December 13, 2023

International Travelers Could Return to the US in 2024

Analytics Firm Projects Rebound Based on Currency Fluctuations

A strong U.S. dollar is one of the main reasons why many leisure travelers went overseas — particularly to European destinations — in 2023 without a corresponding influx of foreign inbound travelers, but Lodging Analytics Research & Consulting President and co-founder Ryan Meliker said that phenomenon is set-up to flip in 2023.

A weakening U.S. dollar and normalizing travel environment means major gateway cities across the country can expect to see more inbound international travel in 2024.

Speaking during a webinar, Meliker noted international inbound travel was still down 17.5% year to date through October compared to 2019 levels, but he believes international travel trends are a major reason to feel optimistic heading into the new year.

"Going forward, Moody's sees foreign exchange rates [are set] to decline, and that decline is going to persist through 2023. ... And when the dollar decreases in value, U.S. destinations become more affordable for foreign inbound travelers, and international destinations become more expensive for U.S. travelers," he said. "That is a tailwind for leisure travel, especially related to domestic travel."

Market Recoveries

There are several markets poised to benefit from this shift, Meliker said. Chief among them is Miami, because it has such high exposure to foreign inbound travel.

Other markets with high international exposure are Honolulu, New York, San Francisco, Fort Lauderdale and Los Angeles.

Meliker noted there's a large disparity in how much markets have recovered international inbound travel up to this point, with Dallas already exceeding pre-pandemic levels while Honolulu is still down 50% compared to 2019 and Los Angeles is down 26%.

The lagging recovery in those two markets make them among the cities with the highest upside potential from an influx of foreign travel, whereas the potential is more muted in cities such as Dallas and Washington, D.C., Meliker said.

He said the bounce back in international inbound travel will be felt the strongest during summer leisure travel months.

Broadly, Meliker expects the best performing markets in 2024 to be those with a high exposure to travelers from Asia, since they tend to be the gateway markets that have seen the slowest recovery in international demand. The exception is Maui, which continues to suffer the effects of August wildfires.

Other 2024 Expectations

Working from the assumption that gross domestic product growth will be muted through 2024, although not technically lapsing into recession territory, Meliker still believes corporate transient travel will grow, climbing to roughly 90% of pre-pandemic levels in 2024.

LARC's projections also include "gradually improving" group demand through 2028, and overall moderating leisure demand that "will remain a larger component of demand moving forward than historically," he said.

The company's current projections for full-year 2024 include a 0.8% increase in occupancy to 63.7%, a 2.8% increase in average daily rate to $160.19 and a 3.6% increase in revenue per available room to $102.06.

Meliker said the slowest markets to grow in 2024 are among those that are traditionally driven by domestic travel. Over a five-year span, the strongest performing markets are expected to be Washington, D.C., San Jose and Seattle, largely because they are still lagging behind pre-pandemic performance.

Copyright 2023 CoStar Group. All rights reserved. From By Sean McCracken, Hotel News Now.

To view all articles, check out the Internet Travel Monitor Archive