Despite the intense travel frenzy, tourism after the pandemic began to reduce demand, especially in the USA and Canada.
After the pandemic put the brakes on the travel industry, leisure spending has rebounded strongly in the last two years. All this pent-up demand from the pandemic is in danger of running out. Hotel company Marriott International is among the leisure companies that said travel demand is leveling off, particularly in the US and Canada. Revenue per available room (RevPAR) or room revenue for leisure travelers from the region was flat year-over-year during the first quarter. Meanwhile, US online travel site Expedia reported lower-than-expected growth in gross bookings to lower guidance for the full year.
Even Airbnb is seeing a slowdown. It said customers booked 132.6 million nights and experiences in the first quarter. That was 9.5% higher than the same period last year, but the slowest growth rate since the pandemic. Hotel occupancy in the US has declined on an annual basis for 12 consecutive months, falling 2.5% year-on-year in March.
While US growth has stagnated, demand in Europe and Asia is more resilient. Expedia, for example, generates almost two-thirds of its revenue from the US. At competitor Booking, the figure is closer to 10%. The number of domestic trips taken by business travelers is expected to increase by 7% this year, compared with a 1.9% increase for leisure travelers, according to the American Travel Association.
Business travellers tend to pay higher airfares and hotel prices. This is good news for companies that serve this group, such as Delta Air Lines and Hilton Worldwide. Over the past 12 months, Delta, Hilton and Booking have outperformed their peers. It is expected that the gap will remain.
