Travel Recovery Hits Some Turbulence

Greetings LinkedIn readers! Welcome to the lead story from The Kiplinger Letter, a weekly business and economics forecasting newsletter. Subscribe below for our full reporting on finance, economics, the markets and more.

-----------------------------------------------------------------------

The travel industry is on the road to recovery.?

But the rebound is uneven, as some sectors?still struggle, while others are gliding back to normal.?Here’s the outlook for this year and beyond.?

Get a free issue of?The Kiplinger Letter , no information required from you.

Total U.S. travel spending has risen quickly.?

Expect 2022 to be about 90% of 2019’s tally,?according to the U.S. Travel Assn., a trade group,?after plunging in 2020 to only 62% of 2019’s spending.?Before COVID, travel saw 10 straight years of growth.?Prepandemic levels won’t return until 2024.?

Driving the rebound: Domestic leisure travel .?It’s already surpassed inflation-adjusted 2019 figures.?But the industry frets it’s still $46 billion below?where it would have been if COVID didn’t happen. International inbound travel is doing better.?It's being aided by the dropping of predeparture COVID testing,?though it will still take until 2025 for a full recovery.?

But domestic business travel is struggling?to bounce back.

2022 will see promising growth,?leaving the sector at 80% of normal, but it’s likely?to stagnate for several years. Corporate cost cutting?and continued remote work are keeping folks at home.?Still, company executives are eager to get back on the road.

Almost 90%?of companies now allow nonessential domestic business travel. In-person meetings?are the top business travel expense planned for the rest of the year, a hopeful sign. Attendance is bouncing back at conventions, conferences and trade shows.?Take Las Vegas, a hot spot for major events. From Jan. through May,?convention attendance surged nearly 900%, compared with the same period in 2021.?Still, Sin City’s business tourism was down 34% through May versus 2019 figures.?The trend is promising, but keep in mind numbers are well below normal.?

As for the airline industry, it’s still far from recovered.

Staffing shortages?are being blamed for historic levels of flight delays and cancellations this year.?Domestic airline passenger numbers are improving fast, but well off 2019 totals.

Expect turbulence for the rest of the summer, if not longer. Plan for delays?and cancellations . Some say it could take years to deal with the pilot shortage.?Abnormally pricey tickets aren’t helping, spurred by record-high fuel prices. Meanwhile, many airports are struggling to meet the surge in demand?after staff cuts in 2020-21. That includes major international hubs in Europe.?

Hotels are still suffering,

Revenues are way down, particularly in large cities?that depend on business travelers. Almost all hotels are facing staffing shortages,?especially in housekeeping. Higher wages, more flexibility and other perks aren't helping much.

Overall, the industry is optimistic, but worries linger.

An uptick?in global COVID cases could lead to travel restrictions. And a recession would hurt .?

Get a free issue of?The Kiplinger Letter , no information required from you.