The travel and hospitality industry was one of the hardest hit business sectors from the onset of the COVID-19 pandemic. From a lack of travel due to stay-at-home restrictions to a general wariness of hotel cleanliness during the height of the pandemic, hotels were in for a bumpy ride.

At the 2022 Skift Global Forum, STR’s President Amanda Hite delivered a presentation titled “The Market Drivers Across Hospitality.”

Hite noted that the travel and hospitality industry has all but recovered from its pandemic-related struggles. Global hotel room demand has seen a boom post-pandemic. Rates have reached 90 percent of room demand compared to 2019, according to Hite’s presentation.

Average daily rates (ADR) have also soared above the 2019 level. Although, if inflation isn’t considered, ADRs are essentially even with what they were in 2019. The increase in demand has been seen most heavily for travel to all-inclusive resorts in Central America. The Middle East and UAE in particular have also benefited from increased travel demand.

“Dubai in particular was one of the first areas to drop its COVID restrictions and reopen to international travelers,” said Hite. “So Dubai and UAE really benefited from those leisure travelers throughout Europe coming in. And that’s helped propel the demand growth and the average daily rate growth in that area.”

The Asia-Pacific region has been the slowest to see demand return to pre-pandemic levels. Travel restrictions to China has been the biggest factor in the region’s slow rebound. China, which relies mostly on domestic demand, has remained closed to international travelers. Furthermore, China currently has a zero COVID-19 policy that’s restrictive of domestic travel.

U.S. airlines and travel groups have expanded their itineraries to Middle Eastern countries post-pandemic. STR has also seen an increase in global room demand in Europe as well.

“The UAE is an oil producer, doesn’t have the same inflationary impacts that the rest of the world is experiencing, and really is dependent on intra-regional travel,” said Hite. “When you look at the GCC countries, they’re all benefiting economically from the oil prices today and there’s continued investment happening in that region.”

The growth of the travel and hospitality industry may slow within the next year, however. A recession is expected to hit the travel and hospitality sector in 2023. The U.S. is projected to be one of the hardest hit by this recession. Business travel demand is at an all-time low as people aren’t required to work in-office post-pandemic.

The lack of weekday business travel, however, has led to an increase in weekday leisure travel. STR data revealed an increase in Thursday-Monday room demand. Travelers can now work from the hotel and extend their stay.

Part of that leisure travel demand is centered around group travel. Individuals are making plans to travel to or with family and friends after two-plus years of travel restrictions. With that, groups are deciding to stay away from major cities, opting instead for rural areas.

The rise of inflation and the looming 2023 recession leave the travel and hospitality industry in an unstable situation. Hite reminded the audience of industry executives that they have almost returned to pre-pandemic levels and they must remain confident in the future of travel.

“Will it ever get back to pre-pandemic levels?” inquired Hite. “We’ve always said it’s going to take several years. I think that’s still the story. This potential recession next year could make it a little slower to recover.”