The State of the Industry session at ALIS . From left : Danielle Bozarth , senior partner , McKinsey & Company ; Christine Duffy , president , Carnival Cruise Line ; Bill Hornbuckle , CEO and president , MGM Resorts International ; Peter Kern , vice chairman and CEO , Expedia Group ; and Geoff Freeman , president and CEO , U . S . Travel Association .
heights and buoyancy of leisure travel , but said it was now moderating off its post- COVID highs . Meanwhile , he said , both business and international travel have space to grow , each at around 85 % of 2019 levels .
Of concern , Freeman pointed to a recent USTA commissioned study that found the U . S . ranks 17 out of 18 top travel markets in terms of global competitiveness , according to Euromonitor International . “ Travelers aren ’ t choosing to come to the U . S .,” he said , concluding that part of the reason is because other destinations make it easier .
The study blamed “ decades of underinvestment and a lack of focus and coordination from federal policymakers ” as reasons for the U . S . becoming a laggard . Meanwhile , it said , “ other countries actively apply robust strategies to increase travel and grow economic output .”
Freeman said the U . S . had 22 million fewer global visitors last year than in 2019 .
WHEN ARE THE CHINESE COMING ? One key component stymying a full return of international travel to the U . S . is the lack of Chinese inbound travel . “ The Chinese travel recovery is now surging , but it ’ s domestically , within China ,” said Jolyon Bulley , CEO , Americas , IHG Hotels & Resorts . “ When are the Chinese coming our way ?” he asked .
Part of it is the stance the Chinese government has taken to stimulate consumption within its own country , Bulley said . “ They aren ’ t encouraging people to travel out ,” he said .
One segment of travel that continues to produce is luxury — on land and sea .
“ Luxury has been killing it . Rates are bananas ,” an enthusiastic Peter Kern , vice chairman and former CEO of Expedia Group , said .
Though COVID had a debilitating impact on Las Vegas business , Bill Hornbuckle , CEO and president of MGM Resorts International , said that it was the luxury segment that “ took us to where we are today ,” adding that MGM ’ s luxury brands are 35 % up on average daily rate over 2019 . “ If I could do anything , I ’ d add more suites ,” he said . “ People want that experience .”
He parroted Freeman on travel to the U . S . from international destinations , calling it painful . “ We are still missing the international segment ,” but , he said approvingly , The Cosmopolitan made half a billion dollars in 2023 .
The cruise industry has also benefitted from the luxury traveler and , as Christine Duffy , president of Carnival Cruise Line , pointed out , it ’ s prompted hotel companies like Four Seasons , Ritz-Carlton and Aman to launch their own cruise lines . She said that her business recorded record yields and onboard revenue in 2023 . “ Demand is only accelerating ,” she said .
The consultant on the panel agreed . “ There is an explosion around luxury travel ,” said Danielle Bozarth , a senior partner at McKinsey & Company . “ It ’ s a prioritization , especially with high-networth individuals .” Bozarth said there has been a palpable shift from spending on products to shelling out for experiences . COVID forced people to hole up and when they couldn ’ t get out and travel , money was spent on things — a rush to Amazon . Now , it ’ s turned . “ It ’ s better to be a travel company than a retailer ,” Bozarth said .
THE OTA EFFECT Online travel agencies are basically retailers for travel companies . OTAs , like Expedia , have always had a prickly relationship with the hotel industry , as they can often take a large chunk of room revenue away from owners . Executives , like Kern , try to toe the line and outline the overall benefits OTAs provide for the travel industry .
Loyalty programs are a hotel company ’ s most important brand , the glue that binds everything together and keeps customers spending on travel with them exclusively . In July 2023 , Expedia launched One Key , a loyalty program that allows customers to accumulate cash back for future bookings .
“ We reward them to book through us , but we give them money to stay at your hotel ,” he said , offering that if that customer booked through Expedia , but became , for example , a loyal member of Marriott Bonvoy , Marriott International ’ s rewards program , thereafter , “ well , there you go .”
Still , he and McKinsey ’ s Bozarth were skeptical of some of the reward programs offered today by hotel companies . “ Over 80 % don ’ t earn enough to get a reward they actually care about ,” Kern said .
Satisfactory with loyalty programs has dropped , noted Bozarth , pointing out a dilution of benefits and the resetting of some tiers that makes it more difficult to attain valuable rewards . “ People can ’ t earn enough ,” she said .
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