As we close out the second quarter of 2023, the economy and inflation have consumers feeling the pinch, and many are rethinking their buying behaviors. The inflation rate in the United States slowed again to 4% during May, from 4.9% in April. Although this marked the eleventh consecutive month where the year-over-year inflation rate decreased, this translates into Americans still having to pay an average of 4% more for goods and services than in May of last year. Gasoline costs decreased by 5.6% from April to May 2023 following a 3% increase between March to April 2023; airfares decreased moderately by 3% over the month.

How does this unique and uneven macroeconomic environment impact the travel sector in the U.S. and here in Sonoma County? The U.S. is experiencing a deceleration in domestic travel. Consumers in the U.K. and continental Europe say they are prioritizing long vacations abroad and Americans indicate a preference for minibreaks abroad. It’s important to note that most international markets were closed to Americans last summer, which caused significant domestic substitution. This finding is also confirmed by Reuters, with reports of record levels of transatlantic flights booked by Americans who can’t get enough of Europe in 2023.

Despite these trends, Americans remain eager and open to travel in 2023. To ease inflationary concerns, Sonoma County remains an ideal destination where travelers can take off-season vacations, particularly outdoor adventures, and romantic getaways—which are also among the top types of vacations that Americans are seeking this year. Travelers have carved out money from their budgets for trips and are willing to make some sacrifices, if necessary, to beat inflation—which suggests that there are still ways to plan a vacation in 2023 at a cost travelers can live with.

Here are a few other travel and tourism trends shaping up this summer:

Summer Travel Outlook 2023: Is Demand Taking Off? J.P. Morgan

Despite the cost-of-living squeeze, consumers in most regions around the globe continue to prioritize vacations abroad. According to J.P. Morgan’s research, U.S. domestic travel revenue in the second quarter of 2023 is starting to pace toward that of the second quarter of 2022, but this is largely offset by surging international demand. Resurgent travel demand is also a tailwind for the airline industry, which continues to enjoy robust ticket sales. Airline capacity for both short and long-haul flights in Europe remains below 2019 levels due to ongoing staffing and aircraft shortages; this supply-demand imbalance continues to push airfares higher.

Small Meetings and Blended Trips Propel Business Travel Comeback, Skift

Recent reporting by Deloitte shows that a full recovery of business travel might not happen until late 2024 or 2025. Smaller companies were quicker to resume travel in 2021 and 2022; Delta Airlines reported in their first-quarter earnings call that travel by small- and medium-sized businesses has surpassed 2019 levels. Similarly, American Airlines also mentioned the impact of people who are taking business-style trips or even blended trips who have no recognized contract or corporate affiliation; according to American Airlines, blended trips yield 8 to 10 percent greater value than the very traditional business trips that they replaced.

Similarly, the growth of smaller meetings is a key talking point as companies look to gather their teams and visit clients. HRS, a business travel-focused tech company that works with hotels in more than 190 countries and territories reports that smaller gatherings accounted for about 75% of the meetings HRS procured for clients; that figure has now grown to 89 percent.

International Travel Updates, Visit California

International non-stop seats to California recovered to within 14% of 2019 airlift, improving by one point from the prior month. Arrivals from India were the most recovered of California’s opportunity markets. International arrivals from China and Japan again saw triple-digit year-over-year growth (+418% and +119%). However, China's non-resident arrivals were down 62% vs. 2019, with limited direct airlift (-93% vs. 2019) being a barrier to travel. In May 2023, international visitors spent an average of 3.5 days in Sonoma County, with 86.2% being overnight visitors and 22% being repeat visitors. Top international origin markets to Sonoma County continue to be visitors from Mexico, Canada, and the U.K.

How to Make Business Travel More Sustainable? Sustainable Travel International

Sustainable travel generally focuses on minimizing the negative or harmful impacts of travel while simultaneously emphasizing its positive aspects. For business travel, changes typically need to be made on both an individual and organizational level. According to the Global Business Travel Association (GBTA), the top three sustainability priorities for business travel professionals are emissions reduction, energy efficiency, and waste reduction. Insights from Sustainable Travel International also highlight environmentally friendly behaviors as a key component of achieving a sustainable travel strategy.

U.S. May 2023 Overview: Short-term rental Occupancy is Down but Net Reservations Are on The Rise, Key Data

According to Key Data, short-term rental occupancy in May was 6% lower than in 2022 and 13% lower than in 2021. Pacing reports from Key Data indicate that Q3 2023 occupancy rates are registering at 55% as of mid-June—that is 7% behind Q3 2022 and 12% behind 2021. Average daily rates of short-term rentals across the U.S. decreased by $12 over May 2022, a third month of year-over-year decreases in 2023. Pricing power has declined in the face of lower occupancy rates and property managers face more competition due to increased supply on the market.

Top 16 Wellness Travel Trends in 2023, Well and Good Travel

The Global Wellness Institute defines wellness travel as “travel associated with the pursuit of maintaining or enhancing one’s personal well-being.” Insights from Well and Good Travel reveal the breadth of experiences and physical and mental activities that comprise wellness-related travel. This can include travelers who desire a strong sense of connection to the communities they travel in, as well as actively engaging in the arts and crafts scene. Working with your hands during a pottery class for example, and enjoying creative play can improve mood and reduce anxiety—as a result, many hotels are incorporating arts and crafts classes into their offerings—both as a means to boost wellness during travel and as a direct connection to the what the local community of artists, artisans, and makers have to offer.

Market Insights on Wine Tourism, Future Market Insights

Revenue contribution from wine tourism is expected to reach $13.9 Billion in 2023 with an expected surge in revenue to $47 Billion by 2033. The U.S. dominated the global wine tourism market and contributed a 17.1% share in 2022; the 46-55 years age group also dominated tourism in wine regions with a share of 23.1% in 2022. Wine tourism is experiencing steady growth, driven by increasing interest in wine, experiential travel, and the rise of culinary tourism. ‘Wine tourists’ are seeking educational experiences to deepen their knowledge and appreciation of wine, leading to the trend of wine education and experiential learning.

Things to Note:



• STR is comparing “Weekly Year Over Year.”
• Full County participation is approximately 48% of hotel properties and 78% of rooms.
• Total hotel supply rooms in Sonoma County in May 2023: 8020 rooms.
• The average from other destinations include Napa, Palm Springs, Monterey, South Lake Tahoe, Vallejo/Napa Valley, and San Luis Obispo.