Monthly Research Dashboard - March 2023

Executive Summary Domestic

Economy

• The economy ran more “warm” than hot in March with solid progress on the inflation front.
• Inflation declined from 6% to 5% in March, the lowest rate in almost two years. The decline was driven by falling gas and energy prices. Service sector prices (which includes hotels and restaurants) remained high.
• U.S. consumer sentiment tracked by the University of Michigan ticked down five points in March.
• Another 236,000 jobs were added to the economy (down from 326,000 in February), and the unemployment rate was stable at 3.5%.

Consumer Sentiment 

• The story in consumer sentiment remains the same — consumers are worried about the economy but still very excited to be planning travel. The good news is that some economic concerns seem to have moderated.
• Domestic consumers were actively planning travel in March with 49% planning a domestic leisure trip in the next 12 months, up two points from prior month. Domestic business trip planning also remained comparable to prior month tracking.
• The price of travel continued to be the primary barrier to travel with 40% of domestic consumers citing this factor (down three points). In terms of recent travel, 38% of U.S. travelers said travel costs impacted their decision to travel in the past six months.
• Despite these obstacles, American travelers were excited about the prospect of future travel with 85% of U.S. travelers (and 83% of California residents) saying they were excited about leisure travel in the next 12 months.
• Leisure travel remained a budget priority to a majority of U.S. travelers (54%) and California residents (58%). The California measures have trended downward for two months now.

Lodging

• California out-performed the U.S. on key lodging metrics but lagged the U.S. in recovery to pre-pandemic metrics in March. Occupancy continued to trail 2019 levels as winter storms impacted some regions and destinations (particularly Northern California and mountain resorts.) ADR continued to help keep revenue metrics ahead of pre-pandemic levels at the state-level.
• California’s occupancy rate in March was 69% (vs. 66% prior month), up 1% from the prior year and down 10% from 2019.
• ADR for the state remained strong at $189 (+7% YOY/+14% vs. 2019) and driving a nearly recovered RevPAR for the state of $131 (+8% YOY/+3% vs. 2019.)
• The High Sierra region saw Occupancy decline to 55% for the month (-8% YOY/ -16% vs. 2019) as visitors struggled to reach mountain destinations due to winter storms.

Airlift

• National TSA passenger screenings and domestic airlift to California for the month continued to be mostly recovered with double-digit year-over-year growth.
• Nearly 72 million passengers were screened at TSA checkpoints for the month (+12% YOY/-1% vs. 2019). This was the largest number of passengers screened in a month over the last year.
• There were 9.2 million non-stop seats to California destinations in March (+10 YOY/-8% vs. 2019).

Travel Impacts

• Visitor spending and employment continued to approach full recovery in 2023.
• According to the Visit California January 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 2% above 2019 spending.
• U.S. Travel’s forecast for California for the month shows total California visitor spending +10% year-over-year but down 3% from 2019.
• The employment leisure & hospitality sector in California approached full recovery, down 39,000 from pre-pandemic peak.

Executive Summary International

Forecast

• International travel spending in California is forecast to recover to within 82% of 2019 spending for 2023.
• Canada is forecast to be the one California market with visitor spending completely recovered in 2023 while Mexico will come close with 97% of spending recovered.
• Markets in the Asia Pacific region (specifically China, Japan, and South Korea) will continue to lag other markets in recovery.

Consumer Sentiment

• International consumer sentiment around international leisure travel remained positive with travel costs the primary barrier to travel.
• Across California’s target markets, 37% on average said they were planning international leisure travel, same as prior month.
• The markets with the highest propensity for travel abroad were Germany, the Middle East, Scandinavia, and the United Kingdom. China and Japan, while having lower rates of planned international leisure travel, these markets did show significant year-over-year gains in travel planning. In China, 20% of consumers said they were planning international leisure travel (vs. 11% in 2019.)
• International consumers were slightly less likely to cite prices as the primary barrier to travel (41% vs. 44% prior month). Citizens of South Korea, France, and Canada were the most likely to indicate prices were a barrier to travel.
• Canada and Mexico were the markets with consumers most likely to consider travel to California for their next vacation.

Airlift/Arrivals

• Airlift to California continued to out-pace arrivals in recovery with the exception of two markets (China and Italy).
• International non-stop seats to California recovered to within 15% of 2019 airlift, improving by two points from the prior month.
• International arrivals from Japan and China again saw triple-digit year-over-year growth (+459% and +347%). However, China non-resident arrivals were down 63% vs. 2019 with limited direct airlift (-93% vs. 2019) being a barrier to travel.
• California’s share of international arrivals for the month was 15%, an improvement over last year’s 14% share but still trailed the pre-pandemic share of 16%.