Some call it “revenge travel” but it’s really more of a “great escape.”
This, at a time when inflation-flattened consumers are cutting back on everything — even the food they eat — yet somehow find the means to throw down for a week in … you name it.
In an otherwise endless barrage of bad economic news coming out of Q4 2022 and continuing into the first quarter of 2023, travel is one of the few bright spots, although it depends on where one lands in terms of earnings that’s deciding whether “travel” translates to a Sunday drive with drive-thru grub, or jetting off in getaways to exotic locales, eateries and experiences.
We need look no further than the Q4 financials of online travel agencies (OTAs) Booking Holdings and Expedia Group — together commanding a huge segment of travel booking activity — to see the trendlines that are ending up as airliner contrails for millions of U.S. consumers.
Booking Holdings CEO Glenn Fogel said during the OTA’s Q4 2022 earnings call Thurs. (Feb. 23) that “for the first time, we saw room nights across all of our major regions above 2019 levels for the quarter,” adding that Q4 activity led to “an all-time high” of nearly 900 million room nights booked on its platforms for full-year 2022, which is 52% higher than a year ago.
Visions of boat drinks and beach umbrellas were also served up by OTA Expedia Group during its Feb. 9 earnings release. Operating travel brands including Hotels.com, Vrbo, Travelocity, Hotwire.com, Orbitz, Ebookers, CheapTickets, CarRentals.com, Expedia Cruises, and Trivago, Expedia Vice Chairman and CEO Peter Kern was all about the value of loyalty.
“In the fourth quarter of ’22 versus ’19, Expedia U.S. grew new customers that became loyalty members by over 300% and enters ’23 with nearly 70% more active loyalty members than any prior year, and almost 60% more active app users. Expedia U.S. was able to deliver almost 20% revenue growth in ’22 as compared to ’19,” Kern said.
You could almost hear the voices of happy travelers in the background as he spoke.
Because you’ve got to stay somewhere after you fly — and because the couches of friends and family just don’t cut it for optimum fun — hotels and alternate lodgings are seeing green too.
In a Valentine’s Day gift to Airbnb (which reported Q4 earnings on Feb. 14), travelers booked 88.2 million stays across 6.6 million global active listings in the quarter, representing growth of over 900,000 additional listings, excluding China, since the start of the year.
During that call, Airbnb CEO Brian Chesky said the following (with a smile, no doubt, possibly from inside a luxury igloo or hobbit house; we can’t know where the digital nomad was): “We had our highest number of active bookers ever in Q4, demonstrating guests excitement of the travel on Airbnb, despite evolving macroeconomic uncertainties during the quarter.”
Speaking of digital nomadism in the broader sense, PYMNTS data finds that those engaging in travel right now are more likely to be high earners, which stands to reason.
Have you seen the prices of airline tickets?
Some intend to travel no matter their economics. In the January 2023 study “New Reality Check: The Paycheck-to-Paycheck Report: The Economic Outlook and Sentiment Edition,” a PYMNTS and LendingClub collaboration, we find that “Among paycheck-to-paycheck consumers, regardless of whether they struggle to pay their monthly bills, 30% plan to spend on leisure travel.”
That’s a “yes and no” situation, as the February study “The ConnectedEconomy™ Monthly Report: Digitally Divided — Work, Health and the Income Gap” said, “Travel is another area where high-income and mid-income consumers’ digital activities sharply differ. High-income and mid-income consumers are 1.5 times as likely as low-income consumers to be online planning vacations and spending on travel and accommodations — and this gap is growing.”
It continues, saying “an average of 46% of high-income consumers used websites, apps, aggregators or other digital tools to plan or book travel tickets or or accommodations — up 19% from last year. Low-income consumers’ use of digital for travel is relatively unchanged in comparison,” signaling that lower-income consumers are finding alternatives to air travel and more upscale hotels.
On the topic of air travel, another sign that “the great escape” is moving at a high airspeed is the recovery of airlines that, aside from disruptive storms late in Q4, are on a comeback course.
The Wall Street Journal reported on Friday (Feb. 24), “A year ago, many airlines were still burning through cash as some countries were slow to remove coronavirus-related travel restrictions. Now, with borders fully open, some of those carriers are posting big profits.”
It went on to say that “One factor in the return to profitability has been consumers’ willingness to pay high airfares. Carriers are still scrambling to hire staff and get planes back in the air, limiting the supply of seats and flights and driving up prices.”
See the PYMNTS study findings previously cited to understand who is (and likely is not) forking over for nosebleed airfares. We found it’s disproportionately skewed to higher-income remote and hybrid workers for whom the bloom is decidedly off the work-from-home rose.
Wherever one sits along the earnings continuum, trendlines indicate you’ll be sitting somewhere fun — and traveling to get there — no matter what happens to the economy in 2023.