Urban
markets big beneficiary as European travel likely to outperform and Asian
travel likely to continue to lag until mid-2025.
Urban markets in the U.S. continue to see upside during “normalization”
of performance, first with group business building momentum and now as
international inbound travel rebounds to 89% of 2019 levels, according to new
data from JLL.
The
loosening of travel restrictions globally, along with China lifting its group
travel ban in August 2023, has greatly contributed to the increase in
international travel to the U.S., according to JLL, notably in its top-gateway markets.
Additionally, the U.S. State Department's record number of visa approvals for the second half of
2024 is expected to provide another boost. As a result, international travel is
projected to continue its upward trajectory, reaching 2019 levels and fully
recovering by the end of 2025.
“Our expectation is that total inbound international travel
will recover by late 2024,” Zach Demuth, global head of hotels research at JLL told
Hotel Investment Today. “Its composition though will be different to that of
pre-COVID with European travel likely to outperform and Asian travel likely to
continue to lag until mid-2025. Lagging Asian travel is a function of reduced
air capacity, ongoing U.S.-China tensions, and visa wait-time challenges (these
have started to abate which will be a major in the coming months).”
Lagging Asian travel is a function of reduced air capacity, ongoing U.S.-China tensions, and visa wait-time challenges (these have started to abate which will be a major in the coming months).
Zach Demuth
Demuth said leisure travel has thus far been the biggest
driver of international demand, driven by excess consumer savings and residual revenge
travel. “We are starting to see green shoots in group travel (driven by
wholesale tour groups and international incentive trips), predominantly from
Europe,” he said. “We expect to see further growth from China over the medium
term, following the country’s removal of group travel restrictions in August
2023.”
In addition, urban markets have benefitted the most from the
return of international travelers, particularly gateway cities such as New York
City, Washington D.C., and Los Angeles. “As Asian travel continues its
recovery, we expect to see a major boost to San Francisco, amongst others,”
Demuth added. “The return of Asian travelers will also benefit non-gateway
markets driven increased average length of stay. Look for places with strong ‘bleisure’
demand such as New Orleans, to benefit.”
JLL added to look for the recovery of international travelers in the top U.S. gateway
markets as a positive
signal for hotel investors to capitalize on the international recognition,
diversity in demand, and robust tourism over the long-term.