Soaring Memorial Day Airline Traffic Bodes Well for Hospitality This Summer

Air travel over Memorial Day weekend topped pre-pandemic levels.

That’s good news for a US hospitality industry that has remained resilient through challenging economic times for many.

Furthermore, air passenger volumes during the summer of 2023 will surpass pre-pandemic levels, according to a report last week from Marcus & Millichap.

An estimated 42.1 million Americans traveled 50 miles or more from their homes during Memorial Day weekend, a 7 percent increase from last year. This trend is expected at least through Labor Day, according to Marcus & Millichap.

Inflation, though, will continue to affect travel decisions. Air traffic is expected to reach a record level this summer, according to Marcus & Millichap, and many travelers are expected to engage in cost-saving strategies.

Two weeks ago, Marcus & Millichap signaled that most CRE asset classes were softening, but not evenly. It said that hospitality tends to be more vulnerable in tough economic conditions, but that hotels have made a “strong recovery” since the health crisis.

About a quarter of vacationers stated they plan to drive rather than fly to their destination, according to a recent consumer survey.

“Hotels near interstates could benefit from this trend, as individuals or families opting for longer trips by car will likely seek additional lodging options on the way to their desired location,” Marcus & Millichap said.

The report singled out Napa, Sedona, Charleston, Savannah, and the Smoky Mountains as destinations that could thrive. Economy and midscale hotels nationwide should perform well.

In fact, the number of rooms booked overall during the trailing 12-month period ending in April rose within 2 percent of the all-time high set in February 2022, Marcus & Millichap reported last week.

Robust demand for hotels is driving growth in ADR and RevPAR nationwide, with both measurements reaching new record highs of $152.67 and $96.69, respectively, during this span, according to the report.

Slowing supply growth should give a boost to performance at existing hotels, especially during the summer travel season.