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Inflation. Rising interest rates. Layoffs. Where is the economy headed? And how will it impact travel? Christian Savelli, director of cruise analytics for Tourism Economics, answered those questions during a breakout session at the IACC Americas Knowledge Exchange, held April 3-5 at the JB Duke Hotel in Durham, N.C.
The bad news? A recession is coming. The good news? It’s expected to be mild. The better news? The travel industry should not be affected.
"We believe that travel may defy economic gravity; that this time, it will not feel the impact of that recession as much as in previous years," Savelli said. Here’s why.
Pent-up demand for travel
People still are eager to go on the trips that they had to postpone during the pandemic, whether it’s a family vacation or an annual conference.
"Pent-up demand and prioritization of travel is real. This is impacting a lot of segments in the travel industry," said Savelli, noting that hotels, airlines, cruise lines and booking sites have reported that business has returned to or surpassed 2019 levels.
Citing a survey from Destination Analysts, not only are people excited about traveling in the next 12 months, they also expect that they will spend more money.
Business travel is still rebuilding
After years of postponing or cancelling events, conferences and retreats, businesses are still restoring necessary travel.
"We don’t feel that they are going to go back to that reflex of, 'Don’t travel,'" said Savelli.
According to the latest Northstar/Cvent PULSE Survey, optimism among meeting planners remains high and new bookings are strong. Demand is growing for cities and city centers, as well as hotels and resorts that can provide meetings and lodging services. Also, nearly two-thirds of planners will produce more meetings in 2023 than in 2022.
International travel has not fully returned yet
While the industry has made a huge comeback, most of the success has been fueled by domestic leisure and business travel.
According to Savelli, inbound visits from Europe, one of the biggest markets for the United States, has only reached 80 percent of prepandemic levels. Due to prolonged Covid restrictions, the Asia-Pacific region also is lagging.
"International travel is going to take until 2024-'25 just to get back to 2019 levels," he said. "[As it grows] that should be an additional boost to the leisure market and even the group market."