For those of you still working on 2024 budget, I feel you; One year after Covid, we are all expecting more certainty but unfortunately this is not the case.
So here are some considerations that you might find helpful.
1/ Chinese travellers are not back yet
Though China borders are opened, Chinese outbound travel has yet to rebound to pre-pandemic levels due to the lack of airlift, slowness in passport issuance and sluggish economic prospects, partially due to the real estate crisis.
Hence, if China was a significant contributor to your geo mix, consider other sources such as India that could make up for the soft demand.
2/ Impact of ongoing conflicts in Ukraine and the Middle East
The war leads to a higher energy cost, impacting living expenses.
European travellers are hence more cautious in spending on long haul trips compared to 2019. This will a greater impact on leisure destinations in ASEAN.
3/ USA presidential election affects outbound travel
Typically, during election years, US travellers take less overseas trips and I expect 2024 to be the same.
Additionally, US household debt is at all-time high, increasing the pressure on discretionary spending. Markets reliant on this market, please take note.
4/ Labour shortage
This will continue to be a challenge in 2024. Given the different advances in technology, hotels should (continue to) explore innovative solutions to help ease the pressure in their teams.
This effort should go in tandem with capex planning but also process redesign and team capacity building.
5/ Average rate expectations
Despite the headwinds faced by the travel industry, average rate is not expected to drop. Though the increase is likely to be more in line with inflation.
RevPAR gains in 2024 will be contributed by increase in occupancy as global airlift improves.
I hope the above points are helpful to all of you.
Vice President Strategic Advisory and Asset Management at JLL