With so many headwinds, why are people still traveling?

At the end of 2022, data and insights from STR showed the hospitality industry at substantial levels of performance recovery around the globe with no signs of demand significantly slowing. So, with rising inflation, record-high travel prices, flight disruptions and short-staffed hotels, why are people still traveling?

This piece from STR provides some answers based on consumer research of more than 1,000 travelers at the end of November 2022.

Rising inflation? No problem, travelers expect to spend more on travel.

It appears that travelers are taking rising prices in stride. When asked about their expected spend in five major travel areas, a significant majority expect to spend much more or slightly more for:

• transportation (72%)
• dining (66%)
• accommodations (64%)
• experiences (58%)

The only area with less than a majority expecting to spend more is shopping.

On a broader level, consumers are choosing services over goods. Overall consumer spending over the past year shows an increase in spending on services while spending on goods is on the decline based on recent statistics released by the U.S. Bureau of Economic Analysis.

During the pandemic, consumers spent a lot of their quarantined time purchasing goods from Amazon and other online suppliers. Once people were able to travel, the pent-up demand for services skyrocketed, and this demand does not appear to have stopped even with rising inflation. The service-based hospitality industry is certainly reaping the benefits of this consumer spending trend.

Short-staffed hotels? Some travelers notice, but most do not.

To measure the awareness of short-staffed hotels, travelers’ attitudes about customer service levels and reduced housekeeping were examined. Responses to statements about these two areas indicate that some travelers are noticing a change, which would show they are aware of labor shortages. A notable one-third of travelers remain neutral, and a slightly lower proportion disagree that service is lower and minimal housekeeping is expected. With these results it can be inferred that some travelers are noticing that hotels are short-staffed, however, most do not.

High hotel rates? Travelers are looking for the best deals.

Hotel rates are markedly higher today than pre-pandemic times. And, as noted above, travelers are expecting to pay these higher rates. However, with higher rates it should come as no surprise that travelers are paying more attention to finding the best deal. When travelers were asked if they are spending longer looking for the best possible deal now compared to earlier in the year, almost half (49%) agreed that they were looking for deals. The price sensitivity is more pronounced when analyzing across three classes of hotels (luxury, mid-range, budget). Guests from the segments with higher room rates, luxury and mid-range, demonstrated a higher level of agreement when it comes to spending longer looking for the best deal.

Flight disruptions, again?

This research was conducted prior to the most recent U.S. airline disruptions in late-December and early-January, so it will be interesting what next quarter’s results show. Research conducted after the summer travel disruptions revealed heightened concern about travel cancellations, but that concern declined in November. This indicates that traveler memories are short, and concerns will most likely recede provided there are no more disruptions.

Remember COVID-19?  

When travelers were asked whether COVID-19 would prevent them from traveling in the next 12 months, the majority said it was not likely to prevent them from traveling and only one-fourth stated it would prevent them from traveling. This proportion has declined throughout 2022 from a high of 37% in February to 25% in November. Even with flu season and the potential for new COVID-19 variants, the likelihood of the pandemic preventing most people from traveling has decreased, which leads to the conclusion that most people are not worried.

Travelers are still traveling against the many headwinds on the travel horizon.

For many consumers around the world, travel is considered a birthright. It appears many remain determined to pursue this right even through inconveniences and economic challenges. The travel industry is fortunate to have such a steadfast customer base. This presents an opportunity for all in the industry to service customers at the highest levels.