February 17, 2023 | 4 min read
Abby Long is the Senior Managing Editor at PMG.
Recent earnings readouts from airlines, booking engines, and hotel groups signaled continued growth across the travel industry, providing new insight into travel trends and an optimistic outlook for the year ahead.
New research from TripAdvisor shows that travel has become a non-negotiable expense for millions of people. One in five dollars of all discretionary spending is expected to go toward travel expenses this year.
As public safety restrictions ease across the APAC region, international travel bookings are surging, with the global airline industry expected to return to profitability by the end of this year.
“Whether it’s a family road trip or a ‘blended’ travel itinerary, the top priority for travelers this year is to relax and rejuvenate, as 2023 is poised to be the year that the travel industry makes its full recovery.”
Led by pent-up demand, 2022 saw millions of travelers hit the road, take to the skies, and enjoy vacations at sea as global travel restrictions eased and people sought new adventures and experiences around the globe. Record travel bookings translated to historic growth and a promising 2023 financial outlook for many companies across the travel industry.
Airbnb, for example, recorded its first full year of profitability in 2022, with 6.6 million global active listings (up nearly 900,000 year-over-year) and guest demand hitting record highs. Similarly, the U.S. airline industry reported a return to profitability in 2022 after two years of pandemic-induced declines.
American Airlines CEO Robert Isom told analysts on the company’s recent earnings call that post-holiday bookings surged, a trend “underpinned by domestic and short-haul international flights.” The airline expects the “strong demand environment to continue in 2023” while it “anticipates further improvement in demand for long-haul international travel this year” as well.
Strong demand characterized much of 2022 for Marriott International as well. On this week’s earnings call, hotel executives confirmed that while business travel is still recovering (nearly 90 percent recovered to pre-pandemic levels in Canada and the U.S.), leisure demand continues to top pre-pandemic levels.
Hilton shared similar trends, reporting that leisure travel demand remains strong with the reopening of travel in China—alongside the continued recovery of business travel—expected to help sustain business growth.
Warm weather destinations like Miami and Cancun were particularly popular among travelers last year, claiming two of the top spots for North American travelers, according to Expedia Group. International travel also showed promising signs of a speedy recovery heading into 2023.
Booking volume reached record highs after travel restrictions eased across various APAC countries, including China, Japan, South Korea, and Thailand, late last year. In 2022, business travel demand grew but continued to lag behind 2019 figures, according to Morning Consult.
“Record travel bookings translated to historic growth and a promising 2023 financial outlook for many companies across the travel industry. ”
Financial outlooks during the recent earnings season were increasingly optimistic as travel demand shows no signs of slowing down in the year ahead. On the Expedia Group earnings call, CEO Peter Kern shared that the company continues to see that “people are prioritizing travel over just about everything.”
Travel has become a non-negotiable expense, despite inflationary pressures and economic uncertainty. TripAdvisor found that 65 percent of travelers are “constantly thinking about their next adventure.” In 2023, one in five dollars will reportedly go toward travel expenses. This ties travel with restaurants as the top category for all consumer discretionary spending.
With travel restrictions easing around the world, particularly in the APAC region, the International Air Transport Association predicts that the global airline industry will return to profitability in 2023. Airbnb told investors that major city centers and urban destinations were incredibly popular towards the end of 2022, a trend that’s expected to continue throughout 2023.
Flexible work arrangements brought on by the pandemic are also playing a role in shaping travel demand. Recent consumer research from Expedia Group, TripAdvisor, Skift, and Morning Consult found that, on average, travelers are taking longer trips year-over-year, suggesting that ‘blended travel’ or ‘flex-cations,’ where travelers combine elements of business and leisure, demonstrate true staying power.
This trend is particularly prevalent among North American travelers, where the average length of stay in Q4 2022 was ten percent longer than in Q4 2021, according to Expedia Group. Morning Consult predicts that more than two-thirds of all business travel this year will be for conferences, seminars, and industry events as corporate travel budgets are cut due to economic uncertainty.
Across earnings reports, booking data, and other industry indicators, travel intent for 2023 is expected to be on par with—and could even surpass—2019 levels. Whether it’s a family road trip or a ‘blended’ travel itinerary, the top priority for travelers this year is to relax and rejuvenate, as 2023 is poised to be the year that the travel industry makes its full recovery.