Travel Executives Expect Breakout Year for International Demand

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Excerpt from CoStar

Recapping the first quarter, executives from public hotel companies and others in the travel industry shared international travel trends that are driving optimism for the rest of the year.

Executives in the travel business anticipate that international travel is finally back in 2023, especially with China travelers emerging from lockdown to traverse the world once more.

Matt Goldberg, president and CEO of Tripadvisor, said on his company’s first-quarter earnings call that appetite for international travel is higher than it’s ever been.

“While travelers are just starting to kick off the peak planning period for summer holidays, summer travel intent is already significantly higher than last year at this time by advanced planners,” Goldberg said. “Our data also suggests that share of international travel intent is returning to pre-pandemic levels in the U.S. and [Europe, Middle East and Africa] and [Asia-Pacific] intent to travel is more than double than last summer. We’re also observing an increase in experiences searches year-over-year, particularly in Europe.”

Executives from hotel brand companies, real estate investment trusts and even home-sharing platform Airbnb are similarly excited about the recovery of international travel demand. Executives shared their expectations for the segment for the rest of the year during first-quarter earnings calls.

Bill Hornbuckle, CEO and president, MGM Resorts International

“MGM China is experiencing a rapid recovery following the lift of public health policy restrictions. Our first-quarter outperformance in Macau is a direct result of a meticulous preparation and well-executed plan put together by our team in MGM China who ensured that we are ready to capture market share and drive results upon reopening. …

“Osaka has approximately 30 million people within a three-hour transit time of our site in Yumeshima. Our site in Osaka is also expected to drive international tourism in Japan given its proximity to other major Asian countries. And I will remind all that Osaka is closer to many Northern Chinese cities than any other gaming market. Considering that will likely be our … first integrated resort offering for some time in Japan, we believe this project will generate a minimum high-teens free cash-flow yield.”

Hubert Wang, president and chief operating officer of MGM China, MGM Resorts International

“Daily visitation to Macau … has been steadily on the rise month-after-month since January after travel restriction was lifted. In March, daily visitor counts averaged about 50% in the first quarter; and April is already at 75% of 2019 levels. If you walk around the streets, you can already see the pre-COVID hustle and bustle in the atmosphere has reemerged in Macau into the resort and the streets. … We think that the market will continue to recover as more and more gaming customers and leisure travelers make their first post-pandemic trip to Macau.”

Tony Capuano, president and CEO, Marriott International

“First-quarter U.S. and Canada business transient revenues surpassed 2019 levels for the first time since the pandemic began, and cross-border travel has continued to rise globally. However, it is still a few hundred basis points below 2019, when guests traveling abroad accounted for nearly 20% of total room nights. Additional upside is expected to come primarily from Asia-Pacific, given international airlift to and from China is still well below pre-pandemic levels. …

“We did see in the quarter that Mainland China RevPAR was fully recovered to 2019 levels. But remember, the vast majority of that recovery was domestic demand. At the end of the quarter, only about 20% of the international airlift in China had recovered. By April, it was recovered about 40%, and we do expect a stronger and stronger return of international demand in China through the balance of the year.”

Leeny Oberg, chief financial officer and executive vice president of development, Marriott International

“In Greater China … roughly three-quarters of the business typically is domestic. Well, right now, it’s over 90% domestic. There is the reality that there’s going to be more travel both in and out of Greater China … as the airlift improves. We would expect to see that help other parts of the world, but also more travel into China. In terms of the segment, it’s seeing the recovery in segments very similar to the way that we saw it in other parts of the world.

“The one difference being that on special corporate and business transient in China, that is recovering much more quickly than it did in the U.S. For example, overwhelmingly, people are back in their offices in Greater China, while in the U.S., there’s obviously much more of a hybrid mix. We are actually seeing all of the segments recover more in line with each other, rather than necessarily one after another, the way it was in the U.S.”

Chris Nassetta, president and CEO, Hilton

“While people may have a little less to spend, they’re spending more of it on experiences and a lot less of it on things. You see that throughout the economy. And … finally with China opening up — while it’s not back anywhere near where it has been — international travel is really on a steep up slope. …

“China has been a little bit slower to pick up steam on the development side. It is picking up steam. Particularly, as we think about next year, I think it’s going to be big net contributor. … China won’t contribute what I would have hoped it would this year, but I think it will be made up for next in ’24 and ’25 because the engines are really cranking up. It’s just a process. It will be conversions, international growth and increased market share of what does get done in the U.S.”

Click here to read complete article at CoStar.

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About Mary Weyand 11728 Articles
Mary founded Scoop Tour with an aim to bring relevant and unaltered news to the general public with a specific view point for each story catered by the team. She is a proficient journalist who holds a reputable portfolio with proficiency in content analysis and research. With ample knowledge about the Automobile industry, she also contributes her knowledge for the Automobile section of the website.

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