Leisure demand as left the party

If “revenge travel” was the buzz word in 2023, then “normalized demand” is poised to be this year’s corporate catchphrase

Marriott International, along with other leisure companies, is seeing travel demand stabilize in the U.S. and Canada. Leisure RevPAR in the region was flat in the first quarter. Expedia revised its full-year guidance due to sluggish gross booking growth. Southwest Airlines reported lower-than-expected RASM amid softening leisure demand. Airbnb also saw a slowdown, with bookings growing 9.5% year-over-year in the first quarter, the slowest growth since the pandemic.

Key takeaways

• In March, RevPAR for the U.S. hotel industry fell 2.2% year-over-year, the first such decline since the pandemic, according to CoStar. This decline is in line with expectations given the 12 consecutive months of declines in U.S. hotel occupancy, which fell 2.5% in March alone;
• While U.S. growth is slowing, demand in Europe and Asia remains robust, benefiting travel companies with international exposure. Expedia is heavily dependent on the US for its revenue, while Booking has benefited from strong travel demand in Europe and Asia, contributing to its recent revenue growth;
• Corporate travel, which initially lagged leisure travel in its recovery from the pandemic, is showing some encouraging signs. The U.S. Travel Association projects a 7% increase in domestic business travel this year, compared with a 1.9% increase in leisure travel;
• Business travelers, who typically spend more on airfare and hotels, are boosting companies such as Delta Air Lines and Hilton Worldwide. Over the past year, Delta, Hilton and Booking have outperformed their peers, a trend that is likely to continue.

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