How a global recession can affect travelers and the travel industry | Tech US News


With interest rates in the US USA that continue to rise and the impact of inflation affecting wallets everywhere, there has been a great deal of talk about the potential for a global recession.

Some of the world’s leading economic organizations have said the economy is weakening. The Conference Board, a global nonprofit think tank, recently projected that the United States and Europe in particular may experience a near-term recession, while China may see “significantly weaker growth in 2023.”


The question then is how a recession might affect the travel industry, which has been busy coming back to life. What would be the ramifications for the hotel industry, airlines, tour operators and destinations? Not to mention the travelers themselves and their plans.

The answer to these questions varies depending on who you talk to. But the overall good news is that the industry seems well-prepared so far to navigate what could be an uncertain few months ahead, and travelers remain eager to keep trotting the world no matter what.

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Economy aside, travel remains a priority

After years of not being able to explore the world and being isolated at home for much of that time, consumers around the world are unwilling to give up the ability to travel right now, even amid economic uncertainty.

“More than half of Americans report that travel is now a priority and view their vacation as a sacred and worthwhile investment,” James Thornton, CEO of Intrepid Travel, told TravelPulse. “Having a period without travel made people appreciate their vacations even more.”

The most recent US study on travel sentiment underscores Thornton’s point. According to data from the November 2022 study, 92% of Americans have travel plans in the next six months, which is tied for the highest level of travel seen since the start of the pandemic.

Travel advisors across the country say they, too, are witnessing a reluctance to give up on vacation plans no matter what the economy brings.

“I think Covid has taught many that life is precious and that it’s important to spend time with loved ones and how much travel is valued when the freedom to travel is taken away from them,” said Jennifer Doncsecz, president of VIP Vacations Inc, based in pennsylvania and a certified travel industry executive. “That may mean consumers take shorter vacations or look for other ways to save on a vacation, but I think people want to travel and will travel despite a recession.”

Opt for value destinations, shorter stays and off-season travel

While globetrotters may remain a priority, even amid a cooling economy, consumers can hedge their bets by revising their plans slightly.

A recent survey by Seven Corners Travel Insurance found that the majority of travelers (57%) preferred to change their holiday plans rather than cancel them. The most common adjustments to plans were staying with family or friends instead of renting or booking a hotel (36%), choosing a less expensive transportation option (31%), and taking a microcation instead of a longer trip ( 25%). ).

Revised travel plans may also include opting for destinations known to be cheaper, experts say.

“People will be looking for good quality destinations and places where their money will go further,” continued Intrepid’s Thornton. “In Europe, for example, the dollar is particularly strong right now, so it’s a good time for Americans to travel there.”

Other historically inexpensive destinations, such as Mexico and South America, may also see an increase in traffic and popularity.

Axel Hefer, CEO of Trivago, told TravelPulse that consumers are likely to make some specific adjustments to accommodate financial concerns.

“With the recession looming, consumers will likely adapt their travel in three ways: shorten the length of their trips, select cheaper destinations and use more price comparison platforms,” ​​Hefer said. “We have seen these changes in consumer behavior in Western Europe, as the recession is expected to be stronger than in the United States.”

A global recession may also mean a greater tendency to travel during times of the year when costs are historically lower. “We may see people traveling more off-season, traveling for less time or taking a short trip instead of a long one, but they’re still going to have their vacation,” Thornton said.

Road trip in the Great Smoky Mountains
A fall trip through the Great Smoky Mountains (Photo by Eric Bowman)

Where industry impacts may be most noticeable

One thing is certain, few travelers are happy about the rising cost of airline tickets. As Doncsecz pointed out, ticket prices have been rising to levels beyond inflation. And that means consumers have the biggest service complaints for airlines, she says.

As a result, he predicts “more consumers will look to sail from a nearby port or drive if they can’t afford to fly.”

Indeed, cruise operators, which in some cases have struggled to fill cabins, could use this economic moment to shine.

“I think they can keep their prices reasonable [cruise operators] They have more to gain because flights are so high and hometown ports offer a fabulous option,” continued Doncsecz.

Tour operators can also benefit amid the changing economic climate. “This is where they can shine because costs are high, so service expectations will be at an all-time high,” Doncsecz explained. “Tour operators can be the link to provide amazing service and step in if there’s a problem. I also think all-inclusive brands will do well because there’s a huge savings in going all-inclusive.

For destinations, on the other hand, highlighting experiences will be key to attracting visitors despite the costs of arriving.

Pool and beach of the Dominican Republic
The pool and beach at the Hyatt Zilara Cap Cana in the Dominican Republic (photo by Eric Bowman)

Thinking outside the box will be key for travelers and travel brands

The bottom line, at least for now, is that people want to travel. Despite inflationary pressures, enthusiasm remains strong. Still, industry experts are keeping a close eye on developments such as inflation, a likely recession and even high energy prices, all of which could slow the travel rebound during the first half of 2023.

And many of these same industry leaders are already using some creative tactics to help ensure the momentum remains strong.

“Companies like us are trying to promote the idea that you can travel outside of peak times and peak cities, trying to disperse tourism dollars to other parts of the world. Instead of focusing on the top 10 destinations, we focus on the top 10 alternative destinations” , Thornton said. “If you have the means, don’t cancel any trips in 2023. A recession can lower rates and provide much-needed income for small business owners in local communities.”


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