Lodging recovery continues despite global economic headwinds

The lodging industry’s recovery reached new levels in the first half of 2022, despite increasing global economic uncertainty and deep labor shortages across travel and tourism companies. The recovery continues to favor leisure and resort destinations as consumers shift their purchasing priorities to experiences and travel and away from material goods. Urban markets are seeing greater momentum in their recovery as more employees return to the office and leisure travelers are once again drawn to restaurants and live entertainment venues with the lifting of mask mandates and restrictions.

Across the Americas, Riviera-Maya, Miami and Orlando achieved the highest occupancy levels in Q2. In Europe, performance has improved significantly with luxury hotels across the major markets, including Barcelona, London, Paris and Milan helping to propel the region’s recovery to new heights. In Asia Pacific the recovery is favoring markets and countries with very little border or quarantine restrictions such as Bali, the Maldives and Thailand

Future trends: Slower economic growth will impact pace of recovery

Short-term: Economic headwinds, the war in the Ukraine and conflicting Covid policies in Asia threaten to slow the lodging industry’s recovery. To date, fundamentals continue to observe strong growth, with inflation not yet disrupting traveler budgets. The industry is seeing greater momentum behind the recovery of urban markets, which are benefitting from both leisure and increasing business demand coupled with a rise in international visitors. More M&A activity is predicted, particularly among operators looking to grow in scale.

Long-term: Consumers’ appetite for experiences, travel and hospitality will continue to fuel high levels of demand as international borders fully reopen and business travel’s revival accelerates. Coupled with continued resilience in leisure demand and a relatively muted supply pipeline this will drive the lodging industry’s full recovery, although the timing is uncertain given near-term headwinds.