Throughout the summer of 2023 there were many reports that a surge of international travel bookings were coming from the US, in part helped by a continued strong dollar. Although that meant US domestic travel demand was waning, the industry was generally excited that 2023 international travel volume could finally catch up on that of 2019.
However, by later this year Reuters reported that international demand from the US may have softened due to economic uncertainty. But meanwhile US airlines were still reporting a continued demand for international travel.
So, who is right? As we 2024 gets underway, should we expect to see outbound US international travel continue to grow, or will it slow down? Should travel intermediaries and B2B sellers now prepare for alternative scenarios? We spoke with some industry experts to find out more.
A recent Traveler Sentiment survey by Arival indicated a drop in the number of trips US travellers are planning to take in 2024. But Douglas Quinby, Co-founder and CEO of Arival, doesn’t think this is anything to be concerned about. ''US travelers are definitely back, and they want more out that travel – especially experiences. The drop in trip intent appears to reflect consumer sentiment today. There’s inflation, the cost of living, the economic outlook… and consumer debt is at an all-time high. Many US travelers are just being cautious. But the U.S. economy, employment and the dollar have remained resilient, the demand for international travel is there, and the trips people are taking are a lot more meaningful. They are booking longer periods away and are spending a lot more per trip. They’re also doing more on those trips.''
That could mean a change in strategy for hotels looking for US travellers, according to hotel revenue management expert BEONx: ''The fact that US citizens and Europeans alike are taking fewer trips, but spending longer away and spending more money is an opportunity for the industry,'' says Alex Barros, Chief marketing & Innovation Officer.
''Diversification could help hotels and airlines make up for revenue implications of people taking fewer flights, for example they could partner with hotels and activity providers to offer new packages and services with a focus on experiences to consumers sold during the booking process or even on the plane. We think that the breadth of ancillary services offered by airlines and hotels is likely to increase as more and more begin to think like retailers.''
One important factor driving US international demand has been the strength of the dollar to other currencies, in particular the Euro. Janis Dzenis from US focused travel comparison website WayAway, who help travellers to find the best discounts, points out that ''whilst the Dollar to Euro exchange rate peaked in favour of Americans in the autumn of 2022, when a Dollar got you just over a Euro, nonetheless it has steadily been at broadly historic highs all year and remains so now. As long as this continues we´ll see US travellers wanting to take holidays to Europe and elsewhere and when it stops, evidently this will hit outbound US travel accordingly.''
For those looking to find growth areas in the US source market, perhaps the biggest opportunity comes from focusing on the roughly 60 million Spanish-speakers there says Civitatis – the world’s leading online seller of Spanish-speaking tours & activities experiences. Its Chief Operating Officer Enrique Espinel comments that ''whether they are travelling domestically or internationally, the experience of Spanish-speaking US citizens is that there aren’t too many Spanish language tourism services being offered to them. So if you can tap into that, both marketing to them in Spanish but also offering them the actual service in their language too, then you´ll likely find higher-uptake and also more satisfied (and therefore loyal!) customers. Very importantly, this is a growing market both demographically but also economically so now is the time to capture them.''
Regardless of which direction US outbound travel is moving in, travel technology event organiser and research company Phocuswright thinks that travel is going through a huge period of change, so peaks and troughs should be expected in all outbound markets whether that be the US or elsewhere. ''Travel once again sits on the cusp of unprecedented change thanks to rapid developments in technology, and is always going to be highly reactive to geopolitical and economic situations,'' said Eugene Ko, Director, Marketing & Communications at Phocuswright. ''Travel is not going to lose its importance – it’s vital to economic growth and human connections. Our latest consumer research shows that consumers in the U.K., France, Germany, Italy and Spain consistently rank travel as their highest-priority discretionary spending area. Travel companies need to stay agile and lean on new technologies – like artificial intelligence for example – to help them quickly adapt to new landscapes as they evolve. The good news is, the outlook for travel in the next 12 months is generally positive for all major markets.''
This is something that, Gareth Matthews, CMO at global travel distribution provider Didatravel, agrees with. “Consumer travel patterns change so frequently – due to economic conditions, work-life shifts, political situations and a myriad of other factors – that travel companies need to continuously adapt their strategies, be diversified geographically, and be thoughtful in how they forecast supply, demand and pricing.” He adds however that ''the right technology plays a big part in that, as if you have automated processes then you can both scale up and down quickly or switch from one market as a priority to another, all at limited cost without the need for huge teams of people.''