2023 travel

industry outlook
Travel moves from a year of return and resurgence
into a period of recalibration and repositioning
2023 travel industry outlook

Contents

Introduction 3
Wanderlust in wallet-wary times 4
The quality equation 6
Corporate’s new normal 7
Sustainability’s imperative 8
Free to roam 9
Conclusion 10
Authors 11
Endnotes 12

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 2023 travel industry outlook

Introduction

Throughout 2021 and most of 2022, the travel industry saw its demand
and performance metrics climb steadily. As pandemic conditions improved,
hotels and airlines in much of the world rode a wave of pent-up leisure
demand back toward healthy business. Hotels have been able to achieve
rates and revenue per available room (RevPAR) above 2019 levels.1 And US
air travel volume reached at least 80% of 2019 levels every day from July 5
through November 30, 2022, on the back of constrained capacity and
higher fares.2

The COVID-19 pandemic put a mark on travel that the industry is unlikely
to soon forget. While travel businesses should continue to account for
the possibility of new COVID-19 variants or the rise of other infectious
diseases, travelers appear to have begun to move past the pandemic.

As health worries fade, significant challenges are coming to the fore:

consumer financial anxiety, a labor shortage affecting all travel segments,
climate change quandaries, and the likelihood that corporate travel may
never return to pre-pandemic levels. If 2022 was a year of welcomed
pent-up demand, 2023 will be a year of coming to grips with some
complicated realities facing travel. The year ahead in the travel industry
will be defined by the basics—product, performance, and price—
in the context of economies and societies reshaping themselves on
the way out of a once-in-a-generation crisis.

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2023 travel industry outlook

Wanderlust in wallet-wary times:

Leisure demand faces murky outlook

When Deloitte launched its Global State of the Consumer The softening in demand that began in September could be the
Tracker in April 2020, just 21% of global consumers planned to beginning of a lasting downshift by belt-tightening consumers.
fly domestically, and 22% planned to stay in hotels. Beginning But it also could turn out to be a blip, as travelers reacted to the
in 2021, however, each month showed improvement over the well-publicized flight delays of summer 2022—concern about
prior year as the vaccine rollout boosted safety perceptions. flight disruption was a prominent concern among Americans
This run finally came to an end in September 2022. For the first forgoing holiday travel, cited by about one in five.3 With intense
time, Deloitte’s Consumer Tracker found intent to book travel peak days, it is harder to avoid crowds and high airfares
flat or down across all travel segments, in the United States and during the holiday travel season. Time will tell the extent to
globally. Sentiment trends improved somewhat by November, which elevated financial concerns continue to plague travel in
but year-on-year trends remained close to flat, following a 2023. Hospitality research firm STR anticipates an economic
summer of big gains. slowdown in 2023 but still forecasts slight increases across hotel
performance metrics. It projects a 3% bump in RevPAR, which
Americans’ intent to travel during the winter holidays declined would represent 12% growth over 2019.4
as well (figure 1), after rising during the summer. This time, no
new COVID-19 variant or health scare was to blame. Financial
concerns were the No. 1 reason cited among those choosing to
stay home.

Figure 1. Americans planning to travel by season, 2021 vs. 2022

Summer Holiday season

(between Labor Day and mid-September) (between Thanksgiving and mid-January)

46%
41% 42%

31%

29% of 15% of Americans

Americans to stay in paid lodging
to stay in (vs. visiting friends
paid lodging and relatives)

2021 2022 2021 2022

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 2023 travel industry outlook

While many returned to travel with enthusiasm in 2022, some had But if fare trends continue, many could continue to delay ambitious
to wait longer than others. China was largely closed to inbound trips. According to data from Hopper, international fares from the
and outbound travel until its government eliminated quarantine- United States for September through November 2022 were up
on-arrival requirements as of January 8, 2023. The policy opened a whopping 31% vs. 2021, compared to 16% for domestic fares
a long-awaited pocket of pent-up demand. Prior to the pandemic, (figure 2). Challenged by airfares, wallet-wary international
the country’s outbound travel growth had made it a fixation of travelers will likely put a high emphasis on in-destination costs,
destination marketers. Chinese travelers’ share of international seeking out destinations with favorable exchange rates.
spend doubled from 6% in 2010 to 12% in 2019, when they were
the biggest spenders in the world, according to Tourism Economics
analysts. The recent policy shift cleared the way for the return
of Chinese outbound travelers, but there are significant barriers
to a sudden surge: High airfares, limited airlift, test-on-arrival
requirements, and slower GDP growth.

Even among markets that have been open longer, international

travelers likely have a backlog of trips in mind. Among US travelers,
plans to fly internationally over the holiday season jumped from 10%
of travelers in 2021 to 17% in 2022.5 Now that many key destinations
have been open for months, international trips should continue to
increase. Ahead of both the summer and holiday travel seasons,
about one in seven non-travelers said they were saving up for a
bigger trip. A similar share of travelers whose budgets were smaller
than in 2021 said they were holding funds for an international trip.

Figure 2. Historic US airfare: domestic and international

$350
November 2022
$300 vs. 2019: +8%
Domestic fare

vs. 2021: +16%

$250

$200

$150

$1,100
November 2022
International fare

$900 vs. 2019: +17%

vs. 2021: +31%
$700

$500
September October November

2022 2021 2019

Source: Hopper.

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2023 travel industry outlook

The quality equation: Challenges in staffing

and supply chain, along with high interest rates,
undermine the travel experience
As travelers consider the price vs. value proposition of travel, a Solutions to staffing challenges are not simple. According to
looming concern of hoteliers and airlines is their ability to deliver the AHLA survey, 81% of hoteliers say they have increased
the experiences travelers expect. Like the service industry pay. But at $22 an hour in June 2022, average wages across
broadly, travel suppliers have struggled to sufficiently staff hospitality might not be high enough. Hotels say they have
frontline roles. offered other enticements, including better benefits and more
flexible hours. Both hotels and airlines must tackle these issues
In hospitality, the labor force had reached just 84% of 2019 levels within complex systems. While hotel brands want to see change
by October 2022. And in September, 87% of hoteliers reported across their portfolios, owners bear most of the brunt. Airlines
staffing shortages in an American Hotel & Lodging Association are affected by the practices of airports, government agencies,
(AHLA) survey.6 At the same time, many hotels have delayed subcontractors, and more, even while trying to stabilize their
renovations as chains suspended some of their quality reviews own workforces.
during the pandemic. Rising interest rates and persistent supply
chain challenges are still making it difficult for some properties Travelers will begin to demand more for their dollar
to invest in upgrades.7
Over the 2022 winter holiday season, one in five Americans
choosing not to travel cited concern about delays and
Airlines face staffing challenges as well, for roles from pilots
cancellations as one of their reasons for staying home.12 This
and air traffic controllers to baggage handlers and gate agents.
came after a summer of widely reported air travel disruption.
And like hotels, they are experiencing delays in infrastructure
And many of those who did travel Christmas week faced delays
updates. Helane Becker, senior research analyst at Cowen,
and cancellations due to a major winter storm. Travelers may
expects labor and equipment challenges to “inform growth” in
have been giving travel suppliers a pass on the price-versus-
2023 and 2024.8
experience equation due to the pandemic, general inflation,
and what they hear about labor shortages. But this will not
If these issues are harming performance for hotels and airlines,
last, especially if overall consumer financial anxiety continues
the harm is not enough to keep them from growing. October
to increase.
2022 was the fourth consecutive month that US hotels reached
or exceeded 100% of 2019 occupancy, according to STR.9
While some may choose to travel less, or not at all, more will
Average daily rates for those months were up an average of
likely adjust their trips, making compromises to control the
16% over 2021. US daily air travel volume averaged 90% of 2019
budget. In Deloitte’s Global State of the Consumer Tracker, the
levels from May through September 2022, even with domestic
percentage of global travelers leaning toward the cheapest flight
fares up an average of 9% and international up 15% over that
itineraries, instead of the most convenient, climbed from 21% in
period, according to Hopper.10 Still, both of these supplier
October to 35% in November.13
categories could see travelers begin to demand more value for
their money soon. J.D. Power’s annual hotel study reported a
The staffing and infrastructure issues facing travel are complex,
drop in guest satisfaction from May 2021 to May 2022, finding
and the road to solving them will be littered with frustrated
that “hotel guests are feeling like they are paying more, but not
customers who may opt to spend their money on other things.
getting more in return.”11 Airlines also may face more price-
sensitive shoppers in the year ahead, especially in the event of a
significant economic slowdown.

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 2023 travel industry outlook

In corporate’s new normal, events will play

a starring role

Deloitte’s 2022 report on the state of corporate travel projected Still, we expect corporate to continue to make significant
that business travel spend would reach two-thirds of 2019 levels gains. And a big contributor to that could be a strong year for
by the end of 2023, after more than doubling over the course of corporate and industry events. These were major pandemic
2022. In recent months, there have been signs of this recovery, casualties—nearly all cancelled in 2020, with limited returns
as airline and hotel performance finished the year strong in the and spotty attendance in 2021. But by 2022, attending
face of flagging leisure intent. conferences and industry events was the top impetus for
business trips, followed by trips to build client relationships
When Deloitte surveys travel managers this month, we expect (figure 3). While travel use cases such as trainings and client
to find that COVID-19’s direct influence on corporate travel has project work have been somewhat replaced by technology,
plummeted, as it has with leisure. But conditions do not indicate conferencing software has proven an inadequate substitute
that corporate travel volume will snap back to pre-pandemic for the networking that goes on at industry events.
levels. In a December interview, United CEO Scott Kirby
suggested it may have “plateaued.”14 These events also have a large role to play in supporting two
other use cases that business leaders consider key to business
Like leisure travel, corporate will face cost-related challenges. goals and not easily executed virtually: client acquisition and
With airfares high, and many businesses finding growth harder relationship building. It appears that much of what used to be
to come by, some expense-related curbing of trips can be office work will continue to be done at home. With work-from-
expected. Among travel managers responding to the Business home likely to continue complicating trips to call on clients at
Travel News 2022 Airline Survey, 85% said their organizations’ their offices (for more on this, see “Free to roam” in this report),
willingness to travel has been impacted by high airfares, with catching up with them at conferences should hold its appeal.
27% characterizing the impact as significant.15 And compared Well-executed, marquee events should have a strong year and
to leisure travel, air travel disruption might have an even bigger play a big role in corporate travel going forward. With less time
effect on the corporate side. Half of respondents to an Egencia spent in-office, the conference’s role in connecting people
survey said they would rather cancel a trip than contend with and creating face-to-face opportunities will likely become
flight disruption.15 more critical.

Figure 3. Primary reasons for business travel, 2022

5%

10%
25% Conference, exhibition, or tradeshow
Build client relationships
11% Client work
Sales calls
Site visits

11%
Internal team meeting or leadership meeting

22% Training

16%

Source: Deloitte Global State of the Consumer Tracker.

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2023 travel industry outlook

Sustainability’s imperative: Awareness is growing, but

clarity about climate-friendly options remains elusive

As awareness of humans’ contribution to climate change grows, Ultimately, 62% of corporate travel managers say they expect their
so does the need for more sustainable travel options. Consumer companies’ green initiatives to result in a reduction in travel of
concern is evident: 68% of respondents to Deloitte’s Global State of more than 25% by 2025 (figure 4). As hotels, airlines, and car rental
the Consumer Survey consider climate change an emergency. It’s companies seek to win their share of a smaller corporate travel pie,
difficult to gauge the effect that has on travel purchases. According demonstrating more climate-friendly practices could strengthen
to a recent Booking.com survey,16 more than half (53%) of travelers their position. But ultimately, the industry should expect a long-term
globally say that they are more determined to travel sustainably reduction in trips compared to pre-pandemic.
than they were a year ago. But the extent to which these intentions
translate into travel decisions is unclear, as is the appetite to pay For the leisure and corporate markets alike, would-be travelers’
more for greener options, especially when prices are already high. demand for clearer and more streamlined and consistent reporting
will grow. But a recession would make it more difficult to move
Corporations’ intentions are more likely to come to fruition. Many environmental initiatives forward, as suppliers would be much
have made public commitments to lower their emissions. Deloitte is more concerned with staffing, interest rates, and the overall
among these companies, aiming for 50% reduction of its business economic environment.
travel emissions per FTE by 2030. Some of this reduction will come
from collaboration with suppliers to enable more sustainable Still, leading hotel companies, airlines, and rental car providers have
travel. In addition to sustainable aviation fuel purchases, Deloitte is sustainability much higher on their agendas than they did a few
also working to move its peers and partners forward via initiatives years ago. Most suppliers have some kind of emissions abatement
promoting greater transparency and more clear, consistent program in place, and travel aggregators have made efforts to
standards—including the Sustainable Aviation Buyers Alliance make climate impact visible in the shopping path. Brands’ efforts
and the CDP Supply Chain Network. to offer travelers more sustainable options will likely become more
prominent, though massive strides and breakthroughs are unlikely
A large amount of the reduction in corporate emissions will come in the coming year.
from reduction in corporate travel. The days of essential-only trips
at the peak of the pandemic, followed by gradual return, have
taught business leaders more about what truly impacts business
performance, as well as where technology can adequately
replace travel.

Figure 4. Expected impact of sustainability on 2025’s travel spend, according to travel managers
Expected to reduce by:

1%

9%

29%
61%

Less than 10% 11%–25% 26%–50% More than 50%

Source: Deloitte Corporate Travel Survey 2022, N=150 executives with oversight of business travel policy, spend, and strategy.
Question: How much do you think sustainability considerations will impact (reduce) your company’s travel in 2025?

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 2023 travel industry outlook

Free to roam: Laptop lugging will grow as more

suppliers cater to it

The shift in work patterns precipitated by the pandemic has given And this consideration is not restricted to those working on their
many people more flexibility. About half of employed Americans can trips. Others are favoring a functional working environment in their
do their jobs remotely, and both the average number of days they decisions as well, likely accommodating those working in their travel
did so (3.2 days per week) and the number they prefer (3.9 days per party or preparing for the potential need to work, just in case.
week) increased about 5% from November 2021 to November 2022,
according to Deloitte’s Global State of the Consumer Tracker. Many travel providers have recognized the ascent of this trend and
are tailoring their offerings to meet the new needs of this group.
Untethered from offices, some are choosing to add trips to the Some airlines are rethinking their route maps to accommodate
calendar and add days to their trips. For many, this means bringing growing hybrid business models and leisure travel.17 Hotel brands
their work with them. This laptop lugging behavior is prominent and that predominantly catered to corporate travelers are investing
expected to grow as consumer habits solidify and travel suppliers in better remote-work infrastructure, changing room layouts for
increasingly shape their products and marketing around laptop more in-room workspace, offering a wider range of services and
luggers’ interests. activities, and so on, to lure the leisure traveler.18 Private rentals
are anticipating longer stays and more international demand going
Deloitte’s 2022 summer travel survey captured one in five travelers forward and attribute it to rising remote and hybrid work.
saying they intended to work at least partially on their longest
summer trip, similar to intent in 2021. These travelers were relatively Laptop luggers present a lucrative opportunity for travel. And this
younger (five times as many 18-to-34-year-olds vs. 55 years and pattern could lead to a positive feedback loop, as more providers
older) and higher income (twice as many earning $100,000 or more mold their offerings to attract this traveler, giving travelers more
vs those earning less than $50,000). One third said they intended to incentive to take advantage.
add three to six days to their longest trip of the season.

With flexibility here to stay, laptop lugging will likely continue to

contribute to higher-frequency travel and longer stays. Those
privileged to exercise this option also could use it to cope with higher
prices, by organizing trips to avoid peak days and to make the most
of available deals and discounts. The ability to work remotely is also
increasingly factored in travel decision-making, especially when
travelers select their destination and lodging (figure 5).

Figure 5. Travelers considering ability to work remotely in

destination and lodging selection

Change in influence
(vs. 2021)

Destination selection 37% +5%

Lodging selection

Hotels 51% +12%

Private rentals 54% +19%

Source: Deloitte’s 2022 summer travel survey.

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2023 travel industry outlook

The US economy ended 2022 on mixed footing. Unemployment Still, performance indicators in the airline and hotel industries
stood at just 3.7% in November, but the month also saw a remained strong, likely due in part to much more corporate
big wave of layoffs. Tech was especially affected, with 51,125 demand compared to the year before. Travel seems to still hold
employees laid off during the month across 203 companies, sway over consumers’ discretionary spend, but high prices
according to Layoffs.fyi.19 Third-quarter earnings calls highlighted in a softening economy could begin to strain that position.
macroeconomic uncertainty and rising interest rates. Inflation Opportunities exist to attract new travel cohorts, but workplace
finished the year in the high single digits, though slightly off its flexibility can only offset so much financial anxiety, especially
summer peak. Anxiety about the near future increased among when travel suppliers face pressure on their own income
Americans—about two-thirds surveyed in October do not expect statements. Overall, the travel industry is moving from a year
their financial situation to improve within the next year.20 defined by return and resurgence into one that will require
recalibration and repositioning.
This weakening of financial confidence seemed to threaten
travel growth in the final months of 2022. After a year and a
half of steady improvement, intent to travel began to wobble
in September.

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 2023 travel industry outlook

Authors

Eileen Crowley Michael Daher Steve Rogers

Vice chair and US Transportation, Vice chair and US Transportation, Executive director
Hospitality & Services attest leader Hospitality & Services non-attest leader Consumer Industry Center
Deloitte & Touche LLP Deloitte Consulting LLP Deloitte Services LP
+1 203 708 4199 +1 212 313 1977 +1 475 277 9018
[email protected] [email protected] [email protected]

Matt Soderberg Bryan Terry Peter Caputo

Principal Managing Director Principal
US Airlines leader Global Aviation leader US Hospitality leader
Deloitte Consulting LLP Deloitte Services LP Deloitte Transactions and Business
+1 214 840 7726 +1 678 431 4676 Analytics LLP
[email protected] [email protected] +1 973 602 6872
[email protected]

Maggie Rauch
Research leader
Transportation, Hospitality and
Services Consumer Industry Center
Deloitte Services LP
+1 212 436 5947
[email protected]

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2023 travel industry outlook

Endnotes

1. STR website.

2. TTransportation Safety Administrat ion (TSA), “TSA checkpoint travel numbers,” accessed December 9, 2022.

3. Deloitte, 2022 Deloitte holiday survey: Travel key findings, accessed December 9, 2022.

4. Sean McCracken, “STR expects hotel revenues to grow even in recession,” CoStar, November 29, 2022.

5. Eileen Crowley et al., “2022 Deloitte holiday travel survey,” Deloitte Insights, 2022.

6. American Hotel & Lodging Association (AHLA), “87% of surveyed hotels report staffing shortages,” press release, October 3, 2022.

7. Allison Pohle, “More hotel rooms are looking shabby, even with higher prices,” Wall Street Journal, November 10, 2022.

8. Yahoo Finance Live, “Airport staffing is ‘going to inform growth’ for 2023 through 2024: Analyst,” video transcript with Cowen Senior Research Analyst Helane Becker,
October 12, 2022.

9. STR website.

10. Adit Damodaran, Hopper Price Tracker, January 9, 2022.

11. Crowley et al., “2022 Deloitte holiday travel survey.”

12. Deloitte Global State of the Consumer Tracker, accessed December 9, 2022.

13. Donna M. Airoldi, BTN’s 2022 Airline Survey & Report, Business Travel News (BTN), accessed December 9, 2022.

14. Michael B. Baker and Chris Davis, “Survey: Disruption frustration threatens travel intent,” BTN, August 15, 2022.

15. Booking.com, Sustainable travel report 2022.

16. Robert Silk, “As flyer habits change, airlines rethink approach to scheduling,” Travel Weekly, October 31, 2022.

17. Christina Jelksi, “Business hotels make room for leisure,” Travel Weekly, October 24, 2022.

18. Airbnb Q3 2022 earnings call transcript, November 1, 2022.

19. Layoffs.fyi website, accessed December 9, 2022.

20. DCrowley et al., “2022 Deloitte holiday travel survey.”

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