The threat of a “capital R” recession could be downgrading to a “lowercase R” recession in the U.S., and it may not even happen at all, according to the latest economic thinking.
In the latest episode of “Tell Me More: A Hospitality Data Podcast” from the Hotel News Now Podcast Network, STR's Isaac Collazo and CoStar's Jan Freitag chat with Hotel News Now's Stephanie Ricca about where they think the U.S. will land, recession-wise, and why it may not even matter.
Tourism Economics still calls for a likely recession in late 2023, but Adam Sacks, president of Tourism Economics, called it mild and short-lived when he shared the firm’s outlook at the 2023 Hotel Data Conference, where this podcast episode was recorded.
Freitag’s assessment was that it might end up being what he called a “stub-your-toe recession,” characterized by a little mild pain.
Still, he doesn’t think the U.S. is out of the woods yet, citing analysis showing that most past recessions were originally predicted incorrectly to be “soft landings.”
Collazo, vice president of analytics at STR, agreed, but underlined that “the impact on the hotel industry is going to be very different from past recessions.”
“Business travel is not going to fall … and we also have the international component, which is starting to come back,” Collazo said. “And high-income households continue to travel like never before. … There’s an insulation there that protects the industry.”
He said those reasons and others are why CoStar’s latest industry forecast still calls for growth in average daily rate and revenue per available room, albeit at a slower pace than in prior forecasts.
Click below to listen to the podcast.
Here's more of what's covered in this episode:
- 'Solid to Strong' Growth in Higher-End Markets: Business travel continues to pick up momentum, which will lead to continued growth in upper-upscale chain scales and above, and in top 25 markets that have felt the lack of business-transient demand in recent years.
- Chinese Group Travelers Aren’t Back Yet: Freitag and Collazo mused on the news that China’s government in early August lifted its ban on international group travel. The floodgates won’t necessarily open to the U.S. quite so fast, Freitag said, given still-long visa wait times, expired Chinese passports and airlift issues. Freitag and Collazo’s take: Chinese group travelers will first venture to other Asia-Pacific locales then make their way to the U.S.
- The 'Total Cost of Travel' Conversation: As hotel demand normalizes, Freitag and Collazo debate how inflation factors into travel trends, especially given conflicting messages about whether airfare costs are normalizing or not. Collazo argues that the U.S. still has plenty of high-income consumers willing to spend what it takes on all elements of travel, while Freitag argues that airfare costs may very well be having an impact on travelers with lower budgets.
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Tell Me More: A Hospitality Data Podcast from the Hotel News Now Podcast Network is available to download on Apple or Spotify, where you can also subscribe to future podcast content.