Anyone who has taken a trip this summer can tell the tourism sector is exploding with packed flights, soaring hotel rates and cruise ships buzzing with passengers.
Tourism remains the bright spot even in China, which is facing economic turmoil at the moment.
That kind of demand is expected to go only higher in the coming years. The World Travel & Tourism Council estimates the tourism economy will expand to become a $15.5 trillion industry by 2033, according to the WTTC’s Travel & Tourism Economic Impact 2023 report.
That means an estimated 24 million new travel- and tourism-related jobs added to the sector over the next decade.
It’s not all good news, however.
“Despite all this, the year ahead will not be without its challenges. Inflation, economic uncertainty, labour shortages and the climate crisis are limiting factors,” WTTC president and CEO Julia Simpson noted in the report. “And as travel returns to its pre-COVID-19 peak, some businesses are struggling to keep pace with demand. Worldwide, we need strong efforts to increase capacity and connectivity, as well as action from both industry and governments to resolve staffing problems.”
The state of tourism and the high cost of travel
The biggest travel economies aren’t necessarily new faces: The U.S., China, Germany, the U.K. and Japan take the top five positions, respectively. But China is expected to overtake the U.S. in terms of travel economy size in the next decade, Simpson told Bloomberg this week.
That’s unlikely to mean much in terms of your next vacation. What will, however, is that rising demand means hotel rates and airfare will only go higher.
Global leisure travel spending is expected to go from roughly $4 trillion last year to nearly $8 trillion in 2033.
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Higher interest rates around the world mean it isn’t as conducive to build new hotels as it was even just a few years ago. That means the hotel supply out there today is generally expected to remain about the same over the next few years in markets like the U.S., so the CEOs at companies like Hilton anticipate rates can go up simply from the case of there not being enough supply to meet traveler demands.
Bargains are still out there
Hotel supply not keeping up with growing demand doesn’t mean you won’t be able to find a discounted vacation over the next decade, especially in the near term.
A presentation at hotel data provider STR’s recent Hotel Data Conference in Nashville noted hotels in Germany, Thailand, Malaysia and Japan haven’t yet recovered to pre-pandemic performance levels. That could present an opportunity for better hotel rates, as owners look to woo back guests.
There’s even potential opportunity for deals here in the U.S. There are signs of a flat summer in terms of hotel performance, and Americans heading abroad are largely to blame. But there are also fewer inbound travelers from abroad.
The same STR presentation noted there are about 1 million fewer international visitors to the U.S. each month this summer compared to 2019, while there are 200,000 more Americans heading abroad each month compared to pre-pandemic.
Further, Expedia indicates several fall travel deals out there. Offseason travel isn’t a new concept for those looking for bargains, but it’s something to consider even more in the years to come, considering swelling demand in peak travel periods like the summer.
Expedia reports airfare is down 20% to cities like Denver, Chicago, Tokyo and Florence, Italy, compared to summer prices. Beach destinations like the Outer Banks of North Carolina; Myrtle Beach, South Carolina; and Panama City Beach, Florida, have Vrbo vacation rentals priced at 25% below their summer rates.
Keep in mind: The offseason travel option isn’t for everyone, especially families who plan their vacations around school schedules.
The Expedia report notes that 70% of couples with double income and no kids — sometimes known as “DINKs” — prefer traveling in the fall at times when occupancy rates are lower in popular cities like London, Paris and New York City.