“Historically there has been a strong correlation between GDP growth and RevPAR,” said Umar Riaz, EY Americas Hospitality Sector Leader, in a recent interview with HOTELS Magazine. “But it’s my opinion that given the current dynamics of the travel industry, even if there is a mild recession in the next six months or so, the travel industry will still perform strongly.”
The post-pandemic urge to travel remains strong, which should drive continued growth in 2023. In the US, RevPAR was up 8.1% in 2022 from 2019, and Europe was up 6.1% for the same period. Asia, driven primarily by China, was the weak spot with a 31.2% RevPAR decline from 2019 to 2022. The industry’s average daily rate (ADR), which measures the average rental revenue earned by an occupied room per day, was up 13.6% last year in the US and 18.5% in Europe, when compared with 2019 figures.²
Business travel is also poised for recovery as companies ramp up their travel budgets. Trade shows and conferences are selling out, reflecting the pent-up demand that persists across all industries to get out of the office. Another factor in the industry’s resurgence is the growing work-from-home (WFH) segment of the workforce. In some cases, those employees build their travel plans around both business and leisure. Bleisure travel, where business travelers add on a day or budget extra time in their work trip for sightseeing or some other type of leisure activity, is a growing trend. The result of these market developments is more revenue and continued economic recovery for the hospitality sector.