Monthly Research Dashboard - August 2023

Executive Summary Domestic

Economy

• Very little changed this month in the overall economic landscape with an exception of the uptick in the inflation rate.
  • Inflation was 3.7% for the month, another slight increase over the prior month driven by gas and energy prices. The U.S. average retail price for a gallon of gas was $3.95, an increase from $3.71 in July. The California equivalent price was $5.13.
  • Approximately 187,000 jobs were added to the economy, an increase over the prior month but well below the average of the past 12 months. The unemployment rate was 3.8% for the month.
  • U.S. consumer sentiment on the economy tracked by the University of Michigan 71.2, comparable to prior month.

Consumer Sentiment 

• While excitement for travel remains strong, consumers, particularly California residents, were slightly more pessimistic on their views about travel costs.
  • Domestic consumers were actively planning travel in August, with 50% planning a domestic leisure trip in the next 12 months, down one point from the prior month.
  • The price of travel continued to be the primary barrier to travel with 43% of domestic consumers citing this factor (flat). In terms of recent travel, 43% of U.S. travelers said travel costs impacted their decision-making in the past six months (up two points). A slight majority of American travelers continued to say travel was a budget priority (51%, down two points). Californians were somewhat more pessimistic on this measure compared to July with 55% prioritizing travel (vs. 64% prior month).
  • American travelers were excited about the prospect of future travel with 86% of U.S. travelers (and 85% of California residents) saying they were excited about leisure travel in the next 12 months. This measure has remained relatively flat at both the total U.S. and California state level for three straight months.

Lodging

• As the school year started up again this month, California hotel performance metrics pulled back a bit as is typical for the time period. Performance metrics were essentially flat on a year-over-year basis. Average daily rate at the state-level continued to surpass the 2019 rate for the month by a double-digit percentage.
  • California’s occupancy rate for the month was 70% (-1% YOY) and down 12% from 2019.
  • ADR for the state was $197 (+1 YOY/+11% vs. 2019); RevPAR for the state was $139 (Flat YOY/-2%vs. 2019.)
  • Family travel destinations San Diego and Orange County saw declines in occupancy relative to their peak in July; San Francisco’s occupancy has steadily improved since the beginning of the year.

Airlift

• Passenger screenings had double-digit year-over-year growth for the month while domestic airlift showed a more modest gain.
  • Approximately 75 million passengers were screened at TSA checkpoints for the month (+12% YOY/+2% vs. 2019).
  • There were 10.1 million non-stop seats to California destinations for the month (+4 YOY/-10% vs. 2019).

Travel Impacts

• Visitor spending and employment continued to approach full recovery in 2023.
  • According to the Visit California May forecast, domestic visitor spending in California is expected to reach $131 billion in 2023. Leisure spending is forecast to be 16% above 2019 spending and business spending is forecast to be 3% above 2019 spending. NEW VISIT CALIFORNIA FORECAST WILL BE PUBLISHED IN SEPTEMBER REPORT.
  • U.S. Travel’s forecast for California for the month showed total California visitor spending +9% year-over-year but down 6%.
  • The leisure and hospitality employment sector in California was down one thousand jobs from February 2020, very near full recovery.

Executive Summary International

Forecast

• International travel spending in California is forecast as of May to recover to within 86% of 2019 spending for 2023.
  • Canada is forecast to be the one California market with visitor spending completely recovered in 2023 (118%), while Mexico will come close with 97% of spending recovered.
  • Markets in the Asia Pacific region (specifically China and Japan) will continue to lag other markets in recovery. China was downgraded and is now forecast to recover to 36% of 2019 spending for 2023.
  • NEW VISIT CALIFORNIA FORECAST WILL BE PUBLISHED IN SEPTEMBER REPORT.

Consumer Sentiment

• Consumer sentiment around international leisure travel remained positive with travel costs the primary barrier to travel.
  • Across California’s target markets, 38% of international consumers on average said they were planning international leisure travel in the next 12 months, up one point from prior month.
  • The markets with the highest propensity for travel abroad were the Middle East (62%), Scandinavia (57%), and Germany (56%).
  • Travel prices remained the primary barrier to travel (43% citing price of travel). Citizens of South Korea (52%) and Canada (52%) were the most likely to indicate prices were a barrier to travel.

Airlift/Arrivals

• California saw an uptick in arrivals at its ports of entry for the month while airlift continued to inch towards full recovery.
  • International non-stop seats to California recovered to within 8% of 2019 airlift, another month moving the industry closer to full recovery.
  • Eight of California’s 14 opportunity markets have fully recovered airlift. India (+106%), the Middle East (+26%), Japan (+18%), and the UK (+11%) have the most recovered airlift.
  • Arrivals through California’s ports of entry were down 27% from 2019 levels for California’s opportunity markets (vs. -34% prior month).
  • California’s share of international arrivals for the month YTD was 16%, an improvement over last year’s 15% share.