The USA expects a strong summer 2023 for its travel sector

This summer, air travel demand in the USA is expected to be the strongest since pre-pandemic—and potentially the strongest ever. Over a quarter of American consumers plan to increase the amount they are spending on leisure travel in the next three months (26%) up from 19% in the first quarter of 2023.

This summer will probably be one of the best ever for the travel industry in the United States predicts the U.S. Travel Association in one of its newest releases.

Americans do not seem to be deterred by a banking crisis, increasing interest rates and higher travel prices says the U.S. Travel Association. They continue to spend on travel and book trips, at least for the time being. 

TSA reported that nearly 10 million Americans passed through security check points at USA airports over the recent Memorial Day holiday, 11% higher than 2022 and about 300,000 more than the same holiday weekend in 2019, consistent with AAA’s predictions.

As of early April, just over half of all Americans (53%), and 81% of leisure travellers have travel planned in the next six months. 

Expedia reported that flight searches are up 25% overall for June through August compared to the same time last year with the top domestic USA destinations including New York City, Los Angeles, Seattle, Orlando and Las Vegas.

Even though demand looks strong for the summer vacation season and over the next six months, the toll of inflation and higher interest rates is impacting overall spending behaviors and we are starting to see a softening of some travel indicators as of the latest April data including hotel demand, air passenger traffic and travel spending, despite inflation.

Recent analysis from PwC suggests that leisure hotel demand will soften in the USA in the later part of 2023 and into 2024, due in part to a slowing economy, though they expect the continued recovery in business demand to offset much of that loss.

Interest rates and inflation create uncertainties on travel intentions

As interest rates remain elevated, consumers may be less able to make big purchases and utilize credit cards as the economy weakens.

Additionally, close to 29% of holidaymakers in the USA plan to save money by selecting less expensive accommodations or destinations, closely followed by 28% who plan to engage in cheaper activities. 

As a result of more people traveling again—not just avid travelers who continued to travel throughout the pandemic—Deloitte also found that while trip frequency is up, trip spend and duration of many American’s main summer vacation is down compared to 2022. 38% of all travellers (38%) this summer expect their longest trip will last a week or more—down from 68% in 2022. 

Airlines, airports and TSA are actively preparing for the upcoming busy travel season in the USA. However, the air travel system is still not equipped to handle this level of demand. 

A4A reported that they expect airlines will carry more than 250 million travellers between June 1 and August 31—1% higher than 2019 inside the USA. Yet, flight capacity is expected to be down roughly 11% due to operational constraints including new aircraft delays and air traffic controller shortages. 

Airlines are hiring at a rapid pace and have increased wages to be more competitive. Yet, several major airlines are trimming summertime service amid concerns about air traffic control staffing levels, which nationwide are at about 80%. Degrading air travel conditions are already having a negative impact on travelers. 

Two in five Americans (42%) say they have travelled by air for leisure in the past 12 months and 35% of those reported experiencing a flight delayed or a cancellation inside the USA.

Less than one-third of recent air travellers (32%) are very satisfied with the air travel experience.Over half of Americans (52%) say they would travel more for leisure in the next six months if the travel experience was not as much of a hassle, significantly more than Q1 (29%). The reality is our air system is challenged to handle this level of demand and threatens to deliver a sub-optimal travel experience and given the cost, a poor travel experience may further diminish demand.