Every year, the industry holds its breath in January as it waits to find out what this crucial booking month tells us about the year ahead.
Its significance is rooted in the fact that it has become a bellwether for the travel hopes and spending habits of the legions of people worldwide fighting off the January Blues and giving themselves something to look forward to.
So with the first month behind us, how did the industry perform? Can we
expect a bumper 2023
?
The short answer is … probably.
Key Data
analyzed last month’s booking trends, and it’s safe to say that traveler confidence is returning. But the cost of living crisis, high inflation, and the return of business travel may be affecting people’s booking patterns.
Travel bounces back — but it looks different
Vacation rental bookings made in the first three weeks of January saw a dramatic increase compared with 2022. Our analysis of
Vrbo
and
Airbnb
data shows the U.S. observed a 27% increase year over year in reservations made for upcoming trips, while we tracked a 19% increase in the United Kingdom during the same window. This clearly indicates that demand has grown among consumers for spring and summer trips booked well in advance.
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However, despite the rising frequency of reservations, there was a slight decline in the number of nights booked overall (a 4% decline in the U.S. and 11% in the U.K.). While the desire to travel is there, consumers are opting for shorter trips this year, which could be down to a number of factors.
Why are travelers opting for shorter trips?
Cost of living squeeze.
To understand why travelers are booking shorter trips this year, it’s important to look at the landscape as a whole. With a global recession on the horizon, it’s hardly surprising that average daily rates (ADR) are rising in the context of inflation. But such a steep increase may have taken travelers by surprise. In the first three weeks of January, the total value of reservations increased dramatically by 43% in the U.S. and 10.5% in the U.K. A sharp increase in ADR coupled with a cost of living squeeze that is hurting budgets means travelers may be cutting trips shorter.
Return of business travel.
The continued
return of business travel
may also be contributing to a decline in the number of nights booked this January. According to the Global Business Travel Association’s (GBTA’s) latest poll, 77% of travel managers expect their company will take more business trips this year. With the average business trip averaging just
three days
in the U.S., it’s possible that an increase in business trips is shrinking the average length of stay.
Decline in remote job listings.
Another factor to consider is a decline in the number of remote job listings. According to LinkedIn’s Global Talent Trends report, remote jobs dropped to 14% of all listings in September, down from a peak of 20% in February — perhaps in line with companies anticipating an economic slowdown. With more people heading to the office for work, it’s possible that fewer have the opportunity to live the digital nomad lifestyle combining both work and travel that became so popular last year.
What can we expect for the rest of the year?
No matter the reason for the lower average number of nights booked in January, total bookings are on the rise. Hosts and property managers in both the U.S. and U.K. generated nearly $7 billion (£5.6 billion) in revenue in the first three weeks of January — a promising start to what could be a lucrative year for property owners.
In previous years, January bookings have been a key indicator of how the rest of the year will play out, giving property managers and hosts an inkling of what to expect over the next 11 months.
While it’s true the global pandemic made traveler confidence difficult to measure in recent years, the data provides good reason for optimism. Property managers can be confident the industry is continuing its post-pandemic rebound.