Travel Volume Could Go Down in 2023 with Prices Still Increasing - Travel Market Report

As the travel rebound continues, there are signs that two very different American travelers are emerging, that is according to the latest Portrait of American Travelers study from MMGY Global.

According to the research, which took the pulse of 4,500 adult Americans for its Fall edition, there is a population of Americans who are being impacted by stubborn, rampant inflation. Then, there are the Baby Boomers and higher-income households who will more than likely keep traveling despite rising prices. This population will actually look to increase their spending over the next year.

According to MMGY’s research, the percentage of Americans who plan to take a vacation over the next six months is 63%, a number that represents a 10-point decrease compared to the same time last year. Almost half of the travelers who said that they aren’t planning on traveling in the next six months (40%) said that they are making that decision, not because of a lack of time or desire to travel, but rather because of financial circumstances or the rising cost of travel.

The cost of travel, and Americans’ growing concern about their own financial health, have replaced COVID-19 as the top concern when it comes to booking travel.

That 63% of those surveyed who are ready to travel do expect, and accept the need, to spend more, which is helping offset some of that percentage who has dropped out of the travel pool—Americans now expect to spend $3,785 in the next six months, up from $2,758 in 2021.

But still, according to MMGY EVP of Travel Intelligence Chris Davidson, 2022 could be a peak year for the industry.

“With these factors in mind, we’re predicting that overall leisure travel volume may decrease somewhat in 2023 while prices will likely increase,” said Davidson. “From a hospitality perspective, we expect leisure occupancy to decrease while average daily rate (ADR) increases modestly. As a result, we’re anticipating a slight increase in revenue per available room (RevPAR) on a year-over-year basis in 2023.” 

That post-pandemic boom, which has been incredibly welcomed by so many advisors and agency owners after what happened during those early months of 2020, might be waning a bit, but only amongst that bracket of travelers, Davidson told TMR.

"The results of this most recent survey indicate demand for travel is in fact waning a bit, but it is really just concentrated among lower-income travelers. An increasing percentage of these travelers say they don't have plans to travel in the foreseeable future,” he said.

Other trends
Along with those trends, the study also found a number of other things that are shaping consumer desires and wants when traveling.

The first is that culinary experiences are now a high priority among travelers and younger travelers, in particular.

The survey found that 6 in 10 Gen Zs (56%) and Millennials (61%) are “influenced by the quality of the culinary scene when choosing where to stay in a destination. Regardless of how affluent travelers are, respondents in these age groups were found to generally value authentic local food and beverage experiences much more so than traditional fine-dining experiences, such as those designated as Michelin-starred restaurants.”

The second is that social media is still playing a significant role in travel planning, especially, again, among those younger generations. According to the survey, 4 in 10 Millennials indicate celebrities and digital content creators have a great deal of influence on their travel decisions (38%) and nearly 6 in 10 Millennials “have made a travel purchase based at least partially on a post by a celebrity or influencer (57%).”

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