Explore Asheville recently hosted Travis Napper, Director of Destination Partnerships at Tourism Economics during the 2024 Hospitality Outlook. 

Tourism Economics is an Oxford Economics company providing data services; analytics; economic forecasts for industries, regions, and cities; economic consultancy; real estate forecasts; and more. Napper shared data collected by their team of experts for the travel and hospitality industry in hopes that businesses within this sector may leverage this information to make adjustments to increase their success.

Despite showing signs of resilience and recovery in 2023, the industry faces a slowing economy, mixed finances, and international opportunity in 2024. 

Travel spending in North Carolina in January of 2024 was up 0.2% from January of 2023, representing an impact of $2.3 billion and a tax revenue of $170 million for the state, though Napper said January is often a slower month for travel in general. While the state is outpacing the country as a whole regarding travel spending, a large increase in this sector began mid-2020, and NC rose above pre-pandemic travel rates prior to the US.

Hotel room demand in 2023 varied by category with luxury and upscale rooms showing an increase while midscale and economy rooms showed a decrease. Air travel has fully recovered and surpassed pre-pandemic levels as the labor market increases, though reported consumer confidence and expectations have been volatile.

Napper’s data predicts a slowing of GDP growth from a Q3 2023 rate of 4.9% potentially to a rate of 0.8% in Q3 2024. This slowing could affect the travel industry, though the percentage of surveyed individuals with plans to travel in the next six months has remained steady through February 2024. Excitement for travel remains high, as do travel budgets, especially for individuals considered Baby Boomers or Gen Xers.

The growing trend of remote workers or companies supporting hybrid work environments supports a new driver of leisure travel — “Wanderworking.” Thirty-seven percent of remote workers intent to travel while working in the next 12 to 24 months, according to November 2023 data. The Asheville metro region is the second highest-ranking area for job seekers to apply for remote jobs, following only Bend, OR, which is a positive for WNC’s hospitality businesses.

Overall domestic trips have continued to grow, though business-specific travel has not recovered to pre-pandemic levels, and is not predicted to until 2025. Business group travel is also slowly increasing toward levels seen in 2019, though there are concerns surrounding smaller corporate profit margins and personal dividend income due to the slowing economy and therefore business travel potential in the near future. 

While trends on spending have shifted from goods to experiences, the nation’s wealthiest households also have larger amounts of excess savings due to COVID-related reasons like stimulus checks and less opportunities to spend their money. This trend is dropping off, and Napper said that means they are spending their excess savings, hopefully on those experiences. 

Credit card debt has risen by the largest year-over-year amount on record, and delinquency rates are rising with an increase in borrowing costs. The net percentage of banks willing to make consumer installment loans has fallen to historically low levels, which may account for the growth in higher-class hospitality sectors at the same time as a decline in lower cost facilities. Hotel rates are tracking with inflation, while luxury rates have increase more quickly.

As wages increase and inflation slows, the number of households with the means to travel is expected to increase. Over a three-year period, there are nearly 5 million additional households earning more than $100,000 annually, which could elevate the numbers of individuals who intend to travel in the coming months.

Outbound International air travel has increased to 123% of 2019 levels, though the rate of inbound international travelers has not returned to this level, but is instead currently 94% of pre-pandemic levels. This accounts for a travel trade deficit implying 39 million lost room nights and 3% of the total US hotel room demand, and full recovery is projected for 2025.

While leisure and hospitality was one of the hardest-hit sectors during the pandemic, employment has now exceeded its pre-pandemic levels. The percentage of growth relative to 2019 is currently 3%, while others like financial activities and business and professional services have grown from 2019 by 23% and 14%, respectively. This sector lagged behind total employment recovery by nearly a year and a half.

For the Asheville area specifically, leisure and hospitality employment outpaced some other industries due to the growing popularity of the WNC region and the outdoor recreation opportunities that exist in the area, unlike many urban areas which were not as popular during the last few years.

Ultimately, the industry still sees some challenges due to the slowing economy, but with the upper-income market’s focus shifting toward spending on experiences, a prioritization on travel, an increase in value of in-person meetings along with an increase in remote workers who intend to work while traveling, Napper said the Asheville area has the potential to “defy gravity” and continue growth in this sector for the near term.