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What’s Next For Domestic Tourism?

Bracha Arnold
April 3, 2023
What’s Next For Domestic Tourism?

The COVID-19 pandemic upended many aspects of travel and tourism – and the industry barely had time to recover before a rising consumer price index and budgetary concerns led some consumers to cut back on travel once again. Now, as the “new normal” becomes more and more entrenched, we take a closer look at the state of domestic travel and tourism. 

Where Are You Going, Where Are You Staying

While the hotel industry overall is still struggling to close the COVID visit gaps, some types of hospitality venues are performing better than others. An analysis of quarterly visits to four different kinds of accommodation – luxury and mid-range hotels, lower-cost inns, and resorts – reveals that resorts and inns are outperforming luxury and mid-range hotels, although no category is back to pre-pandemic occupancy levels.

Q4 2022 visits to inns and resorts were 4.6% and 10.4% lower than they were for the same period in 2019, respectively. In contrast, luxury and mid-range hotels experienced year-over-three-year (Yo3Y) visit lags of 15.5% and 11.4%, respectively. This trend suggests many consumers are looking to maximize how and where they spend their travel money. Some are preferring no-frills, value-priced hospitality options such as inns, and others are willing to shell out if it means staying at an experiential destination like a resort. Meanwhile, traditional mid-range and luxury hotels are seeing lower demand. Yet, the limited nature of these declines – even in the face of distinct economic challenges – suggests the sustained demand for domestic travel. 

Airports Slowly Taking Off

But although the uptick in international trips may be negatively impacting the domestic hospitality industry, the rise in air travel is helping airports in their recovery. 

Q1 2022 saw the most marked year-over-year (YoY) increase in airport visitors, with 65.1% more foot traffic than during Q1 2021. Throughout the course of 2021, as vaccines rolled out and airlines removed restrictions, airport traffic gradually returned, leading to smaller YoY quarterly visit increases in the latter half of 2022. Still, the Yo3Y did continue to shrink steadily, narrowing from 15.4% in Q1 2022 to 10.1% in Q4 2022. 

So while airports are still seeing slightly fewer passengers than in 2019, the increase in YoY traffic combined with the narrowing Yo3Y visit gaps indicate a consistent and ongoing recovery. 

Nature Calling In The Spring and Fall

While hotels and airports suffered a blow over COVID, outdoor recreation soared. Interest in visiting national and state parks reached an all-time high as pandemic restrictions eased, and people found that parks made for an affordable and socially-distant vacation. And now that hotel and airport visits are continuing their post-pandemic recovery, nature-focused tourism destinations – specifically national and state parks – are normalizing in the other direction.

Foot traffic data shows that for all months of 2022, visits to national and state parks were down relative to the equivalent month in 2021. But adopting a wider lens by analyzing the baseline change in visits since January 2018 reveals that 2022 traffic was still relatively in line with pre-pandemic levels – indicating that interest in outdoor recreation is normalizing rather than waning.

Vacation Mode: On

The way people vacation has undergone significant shifts following a tumultuous few years. As people enjoy the freedom to travel where and when they want, many are choosing to prioritize unique experiences, whether by choosing a resort, international travel, or a national park. 

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