Business

CEOs of major travel agencies hope market turmoil will not derail summer recovery


As economists fear a recession, the most powerful names in travel and hospitality are stepping back, pointing to bookings that illustrate a positive picture of American consumers.

“We think this summer will be a series of travel,” Marriott CEO Tony Capuano told last week.

Marriott saw first-quarter revenue grow 81% year-over-year as more business and leisure guests return as Covid restrictions are eased.

Despite concerns about inflation, Expedia CEO Peter Kern said he hasn’t seen travelers cancel plans because of so much pent-up demand after the pandemic.

That demand has driven average daily room rates at US hotels up 40% from a year ago, according to hotel analytics firm Smith Travel Research.

“We don’t see any indication that consumers are impacted in terms of travel spending,” Kern told CNBC. “We both know that there have been savings and shortfalls in spending during Covid,” Kern told CNBC. “.

Expedia saw it Its total bookings rose 58% in the first quarter from a year ago, a significant jump but slightly below Wall Street estimates.

As tourism recovers, publicly listed travel giants are starting to spend more on marketing and advertising – setting the stage for a competitive summer.

Kern hosted a travel conference last week in Las Vegas, where the online travel operator unveiled a number of new technology updates that give travelers new data they can use to make travel arrangements. Choose smarter when booking your trip. Those enhancements include a price tracking tool and a custom hotel score based on guest reviews.

Booking Holdings Not only did CEO Glenn Fogel join the chorus of hotel executives bolstering pick-up in tourism as restrictions ease, but also share a staggering number: Total bookings room for this summer is tracking 15% above 2019 levels, before Covid shut down worldwide.

“Travel is coming back, we’re all happy. We’ve been through a rough time for two and a half years where people couldn’t travel the way they wanted to,” Fogel told CNBC.

Market, economy can play spoiled game?

The question is whether summer 2022 will turn out as strong as CEOs are envisioning – or whether consumers will rethink travel due to economic constraints or lingering volatility across the globe. stock market or not.

The market turmoil could eventually affect the “wealth effect,” Patrick Scholes, hospitality and leisure analyst at Truist Securities, told CNBC. “Basically if we see a sustained bear market, people feel more cautious about their ability to spend.”

Things haven’t gotten so bad yet, he said, thanks in part to the strength of the housing market. “For example, personally, while my stock portfolio may decline this year, it could be rebalanced by appreciating the value of my home,” he added.

The previous economic downturn had resulted in a drop in travel bookings. Data from STR shows that after each recession, Americans restrict travel resulting in a drop in bookings.

Pebblebrook Hotel Trust Chairman and CEO Jon Bortz doesn’t think history will repeat itself. “There are so many emotions to travel… [that] people are not going to cancel a trip to see family for the first time in two years,” he argued.

While higher interest rates may push consumers to opt for cheaper options, executives don’t currently see any evidence of that.

Some industry experts disagree, saying they’re starting to see concerns peak.

Looking beyond bookings, the construction of new hotels has declined in recent months. More than 154,000 rooms were under construction in March, down 15.7% from a year ago, according to STR.

“Construction costs have increased significantly in part due to wage inflation, supply constraints and higher interest rates,” Jan Freitag, country director for real estate research group CoStar, told CNBC.



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