Americans Want to Travel and Are Eager to Splurge, Companies Say
Friday, February 18, 2022
More Americans are satisfying their wanderlust and spending big to do it, companies say.
With daily new Covid-19 cases falling, restrictions easing and the strongest consumer finances in recent history, Americans are finally emerging from the pandemic eager to splurge on everything from travel and sports events to restaurants, cruises, and theme parks, executives say.
Companies including Marriott International Inc., Expedia Group Inc., Coca-Cola Co., and MGM Resorts International told analysts recently that business is already improving from an Omicron dip and indications point to an American public eager to live large.
“Premium customers, who after being cooped up for 2020 and the first part of 2021, are traveling and spending again with a vengeance,” Wynn Resorts Ltd. Chief Executive Craig Billings said Tuesday of the latest quarter.
As more Americans travel, Marriott is seeing greater demand for its high-end properties, CEO Anthony Capuano said on a conference call with analysts Tuesday.
At Walt Disney Co.’s theme parks, business came roaring back in the most recent quarter, with revenue from both domestic and international parks more than doubling year-over-year. Attendance is still short of pre-pandemic levels, but those who are showing up are spending as much as 40% more per capita than in 2019, Chief Financial Officer Christine McCarthy said last week.
“We’ve got really strong domestic demand,” CEO Bob Chapek told analysts.
As more Americans venture out, some venues are dropping mask requirements. Disney said that starting Thursday, masks will be optional for fully vaccinated visitors at Disney’s outdoor and indoor locations, except for enclosed transportation.
Earlier this week, organizers for the 2022 Stagecoach Festival said they would no longer require negative Covid-19 tests or proof of vaccination from attendees, and the organizers of the Coachella Valley Music and Arts Festival said they won’t require masks, vaccinations or negative tests at the event.
Aramark, which helps run sports stadiums and other major venues, said attendance at National Football League games throughout the season was strong. The company is gearing up for attendance to surpass pre-pandemic levels during the Major League Baseball season, CEO John Zillmer said last week.
“There is a lot of pent-up demand for baseball. We think it will perform well this year,” Mr. Zillmer told analysts, though he noted a successful season is contingent on the league resolving its monthslong labor dispute with players before the season is scheduled to begin.
There are signs that Americans could begin to ease up on spending in the coming months. The University of Michigan’s consumer sentiment index hit its lowest level in a decade during the first weeks of February amid a historic rate of inflation. But consumers’ feelings about their financial situation haven’t matched their strong level of spending throughout the pandemic, and there is little sign of the gap closing, according to Robert Frick, corporate economist at Navy Federal Credit Union.
Travis Berninger, a 31-year-old pharmacist from Orlando, Fla., said he and his husband, a pet store manager, are on their first big vacation in six years, a seven-night cruise into the Caribbean with Royal Caribbean Cruises Ltd.
“Being able to work through the pandemic made us feel we could afford a real vacation. We are planning on booking the next cruise while we’re on this one,” he said, adding that they would like to take another cruise before the end of 2022.
MGM Resorts said attendance of key conferences like the CES tech conference in January was hurt by the Omicron variant, but after a short drop, the company’s forward hotel bookings are back above pre-pandemic levels. And MGM’s 65-and-over crowd has now reached pre-pandemic levels in terms of room nights, CFO Jonathan Halkyard said. The company sees more domestic visitors coming in the year ahead.
Airbnb Inc. said it expects international travel to pick up this year.
“We’re really optimistic about cross-border travel rebounding and urban travel rebounding,” Airbnb CEO Brian Chesky told analysts on a conference call on Tuesday.
The company has 25% more nights booked for this summer season than it did in 2019, CFO David Stephenson said.
“We’re just seeing strong demand for travel. People are ready to travel this summer,” he said.
Companies reported that people are eating out at restaurants as restrictions are removed and daily cases fall. PepsiCo Inc. CEO Ramon Laguarta said that while at-home consumption has remained high, business at restaurants is accelerating.
Coca-Cola’s volume of sales at its away-from-home business surpassed 2019 levels in the latest quarter for the first time since the pandemic started, the company said last week.
The hassles involved in traveling right now, rather than fear of falling ill, are weighing on the demand for travel, according to Expedia Group Inc. CEO Peter Kern.
“What we observed most notably is that the issues that evolved were really issues of inconvenience,” he said last week about the Omicron slowdown. “There were border shutdowns, there were planes out of service because pilots and crew were sick, things of that nature, but there was far less consumer fear over traveling, and really, it was an issue of the inconvenience of the health issues.”
Airlines recently reported that despite a temporary setback from Omicron, Americans’ demand for air travel remains strong.
“We don’t view demand as anything more than delayed—we don’t think it’s diminished,” American Airlines Group Inc. President Robert Isom, who will take the reins as chief executive in March, told analysts last month.
Alaska Air Group Inc. said it expects to be at pre-pandemic capacity by the summer. “I know there’s inflation worries,“ Alaska Air Group Chief Commercial Officer Andrew Harrison said last month. ”But it didn’t have the dampening effect on the economy of demand that we may have originally feared.”
Category: Travel and Tourism, US News, Economic News