The year 2022 has been a contrast between massive pent-up demand and revenge travel on the one hand, and worries about rising prices, growing inflation, and a possible recession on the other.
This has been a year of growing optimism around the travel industry’s recovery, as well as growing pessimism about rising inflation, sky high rates, and a possible recession. Here are some of the highs and lows of the past year, in the form of 11 charts produced by the Skift Research team.
Many of these charts are taken from our State of Travel 2022 report, which can be downloaded for free, providing a comprehensive overview of the current state of the travel industry through 175+ charts.
Full Recovery Is Near
Skift Research has tracked the performance of the travel industry in 22 countries and four major travel sectors (aviation, hotels, short-term rentals, and car rentals) since the start of the pandemic, collating and analyzing data from 20 travel partners.
The year 2022 has seen most regions recover to pre-pandemic demand levels, with Asia Pacific the only real straggler, as it is slowed down by China’s persistence with its zero-Covid policy.
For now the tap remains closed from the largest pre-pandemic source market in the world. When will China reopen and will its people travel to the same places and in the same ways as before Covid-19?
Inflation and Price Hikes Are Concern
Globally, inflation is chipping away at purchasing power and risks derailing the robust travel recovery.
Throughout 2022 we have seen travel prices growing at sky-high rates. This represents strong pricing power for the industry, but also risks turning off consumers.
Our surveys amongst U.S. consumers show that high travel prices are likely to impact consumers into 2023. Few are outright canceling trips, but many are downgrading their spending to cheaper alternatives.
Company Performance Improving But Lagging
Unsurprisingly, publicly traded travel stocks have lagged the broad market since the pandemic. The travel stock sector, taken as a whole, declined 54% in March 2020. Since those lows, the travel sector has actually performed in-line with broad stock indices. But the sector is still 30% below its pre-pandemic high.
The industry, and especially suppliers like airlines, airports, and accommodation providers, have struggled with staffing in 2022. While demand returned with a vengeance, staff didn’t seem as willing to come back.
One travel sector not having the same issues with staffing is the already-leaner online travel space. Bookings made through the largest online travel agencies Booking Holdings and Expedia Group are expected to be back to pre-pandemic levels (read more here), but the jury is still out on whether they are coming out of the pandemic stronger than suppliers like hotels and airlines.
Suppliers tend to do best in stable, growing economic environments while distributors are often the first to capitalize on disruption — both economic and technological. Distributors tend to move faster on changes in the tech landscape, with online travel agencies, as an example, early to capitalize on the long-term consumer shift to e-commerce. And in moments of economic disruption, recessions tend to make suppliers more willing to pay with margin for the ‘heads in beds’ that third-party channels can deliver.
Our assumption heading into the pandemic was that, at a moment of extreme disruption for the travel industry, the pendulum would swing back in favor of third-party distributors, but this time around brands have become better at online marketing, discounting was not an option, and Google has disrupted online distribution considerably. We’ll see how 2023 pans out.
Shifts in Consumer Demands Are Persistent
For now, as we are coming out of the pandemic, some of the changes identified in consumer demands and behavior remain strong.
Skift Research surveys show that fully remote working is on the decline, but in its place come more hybrid forms of some home-some office arrangements. The greater flexibility that comes with these new ways of working is having a real impact on the travel industry. People are taking more and longer trips. Where possible, business travelers are increasingly including a weekend into their trips, and leisure travelers are taking their laptops with them to work a few days from their destination.
We also saw a massive increase in the popularity of short-term rentals, and finding more remote and rural destinations to spend vacation time has remained popular during 2022.
Finally, sustainable tourism has seen another boost during the pandemic. While the industry has talked about the need for a more sustainable approach, and the interest of consumers has been steadily increasing over the past decades, we are now seeing a real societal shift towards sustainability that needs to be addressed by the travel industry in the years to come.
Photo credit: Terminal 5 departures area at London's Heathrow International Airport. Skift