The year 2023 holds great promise for the hospitality industry, as it continues to experience a remarkable rebound.
With recovery well underway, we look at how resorts and hotels are anticipated to perform in the coming year and what trends the industry can expect in the market and in travel demand.
No Signs of a Slowdown
Bookings for 2023 show no sign of slowing down. Demand for hotel and resort rooms have not only recovered from pandemic numbers, but are expected to surpass pre-pandemic levels.
According to the American Hotel & Lodging Association report, the hospitality industry is projected to see 1.3 billion occupied room nights for 2023, even higher than in 2019. This is a 56.9% increase from 2020 when the industry saw a low of 831.64 million occupied rooms.
With higher occupancy, revenue from rooms and new bookings will soar with an anticipated $197.48 billion in revenue for 2023. This is compared to $170.35 billion in 2019 and $86.01 billion in 2020.
In 2022, revenue from rooms started to recover with $189.07 billion. All signs point to continued growth as the desire to travel remains strong.
Especially when looking at other industries like retail or tech, hospitality has easily outperformed them in several areas, including revenue, hiring, and where people are looking to invest their earnings.
Types of Travelers in 2023
Business & Bleisure
Companies are reopening their wallets and increasing their travel budgets. Trade shows, conferences, and conventions are rebounding with skyrocketing attendance.
Convention center bookings saw an increase of 13% in 2023 compared to the year before.
With the world reopened the trade show industry is also predicting more business travel, anticipating revenue growth beyond pre-pandemic numbers.
The work-from-home and hybrid models in the office also lend themselves to bleisure travel, where employees will plan a few extra days around a convention or conference to enjoy a couple days of sightseeing alongside their work trip.
Leisure Travel
Booking that yearly vacation is back. Recent consumer surveys showed most are planning at least one vacation over the next six months. Again the demand and desire to travel is there. Granted, with inflation as a potential factor for travelers, their vacation choices may look a little different, opting for several staycations over choosing one more exotic trip.
In 2023, we expect to see more resorts offering staycation packages, encouraging travel for guests with their budget in mind.
The Digital Nomad
While the concept of the digital nomad is not new, 2023 will continue to see more workers traveling and working without a central office. Many are taking advantage of remote work and hybrid work models, making their next travel destination their office.
A recent survey of companies revealed that 75% of workers don’t anticipate having a central office in the foreseeable future.
Resiliency from Economic Cool Downs
Threats of recession and a cooling economy aren’t slowing down travel demand and the hospitality industry should continue to thrive throughout 2023. With many still reeling from pandemic restrictions, more people aren’t waiting around or for the right moment to take their vacations.
Interest Rates & Inflation
Even with rising interest rates in an attempt to drive down inflation, deals and transactions in the industry are still strong due to cap rates easily eclipsing the higher interest rates. Plus, resorts and hotels can mitigate inflation and their costs.
For example, while food and beverage costs haven’t seen much price relief in 2023, especially protein and meat items, resorts can pivot to focus on competitively-priced seafood, downsize portions, or adjust menu prices.
It is evident that this year is shaping up to be a transformative one in the industry. And with strong bookings and high demand in business and leisure travel, resorts and hotels can anticipate more growth opportunities moving into 2024.
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