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Travel

Travel sentiment improves despite higher prices, COVID-19 and travel disruption concerns

Source: https://str.com/data-insights-blog/travel-sentiment-improves-despite-higher-prices-covid-19-and-travel-disruption-concerns

The last few months have seen a much-welcomed boost in demand for the travel industry as COVID-19 restrictions have continued to ease in many parts of the world. STR’s Market Recovery Monitor shows that around two-thirds of global markets and over 95% of U.S. markets are now in a recovery or peak position achieving revenue per available room (RevPAR) indexed to 2019 at 80 or above. Further, around 70% of U.S. markets and 40% of global markets are now achieving higher RevPAR than in pre-pandemic times. While inflationary pressures continue to impact markets, meaning that real comparisons with 2019 are less impressive, strong underlying demand for travel and improving attitudes towards COVID-19 project well for a continuation of growth.

STR’s latest consumer research, undertaken in May 2022, set out to examine just how much sentiment has improved in recent months as well as to gauge appetite for travel in a context of increasing economic uncertainty and geopolitical headwinds.

Improving picture, but COVID-19 continues to weigh down travel

The latest data shows that travel overall continues to be less appealing compared with pre-pandemic times. Factors such as enduring COVID-19 restrictions and lingering concerns regarding infection are continuing to influence, although on a diminishing scale, travel decisions globally.

However, compared with recent waves, there was a significant uptick in opinions for both domestic and international travel. Net propensity to travel, the difference between those who stated they were more likely to travel or less likely to travel in the current environment, was -4% for domestic travel and -31% for international travel compared with -20% and -56%, respectively, in February 2022.

“Post-pandemic” tourism looks poised to thrive

Meanwhile, consumers continue to show heightened enthusiasm for travel post-pandemic. Over a third of respondents stated they are more likely to travel domestically or internationally in a post-COVID-19 world than before the pandemic.

Overall net propensity to travel stood at +29% for domestic travel and +27% for international travel. These results were broadly comparable with previous waves of the research, although they remained below February 2021, a time of improving consumer confidence before the full effects of the Delta variant were realized.

Great Expectations: Consumers expect to spend more on tourism

Improving performance and surging interest in travel signal a burgeoning period for the industry. But, in an environment of growing economic uncertainty due to historically high price pressures, what are the expectations regarding travel spend?

Travelers almost unanimously expect to spend more in 2022 compared with a comparable trip pre-pandemic. Overall, 57% thought they would spend more on transport while just over half expect to pay more on accommodation and food & drink on a forthcoming trip compared with a similar type of trip pre-pandemic. Meanwhile, consumers appear least likely to increase their holiday shopping and souvenir spend.

One respondent aptly summarized the overall mood in the following way:
“Since we haven’t traveled much for 2 years, we have more money in our travel budget and are more willing to make up for lost time. Also, inflation means that we will probably be spending more.”

Put differently, consumers are aware of the impact of global factors on increasing tourism costs. This combined with pent-up and increased demand for travel has led to an acceptance of higher prices and, hence, increased spend. The extent to which higher prices generate growth on the bottom line is a big question for the industry as inflation continues to grow rapidly across the globe.

Travel costs are the greatest barrier for future travel

Given the above, it was perhaps not surprising that the cost of travel emerged as the key barrier for future travel in the eyes of consumers. This result is an understandable consequence of global factors and recognition of increasing prices in the industry. Nearly six in 10 (59%) respondents said that increasing travel costs would negatively impact their decision to travel in the next 12 months.

Oher issues such as COVID-19, increasing living costs and travel cancellation and disruption concerns also figured prominently, being mentioned by over 40% of respondents.

These findings present somewhat of a paradox against improving sentiment and increased desire to travel. The extent to which global factors, including the interventions of governments, exacerbate or alleviate the cost-of-living crisis in the coming months has now become a key issue in tourism. Current evidence suggests that consumers are both willing and accepting when it comes to paying more to undertake travel. However, as household and other costs continue to increase, travel costs may become increasingly scrutinized, which could stall the impressive recovery seen thus far.

To learn more about the data behind this article and what STR has to offer, visit https://str.com/.

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Advan provides hedge funds and institutional investors with unmatched insights into both foot and vehicle traffic to enable better investment decisions. Using precise, manual geofencing, it has the most extensive and accurate location data, available in seconds through an intuitive, self-service dashboard. Its institutional-grade analytics allow fast and actionable insights into customer behavior and corporate activity.

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LET US HELP

Data is changing the speed of business. Investors, Corporations, and Governments are buying new, differentiated data to gain visibility make better decisions. Don't fall behind. Let us help.

DATA PROVIDER SPOTLIGHT

Advan

Advan provides hedge funds and institutional investors with unmatched insights into both foot and vehicle traffic to enable better investment decisions. Using precise, manual geofencing, it has the most extensive and accurate location data, available in seconds through an intuitive, self-service dashboard. Its institutional-grade analytics allow fast and actionable insights into customer behavior and corporate activity.

Advan is headquartered in New York City. For more information please visit www.advan.us