Post-pandemic “revenge travel” may have peaked already. But that doesn’t mean summer travel has gone away.
“This will be a busy summer,” Mike Daher, who leads Deloitte’s travel and hospitality sectors and co-authored Deloitte’s 2024 Summer Travel Report, told Hotel Dive. “Nearly half of Americans are planning to take a trip this summer — a couple [percentage] points down from last summer, but still a meaningful number.”
Summer is just around the corner, and AAA predicts 44 million Americans will travel for the Memorial Day holiday alone. And projections for the season point to a 4.1% year-on-year increase in RevPAR, according to Sachin Avadhani, EY Americas’ hospitality sector leader, and Michael Selinger, EY’s senior manager of strategy and transaction.
The travelers hitting the road this summer will have different demographics, budgets and reasons for travel — and different preferences on accommodations, with more travelers opting for alternative lodging options, like camps and RVs, experts told Hotel Dive.
To compete, hoteliers will need to address shifting traveler desires — and offer guests unique, memorable experiences.
Demographic shifts
Leisure travel will be popular across all generations this summer, according to Lindsay Roeschke, a travel and hospitality analyst at Morning Consult. In her newly released report, “What Each Generation Wants on Vacation,” Roeschke called Gen Z a “rising force.”
Ultimately, “the primary driver for all generations in travel will be to relax and to get away from day-to-day responsibilities,” Roeschke told Hotel Dive. “But the influence of generation on travel preference will remain true during summer vacations.”
Generation Z, for instance, will be more “deal-centric,” while millennials will leverage their credit card miles to travel internationally. Generation Xers will plan more solo trips, or travel with friends as their kids leave the nest. And baby boomers will look to travel with their extended families, Roeschke said.
Boomers, in particular, will vacation a lot this summer, said Daher. Last summer, the generation accounted for 28% of travelers — this year, that number is 34%.
Perhaps the biggest determinant of intent to travel this year, though, is budget.
With travel costs up this summer — including some hotel markets seeing record ADRs — a greater percentage of travelers will be in higher income brackets. Some 44% of this year’s summer travelers make over $100,000 a year, as compared to 35% last summer, according to Deloitte.
Meanwhile, some travelers are increasing their budgets to accommodate greater costs, while others are opting out of traveling entirely.
“It's really about pocketbook issues for those people choosing to stay home,” said Daher. “The major reason why they're not traveling is related to their perception that travel is too expensive right now [...] not that they necessarily can't afford it.”
When it comes to hotels, specifically, Morning Consult’s Summer 2024 Travel Demand Outlook found that consumers are more likely to walk away from a pricey hotel than to trade down for a cheaper substitute.
Demand for high-end experiences, however, is “expected to fuel performance gains in the premium segment,” according to EY’s Avadhani and Selinger. But challenges remain.
“[C]ompetitive pricing and Average Daily Rate (ADR) pressures present complexities, potentially dampening the optimistic RevPAR growth projections,” Avadhani and Selinger said. “Hotels will need to navigate these pricing strategies to remain competitive and attractive to travelers.”
Unique experiences — and types of lodging
According to Avadhani and Selinger, summer 2024 will be marked by greater demand for experiences and adventures. “Travelers are setting their sights on destinations that offer not just a change of scenery, but the chance for meaningful engagement and self-discovery.”
It's really about pocketbook issues for those people choosing to stay home. The major reason why they're not traveling is related to their perception that travel is too expensive right now [...] not that they necessarily can't afford it.
Mike Daher
Travel and hospitality sector leader, Deloitte
Avadhani and Selinger said the shift toward experiences has led to a rise in solo travel, as well as a proliferation of travel services that cater to travelers’ desire for spontaneity and cultural authenticity.
On the lodging front, a desire for more experiences has led to a rise in alternative forms of lodging. Some 63% of those traveling this summer will plan to stay at hotels this year, down 10% from last year, according to Deloitte. “That's a pretty meaningful difference,” Daher said.
Interest in private rentals, bed and breakfasts, recreational vehicles and camping are up this summer as travelers seek “meaningful experiences,” Daher added. And while the type of non-hotel lodging a traveler selects often depends on income bracket, travelers across the board are gravitating toward RV travel.
Resort brands are increasingly catering to consumers seeking RV travel. A $2 billion theme park underway in Oklahoma will include a hotel and a 320-acre RV park. And Jim Wiseman, Margaritaville’s president of development, told Hotel Dive in March that the company is expanding its Camp Margaritaville RV park brand with millennials in mind.
Meanwhile, rising interest in experiential travel is expected to lead to a boom in sports tourism, Avadhani and Selinger said. And while all eyes are on the Summer Olympics in Paris, hotels in the U.S. are also getting in on the sports action. Wyndham Hotels & Resorts now allows its loyalty program members to exchange points for Minor League Baseball tickets. And Marriott Bonvoy partnered with the U.S. Soccer Federation this year to offer exclusive fan experiences.
The U.S. is also co-hosting the ICC Men's T20 World Cup, or Cricket World Cup, next month, which could be a driver of international tourism. Avadhani and Selinger said they expect hotels near the venues in New York, Florida and Texas will see a boost in demand.
The challenge for hotels
To stand out this summer, Daher said, hoteliers should ask themselves: “How do I make the experience this summer feel unique and differentiated?”
Hotels should “look for creative ways to make the traveler feel educated, maybe on the destination they're going to, or surprised and delighted by an experience that they weren't expecting,” Daher added.
The strong U.S. dollar could also be a headwind for domestic hotels, as Americans opt to travel abroad to capitalize on favorable exchange rates, Avadhani and Selinger said.
“[H]otel owners must remain vigilant, balancing the lure of growth opportunities within the luxury segment against the headwinds of a competitive landscape and shifting economic factors,” Avadhani and Selinger noted. “By staying responsive to these dynamics, the U.S. hotel industry can harness the positive momentum of travel trends while safeguarding against potential risks.”
At the same time, generative AI-based technologies haven’t impacted the industry as much as some would have hoped — at least not yet.
Last year, AI “was a shiny new object,” Daher said, with travelers experimenting with it to get ideas for itineraries. While there’s still a lot of interest in leveraging AI for travel, especially to find the best pricing, “the technology is just not there yet.”
Deloitte, however, believes that technology is coming. A report from the company last month predicted the rise of what it called “the Gen AI agent,” which will not only book trips, but also optimize for pricing, loyalty memberships, cancellation policies and more.
