April 01, 2022

Travel and Leisure Update - Travel Bookings Strong During 2022, Led by Outdoor/Rural Destinations

By Robbie Scott
Travel bookings and metasearch spending has been strong during 2022 so far, driven by strong consumer demand for travel to rural and outdoor destinations, and the share of bookings through OTAs has reverted back to pre-pandemic levels.

All four sources reported travel bookings and metasearch spending during 2022 so far increased yy and compared with 2019, aided by robust demand for rural and beach destinations, though metropolitan destination travel remains pressured. “Last year in 1Q, vaccinations weren’t available to all age groups, and travel was still muted. This quarter, travel demand was in a more normal state. International destinations and city travel is still suffering, but secondary travel destinations such as beaches, rural, mountains and national parks are seeing strong volumes in 1Q22,” one said. Another said, “Bookings are strong so far in 2022 and we are seeing higher volume compared to pre-pandemic. Leisure, rural and outdoor destinations remain hot, which is offsetting continued weakness in metropolitan travel to places like New York City or Chicago.”

OTAs vs. Direct
Sources said OTAs’ (online travel agencies) share of travel bookings so far in 2022 has reverted back to pre-pandemic levels, a change from 2020 and 2021, when sources said direct bookings took more share of overall bookings amid cancellation risks and COVID-19-related restrictions. “The share of bookings going to OTAs has remained consistent compared to pre-pandemic. Last year, there were signs that travelers were getting more comfortable going direct for bookings, but that has since reverted back to OTAs. Now that the fear of cancellations and COVID-19 restrictions have subsided, travelers are booking with OTAs,” one said. Another said, “Hoteliers and agencies loved direct booking during the pandemic, but as restrictions go down, OTAs are gaining people back and they are starting to ramp up ads.” Sources stressed that Booking Holdings Inc.’s Booking.com and Expedia Group Inc. remained the leading OTAs. One said, “Expedia and Booking.com remain the top OTAs for hotel bookings.”

Corporate Travel
Midweek hotel bookings have been soft in metropolitan cities during 1Q22, pressured by muted corporate travel. “Corporate and business travel remains down compared to pre-pandemic [levels]. There has been some improvements but no inflections. There are more conferences coming back, which is helping midweek occupancy in cities, but normal business travel trends remain muted,” one said. Another said, “We have not seen a lot of pickup in corporate travel during the month of March or throughout 1Q22. Midweek occupancy in metropolitan areas remains low and recent booking trends show that continuing through the beginning of 2Q22 at least.”

Macro Factors: Sources said travel activity and booking volumes have not been negatively affected by energy inflation during 1Q22, despite costs rising. “We are seeing inflation impact every part of travel. Hotels and airlines are being impacted by energy inflation. And despite room prices and airline costs going up at a sharp rate, we are still seeing strong consumer demand. As prices have risen, we have not seen evidence of a slowdown in the travel recovery. Consumers are willing to pay the higher price,” one said. Another said, “We expect higher energy costs to impact travel, but we’re optimistic that the impact won’t be overly negative. We are not seeing energy inflation have an impact on travel bookings for hotels or airlines currently. Many of our clients are concerned about it, though. The heavy demand for travel seems to be so resilient that higher energy costs may not be able to slow volumes down.” Sources also said labor shortages at hotels were not hindering available hotel inventory or booking volumes. One said, “Labor shortages are an issue at non-metropolitan hotels and destinations. They are experiencing a lot of demand and it has remained a challenge to find workers. We are seeing signs of burnout among leadership teams at hotels, with managers leaving the industry entirely. Hotels are also still having to limit some services and amenities. Despite these issues, though, the hotels are reaching their occupancy goals. But many hotel professionals are being stretched.”

TripAdvisor Plus Not Gaining Traction
Sources reported minimal adoption of TripAdvisor Inc.’s TripAdvisor Plus by hospitality and hotel clients during 1Q22, hindered by weak performance and consumer adoption. “We have seen only about 1%-2% of our clients test TripAdvisor Plus. This hasn’t been a demand driver for our clients, and we are not seeing notable adoption from consumers,” one said. Another said, “We have not seen TripAdvisor take off or gain traction with any hotels. Some of our hotels tested TripAdvisor Plus in 4Q21, but the results did not warrant further investment.”

Sources said TripAdvisor remains a key digital platform for marketing and customer acquisition for direct bookings. “Demand for TripAdvisor has remained constant with very little change compared to a year ago and pre-pandemic. Our hotel brands and resorts leverage TripAdvisor because it is still the primary hub for research and reviews for travelers. We are not seeing any changes in performance on our advertising spending on TripAdvisor. The audience is still highly engaged,” one said. Another said, “We are not seeing any changes on TripAdvisor since pre-pandemic. It’s still an important channel for travel reviews. We do not, however, see TripAdvisor be a source of booking volume.”

Google Travel Gaining Share
Alphabet Inc.
’s Google Travel gained share of travel advertisers’ metasearch spending in 1Q22, aided by strong performance and demand for Google’s commission-free booking link that helps drive direct bookings for hotels. “We are seeing Google Travel is gaining share in metasearch. The free booking link has been very helpful,” one said. Another said, “Since the beginning of 2022, we are taking a bigger focus on Google with our clients. Google has expanded their travel and leisure offerings. It has been great for hotels because we have been able to drive more traffic direct to hotel websites. This has helped profitability because hotels are only paying a CPC and not a commission for the booking to an OTA.”

Meta Update
Sources said despite Meta Platforms Inc.’s challenges from Apple Inc.’s iOS privacy update, the social media network performed well in 1Q22 and remains a key customer acquisition platform. “Meta and Google continue to deliver the best results for guest acquisition. Digital performance has been strong since mid-2021. Despite issues related to Apple’s privacy update on Meta, we are still seeing robust performance, and many of our hotel brands have adopted CAPI and have other resources at their disposal to monitor attribution,” one said.

Additional Quotes
“There is a lot of demand for travel. Consumers seem to have a necessity to travel or fear of missing out.”

“We are topping pre-pandemic levels, and have seen an increase compared to [1Q19].”

“Hotel ADRs have grown by more than 7%-10% so far in 2022.”

“There has been a clear volume shift to more island, beach, mountain and rural destinations. Travelers are also more willing to spend a lot of money for hotel stays. We are seeing substantially higher volume of bookings costing $1,200 or more a night. And in general, travelers seem much more willing to spend more on hotel rooms.”

“Labor shortages and staffing remains the biggest obstacle for hotels. Almost all of our hotels are having issues with finding staff. That has caused some destinations to hold back amenities and services. Fewer of our hotels are being forced to hold back inventory, which is an improvement compared to mid-2021.”

“The labor constraints at hotels is pushing more hotel brands to adopt app-based technology for check-in and concierge services, which is taking some pressure off the workforce.”

“What we’re really seeing is that labor shortages aren’t holding back people from booking. What’s happening is hotels are cutting back on things. For example, daily housekeeping is no longer daily, hotels have cut back on the guest’s experience. As a consumer, we’re almost less appreciated and pampered, but as people, we are OK with it because we are grateful to be able to travel again.”

“The pandemic pushed more bookings direct to travel brand and less to OTAs. The OTAs still play an important role and represent a large portion of overall bookings. Travelers are findings value in going direct to hotels for bookings because the cancellations are easier and there is more detail on services provided by the property. With how much change has happened in the past two years, it’s important for travelers to do more research.”

“We have seen Google Travel remain highly important for hotels, but we haven’t seen Google expand their share of bookings executed on the platform. Google’s ability to scale bookings whenever they want remains a concern in the industry, but because of anti-trust risk, we expect their positioning in travel marketing and bookings to remain consistent.”

“Expedia and Booking.com are delivering the best results among the OTAs, which is not a surprise nor a change from pre-pandemic trends.”

“Travelers are still spending time getting inspiration for trips via core Facebook and Instagram.”