Debate continues on the extent to which global tourism recovery will be impinged by increasing inflationary pressures and potential travel disruption.

Thus far, any potential impact has not been visible in the hospitality sector. The STR Market Recovery Monitor, based on data for the week ending 30 July 2022, showed that more than 90% of North American markets and around 80% of global markets were achieving revenue per available room (RevPAR) that was 80% or above 2019 levels when adjusted for inflation.

However, the expected seasonal slowing of peak leisure demand season is beginning and intersecting with significant macroeconomic headwinds. With that in mind, STR examined the attitudes of consumers in the current context of contrasting tourism fortunes. Ultimately, we want to continue tracking how travel sentiment is being impacted by growing financial and travel pressures alongside easing COVID-19 concerns.

Our latest survey from July 2022 highlights that consumers are vigilant about their personal finances and COVID-19, but wanderlust continues to stoke travel demand even with more concern around travel disruption.

Stalling short-term sentiment, positive long-term outlook

During previous research in May 2022, STR showed an uptick in sentiment as net propensity to travel – the difference between those who stated they were more or less likely to travel in the current environment – increased significantly for both domestic and international trips compared with February 2022.

However, the latest findings revealed identical sentiment with May 2022 as net propensity to travel in the current situation was unchanged, remaining in negative territory for both domestic and international trips (-4% and -31%, respectively). While the outlook improved compared with last year, these results suggest that financial pressures, COVID-19 and other factors continue to weigh down the overall appeal of travel currently.

Despite stalling short-term sentiment, attitudes toward tourism in the medium- to long-term remained extremely positive. Net propensity to travel was again close to +30% for both domestic and international trips. These results signal healthy intent among consumers to increase their travel cadence in the future and the continued presence of strong underlying demand.

New barrier on the block: Travel cancellations

Travel cancellations and disruptions have been much publicized recently as airlines and airports, especially, have had to manage surging demand alongside supply-chain and staffing issues. Travel disruption concerns consequently emerged as a significant barrier to travel with many likely influenced by media reports as well as first-hand and anecdotal negative experiences.

Overall, nearly six in 10 said they are worried about cancellations and disruptions impacting their next trip. North Americans expressed more concern than others as 63% were anxious about travel disruption compared with 54% among Brits and Europeans.

Meanwhile, around half agreed they are concerned by the cost of hotel accommodation now and a similar proportion said they are spending more time looking for deals. These findings suggest consumers are increasingly scrutinizing the cost of travel yet remain eager to get away. How consumers trade off increasing costs with the benefits of travel is a key issue which could shape global tourism performance in the coming months.

Financial factors are greater threats, concern around the war in Ukraine decreased

The cost of travel remains the biggest obstacle to tourism growth. Consistent with May 2022, around 60% thought costs would negatively impact travel in the next 12 months. Unsurprisingly for the reasons discussed above, the second greatest barrier was travel cancellations and disruptions mentioned by 56% compared with 43% in May 2022.

There was a pattern further down the pecking order in overall importance as other financial barriers – increasing household costs, personal financial situations and economic uncertainty – increased compared with May 2022. These findings highlight that economic considerations have strengthened in recent months. How the world economy unfolds will determine if these barriers pose a more significant threat for tourism later in the year.

Meanwhile, conversely, the war in Ukraine was perceived to be a lesser travel barrier than in May 2022. A quarter thought it would negatively impact their travels in the next 12 months, which was well below May 2022 (36%). Europeans though were more guarded than others about the war with 31% seeing it as a barrier.

Cost-benefit analysis reckoning lies ahead

The outlook for travel remains upbeat due to strong underlying demand despite increasing economic uncertainty and inflationary pressures. Travel disruption concerns were possibly a bigger factor than financial issues, which led to the muted sentiment in this latest survey. The good news is that travel disruptions, unlike financial issues, are something the industry can address once staffing and supply-chain issues have eased. The seasonal dip in future demand will also allow businesses to better manage the situation.

However, these factors combined with lingering COVID-19 concerns create a challenging backdrop for tourism. Tourism businesses, like consumers, will be eagerly monitoring government efforts to mitigate the economic challenges ahead. How consumers with decreasing real incomes evaluate the overall cost and benefit of travel will also impact performance going forward. Travel disruption – both perceptions and reality – is likely to remain a topical issue during the remaining period of peak season travel.