Positive Outlook For Tourism Despite Increasing Financial Pressures

In recent months, COVID-19 restrictions have dissipated and that, along with with waning concerns about the virus, has fueled strong demand for travel.

After two years of significant travel restrictions and uncertainty, some may see this as grounds for new levels of optimism. Others might argue that the industry should remain cautious amid soaring costs of living, declining consumer confidence, a war in Europe and other factors that may be obstacles along the path of recovery.

The latest consumer survey conducted in February 2022 by STR canvassed more than 1,300 global travelers to shed light on current views toward travel and future projections. STR is CoStar’s hospitality analytics firm.COVID-19 Has Ignited New Ambitions To Travel

Wanderlust was important for many consumers before the pandemic. Its growing importance was evidenced as the industry recorded consistent growth before COVID-19. However, the past few years offered fewer opportunities for travel, especially internationally, due to COVID-19 restrictions.

Meanwhile, for those who traveled, experiences were regularly shrouded with uncertainty due to cancellation concerns or changing travel requirements. Pent-up demand is, therefore, one factor that helps to explain the strong outlook for future travel. Another theory is that COVID-19 has shifted consumer priorities and stirred newfound interests that could benefit the industry.

Source: STRSource: STR
Source: STR

The latest STR survey findings show that four in 10 travelers expect to travel more, domestically or internationally, once the pandemic is completely over than they did before the pandemic. Net propensity to travel — the difference between those who said they were more likely than less likely to travel — post COVID-19 was +32% for both domestic and international tourism.

This signals increased intent to travel, especially to international destinations, compared with previous research conducted in July and December 2021.Importance of Affordability

At a time of increasing utility, fuel and food costs, demonstrating better value for money may be the new battlefield for brands in winning over customers.

The survey showed that affordability and value for money was the most important consideration for choosing holidays. Other factors such as the quality of accommodation and destination attributes, such as culture and history and things to do, were less important.

Similarly, the COVID-19 status of the destination was considered less important than financial aspects.

However, a disproportionately high number of respondents (26%) said that COVID-19 was the most important factor in destination choice, which shows that the pandemic divides public opinion to a degree.

Source: STRSource: STR
Source: STR

These findings suggest that perceptions of value for money in tourism and hospitality may be increasingly scrutinized in the coming weeks and months as the squeeze on household incomes continues.Government Decisions Could Make or Break the Industry

Government interventions were generally heralded in the early phase of the pandemic as many governments provided generous levels of support for workers and industries most affected by the pandemic.

However, according to STR’s survey results, there is a view among consumers now that government-imposed barriers could be the biggest obstacle to future travel. Seven out of 10 of those surveyed said government-related interventions such as quarantine and travel restrictions might prevent them traveling in the next 12 months. Comfort barriers, which include concerns about infection and financial obstacles, were perceived overall to be less problematic or significant for future travel than government barriers.

Source: STRSource: STR
Source: STR

The evidence suggests that consumers continue to demonstrate lingering anxieties not just about the virus, but also regarding the path ahead for tourism. Uncertainty is known to have a negative impact on consumer spending and behavior. However, the extent to which musings about future travel restrictions are affecting bookings remains to be seen.

The path ahead for tourism currently looks bright with hotel occupancy in many parts of the world recovering strongly toward pre-pandemic levels. Macroeconomic and geopolitical headwinds seem unlikely to ameliorate soon and, indeed, may stiffen in the short term due to more inflationary pressures. However, in a backdrop of increased certainty and confidence, travel seems destined to prosper as consumers have new priorities and want to make up for lost time.

Sean Morgan is director of research for STR’s Tourism Consumer Insights division, based in Europe.

About STR

STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality industry. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. For more information, please visit str.com and costargroup.com.

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