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Big travel company CEOs hope market turmoil won’t derail summer rebound

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The most influential names in hospitality and travel are responding to economic experts’ fears of a recession by pointing out bookings that show a positive image of American consumers.

“We believe this summer is going be crazy for travel.” MarriottTony Capuano, CEO, spoke last week.

The first quarter revenue of Marriott rose 81% compared to last year’s quarter. This was due to more business and leisure travelers returning from abroad as Covid restrictions lifted.

Peter Kern, Expedia CEO said that despite concerns about inflation, he doesn’t see any travelers cancelling their plans due to the high demand for travel after the pandemic.

According to Smith Travel Research, this has led to an increase in the average daily rate of U.S. hotels by 40% over a year.

“We haven’t seen any signs that customers are affected by travel spend. Kern told CNBC that we all knew there was a lot of underspend and pent-up savings during Covid.

Expedia sawGross bookings rose 58% in the quarter over the same period last year, which is an impressive jump but slightly less than Wall Street estimates.

As travel rebounds, publicly listed travel giants are starting to spend more on marketing and advertising – setting the stage for a competitive summer.

Kern organized a Las Vegas conference for travelers last week. The online travel agency presented a variety of technology upgrades that enable them to make more informed decisions about booking trips. These enhancements included a price tracking tool as well as customized hotel scores that are based on reviews.

Booking HoldingsGlenn Fogel CEO not only joined the chorus praising the rise in tourism as restrictions ease but shared an astonishing number: The summer’s gross bookings have risen 15% over 2019 levels. This is before Covid closed the world.

We are all happy that travel is returning. Fogel shared his experience with CNBC, saying that they had to go through two-and-half years of difficulty in allowing people to travel as they desired.

Is it possible for market and economy to play spoiler roles?

The question now is if summer 2022 will be as strong as CEOs are envisioning — or, if consumers rethink travel due to economic constraints or the prolonged volatility in the stock market.

Truist Securities’ lodging and leisure analyst Patrick Scholes said that market turmoil may eventually affect the “wealth effects”. A sustained bear market can make people more cautious about how much they are able to spend.

The strength of the housing market means that the situation isn’t as dire yet. “For instance, while my stock portfolio is down this year for me personally, I think it will be balanced by the appreciation in my home’s worth,” he said.

Travel bookings dropped in the past due to economic slowdowns. According to STR data, Americans have slowed down travel after every recession. This has led to a drop in bookings.

Pebblebrook Hotel TrustJon Bortz, Chairman and CEO of the company, doesn’t believe history will repeat itself. There is so much emotion attached right now to travel… [that]He argued that people won’t cancel trips to visit their families for the first-time in two years.”

Although higher interest rates may encourage people to look for lower-cost options, executive aren’t seeing evidence.

Industry experts differ and say they are starting to notice concern rising.

Look beyond hotel bookings. Construction of new hotels has declined in recent months. According to STR., there were more than 154,000 rooms under construction at the end of March. This was 15.7% lower than one year ago.

Jan Freitag (national director, real estate research CoStar) stated to CNBC that “Construction prices have gone up substantially due primarily in part because of wage inflation and supply constraints, higher interest rates, and lower wages.”

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