub-par customer service,” Barnes said.
Jay Garner’s observation of where the industry stands, on the whole, was similarly short and sweet, including the business and international markets. “Everything is back,” said the president of Garner Economics and past board chair of the Site Selectors Guild. “The airlines, hotels, restaurants and attractions: those that are well run are all making money.”
That’s especially true when it comes to travelers enjoying immersive experiences, such as going to a dude ranch, attending music festivals and concerts and participating in cultural tourism in locales like the Acadiana region of Louisiana (also known as Cajun Country) and even Europe for river cruises that dock at different locations every day.
Part of Garner’s observations are from a personal level. “I live near Hartsfield–Jackson Atlanta International Airport, which is a big international hub, and every flight is full,” he said. “The problem, however, is that most of the airlines laid off staff when COVID-19 hit. They’ve had trouble getting fully staffed ever since the world reopened.”
Concerning the pilots, increasing their retirement age is being discussed in Congress “and could help,” Garner said, “as could hiring pilots from the military. One of the problems is that the pay for the non-mainline airline carriers is not competitive. The government is working on that with the industry and colleges, like Embry-Riddle Aeronautical University and Auburn University, which are trying to attract more students to their aviation programs.”
Another issue concerning the airlines is that though they buy their fuel far in advance, when flight prices might rise due to higher market fuel costs. But for today, travelers are moving about at pre-pandemic levels, which has also spilled over into the business and leisure (or “bleisure”) markets.
“Conferences like Select USA and the International Council of Shopping Centers are pretty much back to 2019 levels, and our smaller biannual Site Selectors Guild conferences are full,” said Garner. “It’s nice that Zoom exists for when you don’t need an in-person meeting, but know that it’s also not replacing them. They’re needed to create business relationships and opportunities.”
103% of 2019
Concerning the number of international visitors, Josh Noble, tourism services manager for the City of Kingman (Ariz.), reported that number “has stayed consistent. It constituted about 30 percent of our visitation in 2022 and 2023 is following the same trend,” he said.
However, it’s not as high as it was in 2019 and early 2020 (40 percent), “largely because the Chinese market hasn’t returned and Canadians aren’t visiting as much. The U.S./Canadian exchange rate seems to be to blame,” said Noble, “but travel from European and from Central and South America has remained strong.”
Despite Noble’s and Garner’s impressions, other observers were less enthused about the business and international markets, but agreed that domestic is rocking.
The news “could hardly be better,” said Tori Barnes, executive vice president, public affairs and policy, for the Washington, D.C.-based U.S. Travel Association, which estimates that domestic leisure volume in the U.S. is “at about 103 percent of 2019 levels.”
“We may be experiencing the strongest travel industry not just since the shutdown, but ever,” said Barnes, who indicated that “more than half of all Americans and 81 percent of leisure travelers say they have travel planned during the next six months.”
And the business market is improving: inflation-adjusted domestic business spending is up, though it’s still “only going to reach 85 percent” of its pre-pandemic heights before the shutdown, even with an uptick of “bleisure” travel.
But the international market, however, has yet to return to form. “There is still a strong appetite in the international inbound market,” she said, “but if you need a visa―and 43 percent of international visitors coming to the U.S. in 2019 required a visa for entry―the line is more than a year-long for our top 10 inbound markets.
“We were still down 26 percent in May on international visitation numbers from pre-pandemic levels. President Biden’s Commerce Department set a goal to welcome 90 million international visitors annually by 2027, and not only do we need to be more welcoming, we need to enact policies that enable a more seamless and secure travel experience,” said Barnes, noting that other countries are honing those processes, notably Canada and Australia.
“They’re eliminating barriers for entry,” she said. “International visitors are waiting for more than a year for a visa in some cases, yet Canada wants to make it easier to come there and just announced 13 countries that can travel to Canada visa-free. And some travelers are choosing to do just that.”
Echoing the observations of Tori Barnes was Amir Eylon, president and CEO of Columbus, Ohio-based Longwoods International. He said the current leisure market “has already exceeded the record year of 2019; however, business travel has still not totally recovered and international is lagging for outbound and inbound.”
Any potential problems in the domestic market are coming down to, in short, money. “We’re seeing many more travelers who are concerned about their pocketbooks,” said Eylon. “Few traveled in 2020, but they came back in 2021-2022 and the days of stimulus checks and strong personal savings-fueled travel, coupled with pent-up demand.”
“Now, however, they’ve been spending money and with inflation, household debt is on the rise. Still, that doesn’t mean they’re canceling plans; they’re just looking for better deals,” he said. “They know they have to pay more than before the pandemic, but they still want to find better value for their money.”
Longwoods International’s research shows that 25 percent of American travelers are concerned that their current financial situation will greatly impact their travel decisions, “but unlike past times of economic concern, demand has stayed heavy,” Eylon said. “Nine out of 10 travelers still have plans to take a trip somewhere in the next six months.”
So more travelers are using their wits. “Many are opting to drive instead of fly, downsizing their accommodations from a Hilton to a Hampton Inn―which offers a free breakfast―and they may hit McDonald’s for lunch,” Eylon said, “before picking a sit-down restaurant for dinner.”
“They can also walk rather than take public transportation, buy bleacher tickets to the ballgame and skip buying as many souvenirs,” he said. “In other words, they’ll reallocate their money to offset the greater expense to ensure the trip happens.”
The main goal of many travelers is simply to spend time with family and/or friends, since that’s often who people want to see when they’re on vacation, especially considering the shutdown. “We’re seeing more multi-generational (i.e. family) events because people are still reconnecting,” he said, “that often results in larger group travel.”
And oddly enough, many such groups not staying with their grandparents. “They’re getting a beach house, for instance, to enjoy a shared experience. The biggest motivators today start with “re”―as in relax, reunite, rekindle, rejuvenate, etc. They’re very powerful and emotional words.”
While the market is strong today, industries run in cycles with financial factors, good and bad, entering the mix. Might the domestic tourism boom fall victim to various market influences?
“Sure, it could. It could be affected by market trends of a recession, especially when you add in fuel costs in light of the recent cut in production in Saudi Arabia. There is price elasticity and a point of diminishing returns,” Garner said.
“Companies get to the top of the bell-shaped curve and then when costs get too expensive for the public,” he said, “participation retracts―and prices come back down.”
To some observers, it’s surprising that the domestic tourism market has been rising.
“The biggest impacter on travel sentiment during the last 13 months has been anxiety about the economy,” said Karyl Leigh Barnes. “Travelers aren’t feeling quite as good about their current financial situation as they were” a year or so ago, noting that “just 29 percent recently said they/their household are better off financially than they were a year ago, which is a three-point decline.”
Still, their optimism about their future financial prospects has been trending upward. When asked if, in a year from now, they and/or their household would be better off financially, “46 percent feel they will be better off,” said Barnes. “That’s up four points from the same period last year.”
All told, positives are still visible, even on that broader horizon. “It’s still all-systems-go going forward, too,” said Diaz. “If the first half of the year is any indication, travel will remain strong. People overlook the September/October time frame, but that can be strong, too, possibly because it’s a little cheaper then.”
And know, she said, “That there will be deals to be had.”