Latest U.S. Travel Forecast Showcases a Resilient Travel Sector Though Headwinds Remain

The big picture: The latest U.S. Travel forecast is relatively unchanged from our previous estimates from the spring, despite the increased odds of a recession, stubborn inflation and additional headwinds. 

• Although there was a moderate downgrade in projections for 2023, the overall recovery is expected to remain robust.

The backdrop: Over the past couple of months, inflation has soared and the chances of a recession have increased. A mild recession in the first half of 2023 is now the most likely scenario. A drop in GDP has historically led to a substantial retrenchment in travel.

Yes, but: The latest data shows that travel is showing no signs of weakness now and is defying the norm. For example, hotel demand is back at 2019 levels and Average Daily Rates (ADR) were 17% above 2019 levels in October. 

The latest forecast reflects this reality and expects this trend to endure. 

Travel is now uniquely positioned to withstand a downturn thanks to ongoing pent-up demand—as travel is often prioritized over many other goods and services—coupled with strong household balance sheets and a continuing recovery in businesses travel. 

Breaking it down: While the overall trend is encouraging, there are notable differences between sectors: 

• Domestic leisure travel is continuing to show the strongest resilience and has already largely recovered to pre-pandemic levels.
• Domestic business travel is continuing to improve but the forecast has been somewhat downgraded in 2023 as the economy enters a mild recession. A full recovery in terms of volume is still forecasted for 2024, but an inflation-adjusted spending recovery remains beyond the range of the forecast as cost containment efforts among companies are expected to keep a lid on spending per trip.
• International inbound travel, though recovering, remains the most sluggish as it continues to face headwinds. Our forecast for both visitations and spending has been moderately downgraded, but the timeline for a full recovery in visitations remains at 2025.

Go deeper: The most noticeable change in the latest forecast was, in fact, the moderate downgrade in inbound travel in 2022 and 2023. 

• The recovery of international visitations was lowered from 67% of 2019 levels to 63% in 2022, and from 82% to 75% in 2023. 

By the numbers: This amounts to an additional loss of eight million visitors and $28 billion in spending over the two years and comes at a time when outbound travel has nearly fully recovered. In fact, while inbound travel recovered to just 66% of 2019 levels in October 2022, outbound travel was at 95%.

The forecast table can be accessed on our website, together with a detailed slide deck that is available exclusively to U.S. Travel members.