When the COVID-19 pandemic hit, travel around the world saw a sharp decline.
But the travel industry is seeing a big comeback, with international tourism levels expected to be over 80% of pre-pandemic levels in 2023, according to the United Nations World Tourism Organization.
And Marriott International ( MAR ) is among the many hospitality companies benefiting from increased travel.
“I think the psychological impact of being shut down for part of the pandemic has only accelerated the trend that had already started,” Marriott International CEO Anthony Capuano told Yahoo Finance Live in an interview this week. “I think people remembered how much they love to travel, explore new places, try new foods, immerse themselves in new cultures, and some of the events that were postponed.”
Marriott’s latest earnings report showed that revenue per average room rose 29% year-over-year in the fourth quarter of 2022.
Capuano said demand remains strong so far in 2023 amid rising growth in leisure travel.
According to an Ipsos poll released earlier this month, nearly a quarter of Americans plan to travel more for vacation in 2023 than in 2022. Capuano notes that Marriott saw demand this quarter grow 10% compared to the same quarter. quarter in 2019.
“Leisure was outpacing business travel before the pandemic. We’ve seen this trend accelerate over the last number of quarters as well,” Capuano said.
Capuano also noted that Marriott is starting to see increased booking activity outside of China as the country begins to open its borders.
“As we emerged from the pandemic, it was fascinating to look at the data. Whenever a destination opened its borders or facilitated travel domestically and internationally, we saw immediate increases in search activity on Marriott.com. We saw booking activity begin to build,” Capuano said. “Obviously China is just starting to open its borders. But we are already seeing similar trends.”
However, the tourism industry has seen obstacles, especially in the area of hotel development.
Capuano, who was once a hotel developer, cited several obstacles to growth, including supply chain issues, the construction cost environment and interest rates.
“I think our developers understand that they’re developing in a cyclical sector. They understand that interest rates ebb and flow,” Capuano said.
“Maybe it squeezes margins and returns on their projects, but it’s the availability of debt that’s the biggest challenge right now. There’s plenty of debt for buying existing assets, more limited for new builds.”
Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.
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