U.S. Travel’s Forecast Highlights Travel’s Continued Resilience Within a Challenging Economic Backdrop

Our latest biannual forecast projects that all segments of travel will be robust in 2023 and beyond, despite our expectation of weakening economic conditions and a normalizing of post-pandemic demand. Even when adjusted for inflation—and despite the still-lagging recovery in the business and international segments—total travel spending in the U.S. is expected to reach 93% of 2019 levels this year.

The backdrop: The first half of 2023 has managed to dodge a recession, but with soaring inflation, a continued tight monetary policy and softening consumer spending, a mild recession remains likely toward the end of the year. Coupled with a softening of demand and a dwindling of excess savings, travel’s continued growth will face moderate headwinds.

• Nevertheless, the economy’s negative effects on total travel spending is expected to be limited in scope and duration, as consumers continue to prioritize and value travel.

Go deeper: While we expect a very strong summer, travel is projected to moderate this fall and possibly into the first quarter of 2024—a result of the anticipated recession. Still, with travel’s strong performance in the first part of year—and expected strength in the latter part of next year—annual growth rates will largely obscure the short, anticipated moderation.

By Segment:

Domestic Leisure Travel, the driving force of the industry’s post-pandemic comeback, will experience continued strength.

• Volume and inflation-adjusted spending will both be fully recovered this year and is positioned for continued—though more normalized—rates of growth (around 2%) in 2023 and 2024.

Domestic Business Travel is expected to continue recovering, though a full return to inflation-adjusted spending remains beyond the range of the forecast.

• Business volume and spending are both expected to experience double-digit growth in 2023, but their pace of recovery will moderate toward the end of the year and into 2024.

International inbound travel, still far behind, is expected to experience a spike over the next couple of months and years, as it reaches near-full recovery next year.

• The already-impressive comeback from Canada and India will be matched by some other markets as they slowly return to pre-pandemic visitation levels.

What changed: The latest forecast builds on our consistent story of resilience and recovery, which was the hallmark of our forecasts in 2022. While it is remarkably similar to our previous forecast in the fall, there are some notable differences:

• As a result of a continued restrictive monetary policy and an expected weakening of economic conditions, domestic business travel is projected to grow—and recover—more slowly than we previously expected.
• Thanks to very strong performance from the Canadian market, as well as stronger expectations from key overseas markets such as Brazil and China, international inbound travel’s recovery timeline has improved in our latest forecast.

While travel’s recovery trajectory is expected to remain robust, there are key constraints that may limit its recovery if they are not swiftly and properly addressed.

Our work: U.S. Travel is advocating for the following four key federal policy areas to accelerate growth across travel sectors:

• Improve the overall air travel experience through the Federal Aviation Administration reauthorization bill.
• Lower U.S. visitor visa interview wait times, which currently exceed an average of 500 days in top visa-requiring inbound markets.
• Reduce customs wait times at U.S. airports and other ports of entry experiencing excessive delays.
• Increase federal prioritization and focus on travel industry growth, as many other countries have done.

Addressing the above policy priorities are necessary in ensuring we meet––and hopefully surpass––our forecast as we enter an increasingly competitive chapter of global travel.