US travel’s “surge” is over, but sector remains strong: report

Dive Brief:

The U.S. Travel Association released its biannual travel forecast last week, predicting rates of travel to and within the United States and forecasting its Travel Price Index through 2026.
The TPI measures the cost of travel away from home in the U.S. based on Department of Labor price data collected for the monthly Consumer Price Index. TPI data is broken down into four categories: food away from home, lodging away from home, motor fuel and public transportation.
Costs of lodging away from home will continue to rise year over year through 2026 but at a much slower rate than in the past two years — reflecting the travel industry’s normalization after a pandemic slump and subsequent boom.

Dive Insight:

In 2022, TPI data for the cost of lodging away from home rose 19.9% YoY. In 2021, it rose 21.6% over the previous year.

The cost of lodging away from home is projected to increase by just 3.5% YoY in 2023 and by only 2.9% YoY in 2026.

“Robust domestic leisure travel demand has been the driving force in the overall industry’s post-pandemic comeback,” said U.S. Travel Association President and CEO Geoff Freeman in a statement. “Though the surge we experienced in the last year is starting to moderate, we expect this segment to remain resilient in coming quarters.”

While the cost of lodging away from home is forecasted to grow more slowly this year, it’s still above pre-pandemic levels, with a 112% increase compared to 2019.

The association also upgraded its inbound travel forecast due to strong demand from Canada, as well as stronger expectations from major overseas markets including Brazil. Inbound travel volume is predicted to grow 31% YoY in 2023.

The report also noted that while business travel is steadily recovering — with both volume and spending at “double-digit growth” this year — business travel volume is not expected to recover to 2019 levels until 2025.

Professional services company PwC also predicted slowing hotel demand growth for the remainder of the year, in its U.S. hospitality outlook report released last month.