With the exception of business-related travel, people are hitting the road, seas, and skies as if the past three years never happened.
The travel and tourism industry is back firing on all cylinders, and the advertisers working in it are doing everything they can to claw back the trillions they lost in revenue during the pandemic.
Here’s how travel advertisers approached the highly anticipated post-pandemic chapter of their journey.
From the Sky to the Sea
In 2022, nearly 19k travel advertisers from airlines, car rentals, and retailers (gas stations and travel plazas) spent $4.6b on ads, representing a 42% YoY increase from 2021.
The most significant increase came in Q1 when advertisers spent 107% more YoY as lingering travel restrictions vanished and people followed the sun.
Spending in Q2, Q3, and Q4 jumped by 45%, 33% YoY, and 13% YoY, respectively.
Advertisers in five categories accounted for 83% ($3.8b) of those dollars: lodging, parks & recreation, cruise lines, U.S. tourism bureaus, and airlines.
The biggest moves, however, came from advertisers promoting airlines and cruise lines.
Advertisers for cruise lines spent nearly $749mm in 2022, increasing their budgets every quarter; spending jumped in Q1, Q2, and Q3 by 247%, 284%, and 139%, respectively.
Overall, advertisers for cruise lines, including Norwegian Cruise Line and Royal Caribbean, increased spending by 140% YoY.
While cruise line advertisers are back after a turbulent few years, including being stranded at sea, they’re sailing with different mindsets.
Leaders at Norwegian Cruise Line, for example, don’t expect pre-pandemic occupancy levels to fully return until at least Q3 2023. In Q2, occupancy anchored at 65% compared to 107% in 2019.
On the other hand, Royal Caribbean is seeing record bookings, thanks partly to a rush during “wave season” (a period between January and March) that saw many Americans take advantage of early-year discounts and specials.
Ad spending is up and will likely remain so throughout 2023, but Royal Caribbean Chief Finance Office, Naftali Holtz, expressed caution. During a recent post-earnings call, he said, “Inflationary pressures and supply chain disruptions continue to put pressure on costs across many categories, including food and beverage.”
The chart below tells the narrative everyone anticipated and the airline’s harsh reality since the onset of the pandemic.
With airlines lifting mandates, international destinations easing entry—and exit—restrictions, and exploding demand, airline travel is essentially back to normal.
According to the United States Transportation Security Administration (TSA), more than 2.4mm people strolled through security on October 16, 2022, the highest daily total since February 2020.
That level of traffic has stayed constant in 2023.
Advertisers for airlines have responded, increasing their investments by 121% YoY to $424mm.
Advertisers for Delta and United Airlines were the primary drivers behind the triple-digital increase.
Through October 2022, advertisers for Delta increased spending by 265% YoY to promote its “Faces of Travel” initiative and woo premium travelers.
The world’s third-largest airline (as of 2021) also partnered with IBM to “identify unconscious bias in our advertising.”
Meanwhile, advertisers for United increased spending by 304% YoY as it launched its “Good Leads the Way” campaign and shifted their strategy to “be more flexible with both media and message.”
Maggie Schmerin, the company’s managing director and head of global advertising and social media, said the new message aimed to answer questions such as “Is this a campaign that another airline can easily come in and put their logo on top of?”
While other travel advertisers didn’t boost their budgets to quite the extent of those promoting airlines and cruise lines, their budgets are trending up.
Lodging advertisers, for example, increased spending by 38% YoY, while those promoting parks and recreation, and U.S. tourism rose by 19% and 31% YoY, respectively.
Advertisers Split Their Time Between Traditional and Digital Ads
An estimated one million “snowbirds” split their time between the sunshine state and a home in presumably a colder climate.
Travel advertisers split their budgets between traditional and digital formats.
In 2022, travel’s five top advertisers spent nearly $1.8b on digital ads (online video, display, and social media platforms). At the same time, they allocated just over $2b to traditional ads.
Lodging advertisers, for example, invested 48% ($636mm) of their budgets in digital while sending the remaining $380mm to online video formats.
Meanwhile, parks & recreation advertisers, including those from The Walt Disney Company, NFL Enterprises, The Shubert Organization (various U.S. theaters), and Cinemark USA, spent 62% of their ad dollars on digital formats; $286mm of that went to online video ads.
With the expectation of The Walt Disney Company, each of the above parks and recreation advertisers increased spending by more than 100% YoY. Still, advertisers for the happiest place on earth boosted spending by 75% YoY (Disney’s advertisers were the top spender in the category).
While digital formats are inevitable and will remain so in 2023, advertisers’ embrace of TV and print makes it clear that there’s still a seat for traditional formats.
Airbnb, Hilton Worldwide Holdings (Embassy Suites, Hampton, Hilton, etc.), and Royal Caribbean Group (Celebrity Cruises and Royal Caribbean) spent big on T.V. ads, accounting for 22% of the format’s investment.
Overall, nearly half of T.V. ad dollars landed on ABC, CBS, and NBC.
Meanwhile, advertisers for U.S. tourism, including California Travel & Tourism Commission, Hawaii Visitors & Convention Bureau, and Visit Florida, relied heavily on print publications (more than $272mm) such as Midwest Living, Real Simple, and Travel + Leisure.
Travel Advertisers Shrug Off Economic Uncertainty
How are consumers spending in the face of intense economic headwinds?
It depends on who you ask.
According to PwC, consumers are cutting back on all “non-essential” expenses. It’s fair to put travel into the “non-essential” bucket.
Many economists also predicted that spending would drop, which seemed to be coming true toward the end of 2022.
Then came 2023.
According to Shannon Seery, vice president and economist for Wells Fargo’s corporate and investment bank, “If they have money, they’ve shown us they’re going to spend it.”
But they’re not just spending on necessities—they’re splurging on restaurants, travel and other experiences put on hold by the pandemic.
Travel advertisers see the writing on the wall.
In January, advertisers increased spending by 23% YoY to nearly $411mm, representing an uptick that’ll continue for the rest of the year as people make up for lost time and fully embrace “revenge travel.”
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