The Missing Piece for Full U.S. Tourism Industry Recovery

Good morning from Skift. It’s Monday, July 24. Here’s what you need to know about the business of travel today.

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Episode Notes

Hotel companies will report earnings over the next several weeks. So what will industry insiders be paying close attention to? Senior Hospitality Editor Sean O’Neill explains in this week’s Early Check-In column. 

O’Neill writes investors will look closely to estimate when sector revenues may return to pre-pandemic levels. The American Hotel and Lodging Association doesn’t expect U.S. hotels to hit their pre-Covid sales figures until 2024. O’Neill adds that analysts are eager to find out if hotel companies are still considering expansion. One analyst said the pace of hotel supply growth is noticeably below the historical average. 

Next, the U.S. travel industry is continuing to make enormous progress in its rebound from the pandemic as Americans travel in huge numbers this summer. Yet, the industry still hasn’t made a complete recovery. Associate Editor Rashaad Jorden delves into the reasons why with answers provided by Ask Skift, our artificial intelligence chatbot, and further research. 

Jorden cites the decrease in visitors from China, a major market for the U.S. tourism industry, as one factor in the U.S.’ inability to make full recovery. Although U.S. tourism boards have unveiled plans to increase marketing efforts in China, their efforts are complicated by the inability to restore flight schedules between the two countries to pre-pandemic levels.

In addition, U.S. Travel Association CEO Roger Dow said a full complete travel company depends on reopening international markets. The U.S. welcomed 51 million overseas visitors last year, about 64% of its 2019 mark. Dow’s organization projected international inbound travel to the U.S. would hit three-quarters of its pre-Covid volume this year. 

Finally, Icelandair rode a surge in transatlantic travel to record profits in the second quarter. However, the company might see a drop in travel demand in Europe later this year, writes Edward Russell, editor of Airline Weekly, a Skift publication. 

Icelandair CEO Bogi Nils Bogason said during its earnings call on Friday that economic turbulence across Europe could stunt the company’s revenue growth in the second half of 2023. Bogason had acknowledged earlier this year that inflation would impact travel demand. However, Russell notes economic uncertainty hasn’t affected the company’s forecast of a 4-6% operating margin for the year. 

Icelandair reported a $21 million operating profit in the second quarter, its highest quarterly profit since 2016. The company also generated roughly $414 million worth of revenue during the quarter.