As we enter 2024 and hoteliers gear up to execute their plans for the coming year, it's important to reflect on the trends and developments that have shaped the industry over the past year.

Despite some lingering concerns around the broader economy and geo-political instability, we can confidently say that travel has fully recovered in 2023.

While obstacles still remain and will continue to rise, we can look back on 2023 and forward in 2024 with optimism and recognize the potential for growth and innovation.

Here are our key learnings from 2023.

Despite tougher conditions, consumers kept spending on travel

In 2022, it was pretty much a given that we were going to see a big travel and tourism rebound given the artificially depressed years of travel restrictions that had preceded it.

One year later and that surety was falling away as high inflation ate away at consumer spending power, as did rapid rises in interest rates to counter those soaring prices. There was now a global crunch in discretionary spending, and many economists warned about the impact to livelihoods and even the potential for a global recession.

Fast forward to the close of the year, and travelers decisively defied the gloom. Global expenditure on travel and tourism has remained incredibly robust even in the face of weakening household spending power.

In the US, which opened up earlier than other economies and had very high rates of growth in the travel sector in 2022, momentum continued in 2023. While the previously explosive rates of growth have come down, US consumers still spent 8% more on transportation, recreation, and food and accommodation services than a year prior in both Q2 and Q3 2023.

US personal consumption expenditures on transportation, recreation, and food and accommodation services (billions of dollars)

Even in less robust economies where consumer discretionary spending has been squeezed more than in the US, there seemed to be little let up in the desire to book trips. While Japanese households cut overall spending by the highest amount in nearly two-and-a-half years in Q2 2023, they continued to increase the amount of their budgets going towards dining out, transportation, culture and entertainment services.

Similarly, Barclays’ October UK Consumer Spending Report noted that the travel sector “continues to be one of the best-performing categories of 2023,” with spending rising 10.5% in October 2023, even amid a cost of living crisis.

In 2023, the desire to see the world could not be dampened.

Events remain a huge demand driver for hotel and short-term rental bookings, while business travel provides a welcome boost

One of the main drivers for this continued spending by consumers and the overall strength in the travel and tourism sector seems to be the drive to experience things in person and reject the online world forced upon us due to the pandemic.

Whether it was Primavera and Sonar festivals in Barcelona, Eurovision in Liverpool, Summerfest in Milwaukee, the Rugby World Cup in Paris, Taylor Swift’s Eras Tour, or the Women’s World Cup down under in Australia and New Zealand, excited fans turned out in droves for major sporting, cultural and music events.

Just by glancing at the chart for some of these cities mentioned above, there are clear spikes in hotel room pricing where those events fell in the calendar for their respective cities, which are marked in the chart.

Those boosts to room rates underlined the strong demand generated and the subsequent capacity for hoteliers to set higher rates in all of those cases.

Hotel room rate pricing in select cities in 2023 (local currencies)

People weren’t only traveling for pleasure, though, as the personal touch very much returned to business travel as well.

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