Travel patterns normalized somewhat in 2022 as many countries across the globe loosened COVID-19 restrictions and booking windows increased. However, a lack of international travel, particularly from Asian countries, continues to be a concern for the U.S. hotel industry.
Compared to 2021 levels, international travel grew significantly, especially from European countries.
Hannah Huse, vice president of sales and marketing for Twenty Four Seven Hotels, said international travel “dramatically improved in 2022 compared to 2021” across its portfolio.
John Beck, general manager of Crowne Plaza HY36 in New York, said bookings by international travelers at his hotel are up 83% year over year, crediting the increase to European countries being fully opened up. Although international travel is set to reach 2019 levels next year, tourism from Asian countries — especially China — continues to lag pre-pandemic levels.
Room bookings originating from Asian countries was only 9% of 2019 levels at the Crowne Plaza HY36 in 2022, Beck said.
One factor at play is the record-high room rates across the U.S.
Beck said that once China ends travel restrictions, it could still be up to a year before Chinese tourists return to New York City because of the high rates.
“People understandably don’t want to shell out all this money for a big international trip that they don’t know what’s going to happen to,” Beck said.
Travel from countries such as Thailand and Japan started to pick up as more restrictions were lifted, but China — the biggest market in Asia — contributed virtually nothing this past year due to its strict zero-COVID policies, he said.
Lynette Eastman, general manager of the Surfjack Hotel & Swim Club in Honolulu, Hawaii, said the hotel booked very few international guests in 2022, but European travelers were the exception.
European travelers accounted for nearly 9% of all guests in the third quarter of this year, and Eastman said they came from a variety of countries such as Germany and Italy.
She said she has renewed optimism in international travel accelerating, as travel from the Oceania region and Japan has picked up. Despite the growth, Eastman said there’s still a lot of room for improvement.
Japan represented 3% of all bookings at the Surfjack in 2022. In 2019, it represented 17%. Similarly, the Oceania region represented 5% of all bookings in 2022 while it represented 20% of bookings in 2019.
“We’ve got a ways to go,” she said. “That’s not where we want to be. We like more of a diversified market. But if we’re looking at pie charts from 2019 through 2022, it’s very optimistic,” she said.
An increase in international travel to the U.S. next year will be critical for the hotel industry, as demand from domestic leisure travelers is expected to decrease after setting record highs the past two years, Eastman said.
“Of course 2022, with all the restrictions coming down throughout the year, our U.S. mainland piece of the pie was still 52%, but I can’t see the domestic continuing at that level for 2023 because a lot of that pent-up demand has traveled,” she said. “Our hope is that the international [demand] — whether it’s Europe, Oceania, Japan, Canada — that they get more confident in their travel and they start to travel more.”
Booking Rooms
Booking windows — the time between booking and arrival — increased in 2022, inching back toward pre-pandemic levels. Beck said booking windows are at about two weeks for business transient and 45 to 60 days for leisure travel at the Crowne Plaza HY36.
“Thank goodness for the whole industry that we're back to a healthy window because sitting in your office on a Monday hoping that people would come to the hotel on Friday, that's how we spent 2021, and it was pretty nerve-wracking for everybody,” he said.
The Surfjack's reliance on direct bookings, rather than online travel agencies, has helped to extend those booking windows, Eastman said, noting the hotel switched its strategy after the pandemic and it has led to sustainable change.
“The only good thing I could say about the pandemic was it shifted us from depending on the OTAs to becoming self-sufficient with property direct,” she said.
In 2019, 48% of bookings at the Surfjack came via an OTA compared to 13% coming via property direct and 15% coming via web direct. Those values were almost completely flipped in 2022, with OTAs accounting for only 19% of bookings while property direct accounted for 47% and web direct accounted for 30%.
The percentage of OTA bookings shrunk at the Crowne Plaza HY36 as well, dropping from 44% in 2021 to 38% in 2022. Beck attributes the shift to business travelers in particular who are prioritizing loyalty to brands for rewards.
“Now people are realizing 'I need to get my status, I need to stay with the brand, because that's how I'm gonna get rewarded and have a nice room and a better rate,'” he said.
Eastman said the Surfjack filled its rooms in the summer early, and it's going to end the year strong with the New Year’s holiday.
“We’re getting the booking a lot sooner,” she said. “We’re having a phenomenal year, just because of our market segmentation, because we're not depending 50% on OTAs.”
Flight Disruptions
One of the major headwinds of the travel industry in 2022 was the amount of flights getting delayed or canceled, and it continues to be a problem heading into the new year.
The most severe example of this has come at the close of the year as Southwest Airlines has canceled more than 16,000 flights since Dec. 23, the peak of holiday travel, due to system-wide shutdowns.
Generally speaking, the lack of business from guests who can’t make it to the hotel due to flight delays or cancellations tends to be offset by guests stuck in the city due to a delay or cancellation, Beck said. However, system shutdowns such as Southwest’s could have a more material effect on the hotel industry.
“Flight cancellations tend to wash themselves. If someone's coming into or planning and their flight gets canceled, someone’s stuck in New York,” he said. “Generally they wash and they don't really affect business unless … someone's system is down and the whole airline can't fly.”
According to data from the U.S. Department of Transportation, 3.2% of flights from reporting carriers were canceled, up from 2.4% in 2019. In June 2022, complaints about airline services from consumers were up 269.5% compared to June 2019 levels.
“That was definitely an issue in the beginning of the year. That was definitely an issue with leisure travel in the summer,” Beck said.
Huse said the surge of cancellations led to Twenty Four Seven Hotels increasing its daily forecast cancellation capacity to “offset the increase in airline uncertainty.”
“We have also targeted relationship development with airlines and intermediary accounts to help support accommodating distressed passengers,” she said. “We are also more mindful of cancellation policies and empathy for our guests experiencing unforeseen changes and displacement in their travel plans.”