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Summer travel demand likely to soar following relaxed US COVID-19 test mandate

June 16, 2022
6 min read
Summer travel demand likely to soar following relaxed US COVID-19 test mandate
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In theory, a big boost to travel arrived earlier this week when the U.S. officially dropped its coronavirus testing requirement on travelers flying in from abroad.

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Various travel organizations lobbied against the friction point in recent months, as many countries abroad dropped the practice, even though the U.S. typically sees a higher average daily count of reported cases.

Removing the testing requirement eliminates the potential of getting stuck in a foreign country — as some of our own know all too well — and could boost demand for travel to the U.S., the thinking goes. It should particularly benefit some of the largest cities in the U.S. that rely more on international travelers to fill up hotel rooms.

United Airlines reported a 7% jump in international travel searches following the decision to end U.S. testing requirements.

It’s too soon to decipher if hotels saw an immediate benefit, and many companies won’t report hard numbers until after the second quarter wraps at the end of this month.

But the industry appears upbeat at the potential for some degree of increase in international traveler demand.

“The removal of [COVID-19] testing requirements to enter the U.S. is another pivotal moment in the travel industry’s pandemic recovery as we believe this decision will help further stimulate international travel,” Jack Horne, Hyatt’s global head of sales and revenue said in a statement to TPG.

“Summer 2022 continues to be one of Hyatt’s busiest travel seasons with momentum across every segment of our business. Leisure demand at Hyatt properties in the Americas continues to pace well above 2019 levels, and groups, events and business travel levels are also making a meaningful return.”

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Soaring costs on everything from gas to airfare to hotel rooms have analysts expecting the travel sector to eventually take a hit while travelers try to trim costs. But the CEOs of hotel companies like Hyatt, Marriott and Hilton all downplayed such conjecture at the NYU Hospitality conference earlier this month.

Their focus on higher-end brands as well as other demand generators coming to life like group, business and now international travel should offset any downturn.

At least, that’s what executives hope.

“With this recent testing announcement, we anticipate a further increase in demand in the weeks ahead, and, as always, we will work with Hyatt hotel owners, operators and colleagues around the world with the health and safety of Hyatt guests and colleagues in mind,” Horne said. “We are excited to usher in this new era of travel, and welcome back even more guests from around the world this summer.”

No silver bullet

The removal of testing requirements still doesn’t move the needle on one key source of inbound travel to the U.S.: China, which prior to the pandemic was the fastest-growing source of international visitors to the U.S., per U.S. Travel Association data on the top 20 inbound markets.

At the very least, it removes an obstacle for American travelers looking to go abroad — which might help international hotels more than those in the U.S.

“Maybe this is just the impetus that American travelers needed to jump on a plane and go abroad,” said Jan Freitag, national director of hospitality analytics for STR’s parent company CoStar. “The negative impact could be that for places like Miami Beach that have seen a tremendous run-up in room rates on the very high end ... They may not have the customers at quite the same high levels because the customers are saying, ‘Oh, I can finally go back to Venice.’”

The spring and summer surge

Hotel brands around the world have plenty to celebrate even before peak summer travel demand picks up in the coming months.

Global hotel reservations have kept up with pre-pandemic booking levels since March of this year, according to data released Thursday from travel software provider Amadeus’ Demand360 platform.

April was the first month during the pandemic where hotel occupancy exceeded 2019 levels, and the outperformance continued last month, when global hotel occupancy averaged 63% compared to 60% in May 2019.

Keep in mind, that this achievement happened even while China faced a new wave of travel restrictions amid a spike in coronavirus cases in Beijing and Shanghai. But countries like the U.S. (the world’s largest hotel market) and Canada managed to notch impressive gains over pre-pandemic performance.

U.S. hotel occupancy in May averaged 68%, which was 7% above 2019 levels, while Canadian hotel occupancy averaged 64%, an 8% jump over the country’s performance in 2019.

“It is fantastic to see the revival of travel that is underway,” Francisco Pérez-Lozao Rüter, president of hospitality at Amadeus, said in a statement.

It is still early to tell precisely how much other factors, like the U.S. dropping its testing requirement, will goose up demand for hotels through the summer. But one thing keeping analysts optimistic is how forward-looking booking data already shows summer months pacing only 1% off 2019 levels when it comes to hotel reservations.

This doesn’t mean the springtime outperformance of pre-pandemic occupancy levels will come to a screeching halt. Booking windows — or the number of days ahead of time travelers book a trip — remain shorter than normal. More than half of trips taken are still booked within a week of the travel, meaning hotel occupancy rates could soar even higher over the next three months.

“What we're telling hotels is the demand is there,” Katie Moro, vice president of data partnerships and hospitality at Amadeus, said in an interview with TPG. “The booking [time] is still very short, and we encourage them to take advantage of that and make sure that they're priced appropriately for the demand that's coming into the market.”

It won’t be a surprise to anyone that hotel rates are expensive right now, and it isn’t just limited to the U.S. Amadeus expects the global average hotel rate to soar from its $83 per night low in April of 2020 to an eventual $200 per night average over the summer — a jump from the $180 per night average seen over the same three months in 2019.

Things are particularly pricey in France, where average rates are expected to rise to $428 a night in July — a 29% increase from 2019 levels.

It may not be clear just how much impact reviving travel demand sectors will have on hotel occupancy rates, but it's abundantly clear that expensive hotel rates and airfare are a summer travel certainty.

Featured image by Getty Images
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
3 / 5
Go to review

Rewards Rate

6X6x Marriott Bonvoy Points on each dollar of eligible purchases at hotels participating in the Marriott Bonvoy® program.
4X4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
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  • Intro Offer
    Limited Time Offer: Earn 125,000 Bonus Marriott Bonvoy Points after you use your new Card to make $5,000 in purchases within the first 3 months of Card Membership. Offer ends 5/3/23.

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  • Annual Fee

    $125
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent/Good

Why We Chose It

The Marriott Bonvoy Business Amex is a stacked card with a rewards rate that will help you earn bonus points on everyday and business-related purchases. You'll earn 15 elite night credits each calendar year, and receive automatic Gold elite status. Finally, the free night award certificate with a redemption level of 35,000 points or less can get you hundreds of dollars in potential value each year.

Pros

  • 6 points per dollar on eligible purchases at hotels participating in the Marriott Bonvoy program
  • 4 points per dollar at restaurants worldwide, U.S. gas stations, wireless telephone services purchased directly from U.S. service providers and U.S. shipping
  • 2 points per dollar on all other eligible purchases
  • Earn a free-night award each card renewal month (up to 35,000 points)
  • Receive 15 elite night credits to jump-start status
  • Transfer Marriott points to 40+ airlines

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  • Airline points transfer ratios are poor
  • Must spend $60,000 in a year for second free-night award
  • Limited Time Offer: Earn 125,000 Bonus Marriott Bonvoy Points after you use your new Card to make $5,000 in purchases within the first 3 months of Card Membership. Offer ends 5/3/23.
  • Receive a 7% discount off standard rates for reservations of standard guest rooms at hotels that participate in the Marriott Bonvoy program when you book directly. Terms and Conditions Apply.
  • 6x Marriott Bonvoy Points on each dollar of eligible purchases at hotels participating in the Marriott Bonvoy® program.
  • 4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
  • 2x points on all other eligible purchases.
  • Receive 1 Free Night Award every year after your Card renewal month. Plus, earn an additional Free Night Award after you spend $60K in purchases on your Card in a calendar year. Awards can be used for one night (redemption level at or under 35,000 Marriott Bonvoy® points) at hotels participating in Marriott Bonvoy®. Certain hotels have resort fees.
  • Enjoy Complimentary Marriott Bonvoy Gold Elite Status with your Card.
  • Terms apply.