Travel brands look to navigate strong head- and tailwinds in 2023

The leisure travelers that powered a strong, global post-pandemic rebound in 2022 maintain their desire to hit the road: Forty-six percent of people globally report that travel is even more important now than pre-pandemic, according to Expedia’s Traveler Value Index 2023 study. And nearly the same number of travelers are planning to spend more on travel next year. 

Business travel also is beginning to rebound, according to Expedia research, with 32% of consumers indicating plans to take a business trip over the next year—and that’s despite a lag due in part to the lead times required to plan meetings. 

Industry leaders like Delta Airlines CEO Ed Bastian and Hyatt CEO Chris Nassetta each recently voiced confidence that their rebounds would continue well into 2023, and companies such as British Airways are adding new routes worldwide

“While that pent-up demand can’t last forever, it does feel like we have momentum to take us through the next several quarters,” Nassetta told CNBC in late October

So, what does 2023 travel marketing look like? 

Consumer preference to spend on experiences, mainly travel experiences, over tangible goods is a trend that’s here to stay. Travel brands have a great opportunity to carry momentum out of the last two years focusing on creating strong visitor experiences to generate visitor loyalty bringing them back year after year.

Although the winds of change look favorable, brands are continuing to pay attention to micro-challenges as we kick off the new year.

Inflation is certainly an important piece of the travel puzzle; prices continue to rise worldwide, and central banks raise interest rates in response. According to that same Expedia report, more than half of consumers said inflation was likely to affect their travel plans in the next year. 

International travel could be especially affected because of the higher price tags associated with those trips and because unpredictable fluctuations in currency valuations across different national economies add cost uncertainty to those trips. As a result, people who do decide to travel may choose to stay closer to home. 

For example, the number of Americans who said they were likely to travel internationally in the next 12 months fell by four points in a single month from October to November, amidst ongoing interest-rate hikes by the U.S. Federal Reserve, according to a December report from Destination Analysts. In the November version of the report, over two-thirds of American travelers said they were being more careful with money out of fears of a looming recession—and for the vast majority of those concerned consumers, travel spending was one of the items on the chopping block. 

Additionally, many consumers who returned to airports in 2022 didn’t love their experiences there. Customer satisfaction at U.S. airports fell sharply compared to 2021, according to the J.D. Power 2022 North America Airport Satisfaction Study, driven by frustrations related to rising costs, congested terminals, and canceled flights. That combination of high prices and poor experience could be especially troublesome in a more challenging economic climate when consumers focus more on value. 

Finally, destinations worldwide that scaled back operations during the pandemic continue to reopen, creating a more global environment.

What can we expect?

Both the head- and tailwinds are real and powerful, and both are likely to exert considerable influence on consumer behavior and travel expenditures in the coming year. They also are likely to intersect in unpredictable ways, creating complex conditions for travel companies and their marketers, just as swirling winds make it more difficult for pilots to fly.

That said, there remains ample opportunity for smart travel and hospitality companies to thrive in 2023. To capitalize, travel brands must be hyper-focused on consumer engagement, along with developing and deploying long-term messaging and strategies aimed at building loyalty. 

One crucial step in that effort is for travel brands to engage with the travelers who powered their strong re-openings in 2021 and 2022. Those customers have already re-established their connection with travel brands and signaled their willingness to resume traveling. Hanging onto them is key. 

It’s equally critical to continue to try to capture pent-up leisure demand, knowing that some travelers are still only beginning to get back in the game, and others are gradually expanding their post-pandemic travel. The Expedia report indicates that many consumers continue to factor pandemic concerns into their travel choices and still favor car trips over other modes of transportation. 

Also, while plenty of consumers are still hungry for travel, the uncertain economic outlook means that brands may need to be more sensitive to pricing concerns and demand as they tailor their messaging and offerings. 

Finally, industry execs such as Nassetta point to business travel as a potential growth driver in 2023 because that segment hasn’t burned through as much of its perceived pent-up demand as the leisure category. But to succeed here, travel brands will again need to focus on communicating value as businesses tighten their belts in anticipation of an economic downturn. 

Navigate forward and plan for an evolving trajectory

As travel brands look to navigate forward amidst the swirling winds ahead, it makes sense to focus on reaching the right customers with the right messages, along with carefully studying market conditions to make quick course corrections when the conditions dictate. 

To do so, it helps to have a marketing partner who understands a brand’s travelers well and helps its brand partners respond to the unexpected challenges of 2023. Epsilon, for instance, creates the conditions where brands need to be to stay close to the traveler. Epsilon boasts strong contextual capabilities, and allows brands to stay very close to their travelers by seeing them when they’re not only purchasing, but dreaming about their travels.

Being close to the traveler is vital as we look to 2023, engaging with visitors in the spaces they’re looking to engage with travel brands and being timely in the messaging and engagement brands have with them.