One big supporting argument for the strength of the global hotel industry right now is the notion that consumers are spending more on services than they are on goods, and travel fits squarely in the “services” bucket. People want those vacations; they have a right to them, and gosh darn it, they’re going to take them and spend big.
That has proven to be the case this summer for sure, and I don’t even need to show you supporting data or stories to prove it.
But as the calendar shifts away from those hot summer nights of nonstop vacations, I have a feeling consumer sentiment will shift too when it comes to spending.
At the recent Hotel Data Conference in Nashville, I heard a lot of “Team Recession” vs. “Team Optimism” chatter, and while I’m not necessarily Team Recession (honestly, I’m probably more “Team There Likely Will Be A Technical Recession But Times Are So Different Now That It Won’t Hurt As Much”), I’m also not Team Optimism.
Because I truly believe the general public are a fickle bunch, and the lure of a shiny vacation is wearing off.
Not only is that pot of extra pandemic cash drying up, but what we’re seeing out of the airline industry sure isn’t helping either. Yes, you can book that great vacation, but when you’re delayed getting there and canceled returning home (apparently we should be blaming Florida for all of this), or rerouted on a different plane so you lose your premium seat, that scares people off of taking that second or third trip, or that extra weekend trip this fall.
Just think: It’s not even COVID that’s scaring travelers off anymore; it’s the hassle of airline delays and cancellations.
And just as the shine of travel is wearing off, the shine of brand-new toys is gaining luster.
That’s right: Retailers are slashing prices in order to move inventory they panic-ordered during supply-chain slowdowns that finally showed up. Just this morning, a segment on NPR advised me to start that Christmas shopping now, because toys, gaming systems, computers and TVs are among the product categories where American consumers can see a lot of savings.
Plus, even though mortgage interest rates are up, it’s likely going to get a trifle easier to buy a house — easier at least than in the past month or two — and those same people who were footloose and fancy-free vacationers for the past year may decide it’s time to put some roots down.
I’m not saying people won’t continue to travel. And hey, business travel is definitely going to pick up this fall and winter (unless those travelers decide airline woes and other annoyances make it not worth it). What I’m saying is that the proclamation of “People think it’s their right to travel and they’re going to keep doing it so let’s plan that way” may not turn out the way you think it will.
I have a feeling leisure demand is about to take a huge drop that’s more than just a typical seasonal drop. That’s not an official forecast, of course. It’s more of an “I’ve got this gut feeling” type of forecast.
Again, because people are fickle. Once they see those toys and TVs and PlayStation 5s in their sights, their wallets will follow. They took their vacation, that vacation was pretty great, but hey, look at those TV prices!
Listen, I know the hotel industry is famous for making hay while the sun shines. Good for you all for doing that during this intense leisure boom!
I’m just throwing a word of caution your way. My gut says that not only will leisure fall off, but it’s going to fall off in a big way. I’d love to know what you think about it, and more importantly, why. I know your indicators are much more reliable than my gut feelings.
Email me, or find me on Twitter or LinkedIn.
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