USA Travel Summer 2022 |  McKinsey

USA Travel Summer 2022 | McKinsey

Summer 2022 is likely to be good for travel and tourism in the USA. The following five key trends are shaping the industry with implications for hoteliers.

Leisure travel is booming

Revenue per available room (RevPAR) in the US is outpacing not only 2020 and 2021 levels, but increasingly 2019 levels as well. RevPAR’s outperformance is largely driven by rates. Hotels are not as full as they were in 2019, but prices have increased – the average daily rate (ADR) is about 15 percent more expensive now than it was in 2019.

Essentially, people love to travel. We asked over 1,000 U.S. travelers what they would do if they won the lottery, and travel expenses ranked as the second top choice (Appendix 1).

While short-term travel after this summer is still unclear, we are convinced of one unchanging truth: Everyone loves to travel.
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This summer, vacations will happen “no matter what” for many

The survey also revealed that people are concerned about macroeconomic factors such as inflation, but this is not enough to prevent almost 70 percent of travelers from taking their vacation this summer (Exhibit 2).

Three words define travel this summer: No matter what.
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Are gas prices high? People will go somewhere closer. Hotel prices prohibitive? They will look for a deal. Consumers may find ways to cut back, but these factors will not ruin their vacation plans (Appendix 3).

Inflation may prompt some travelers to stay closer to home - although it is not expected to significantly disrupt holiday plans.
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Since the survey was conducted in June 2022, travel plans are in motion. AAA estimated that 42 million people will travel by car over the July 4th weekend, a new record for car travel volume for the period – even though the national average gas prices exceeded the $5 mark.

In addition, hotel occupancy, ADR and RevPAR data exceeded the comparable week in 2019, and the number of TSA security checkpoint trips showed a 15% increase for the Thursday and Friday before the July 4th weekend compared to 2019.

Guests have more accommodation options than ever before


Travel insights and trends with McKinsey

The lines have blurred between accommodation categories and travelers are looking for hotels, shared accommodation, all inclusive and outdoor/glamping options.

While 78 percent of travelers surveyed said they were comfortable staying in a hotel, only 61 percent were comfortable staying in alternative accommodations. The top five reasons for staying in a hotel include consistency and predictability; safety and privacy; convenient location; availability of concierge, salon, restaurant and/or other amenities; and lower price. In comparison, travelers may choose alternative accommodation options as they offer more space; household amenities; and an authentic or local experience.

So where do these travelers plan to go? Over half (54%) plan to go to the beach, a popular choice among 25- to 34-year-olds. The next most likely destination (32%) is an urban/urban location, followed by a mountain/tourist trip (24%).

Loyalty runs hot

In this environment of higher prices and increased choice, efforts to maintain customer loyalty are intensifying. But the survey shows that many travelers, especially the younger generation, don’t think they’re getting enough value from loyalty programs, or the programs seem too complicated.

There are some features of loyalty programs that are more important than others: offering discounts, having the right position so guests can stay where they want, and making it easy to redeem points are favorites.

ESG is becoming increasingly important

While 75 percent of travelers surveyed agree that sustainability is important, only half would pay extra for it. But younger travelers are much more willing to pay extra for green initiatives. Such initiatives that are currently resonating best with guests include the use of eco-friendly cleaning products; replacement of plastic key cards with alternative ones; reduced paper use, e.g. electronic receipts; and smart appliances and monitoring systems to optimize energy use.

Five ways hotels can respond to these trends

  1. Encourage leisure stays by highlighting local attractions and events. With the boom in leisure and the recovery of business travel, we expect to see growth in leisure travel.
  2. Help guests find you when they’re researching their next trip. Hotels can invest in their online and social media presence to communicate with potential guests early in their research. This is especially important as hotels face labor shortages and sometimes reduce service levels: communicate transparently to ensure guest expectations are set appropriately before guests step foot on the property.
  3. In markets with a large supply of alternative accommodation, communicate delimiters. Hotels can communicate what makes them better, especially convenience, consistency and available amenities.
  4. Upgrade loyalty programs. Hotels may need to review their loyalty programs to ensure they meet new needs and help both frequent and infrequent guests get the most out of their programs.
  5. Launch green initiatives with clear and consistent communication with guests. Hotels can think about how to attract eco-conscious travelers and build meaningful relationships with them that will lead to long-term loyalty.

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