Will Travelers Return to Large Cities?

Business travel remains slow, but more and more leisure travelers are returning to urban destinations.
Sean Cudahy
By Sean Cudahy 
Published
Edited by Meghan Coyle

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For many travelers, trips to large cities had little appeal during the COVID-19 pandemic. Activities like riding public transportation, touring a museum or attending a professional sporting event often took a back seat to less crowded — and less urban — experiences.

In the nation’s 25 largest markets, occupied hotel room nights (a measurement of demand) were down by 32 million in 2022 versus 2019, according to hospitality data and analytics company STR.

Outside the 25 largest markets, though, it was a different story. Hotels saw an increase of 550,000 occupied rooms throughout the rest of the country compared with 2019.

Isaac Collazo, STR’s vice president of analytics, says smaller markets did well during the pandemic while the top 25 markets suffered. He says travelers felt safer in smaller properties at less-crowded destinations.

Now, could it finally be changing?

European and U.S. cities are making a comeback

Mari Hawkins, a travel advisor with New York state-based Gemini Travel, is undoubtedly noticing a shift in her clients’ attitudes when it comes to travel and big cities.

During the pandemic, she was mainly helping clients book villas and vacation homes, where they wouldn’t have to interact with other people.

“We’ve done a complete 180. They’re going back to cities in droves,” she says, citing an increase in bookings to European cities.

“We have hundreds of people heading to Paris, Rome, Florence, Athens this summer,” said travel advisor Lauren Doyle in an email. Her company is called The Travel Mechanic and she’s based in Raleigh, North Carolina.

It’s not just travel to Europe. Collazo said a handful of major U.S. cities saw hotel room sales in the first part of 2023 outpacing pre-pandemic levels, including Houston, Dallas, Miami, Atlanta, Boston, Phoenix, Denver, Nashville, Tennessee, and Tampa, Florida.

The ones that benefitted the most had fewer COVID-19 restrictions or lifted the restrictions earliest. But several other major U.S. cities — including the nation’s largest — are still fighting to fully regain 2019 travel volume.

“New York City’s tourism is back in full swing,” says Vijay Dandapani, president and CEO of the Hotel Association of New York City. But he quickly pivots to a caveat: “The operative word is 'tourism.' Business travel is nowhere near where it was.”

The lack of business travel is dragging down New York’s overall hotel occupancy rates. During peak spring break in April 2023, occupancy was down by several percentage points compared with the same month in 2019, according to STR data.

Experts are optimistic

Dandapani isn’t worried. His team predicts New York’s travel landscape won’t fully recover until 2024.

Collazo shares his optimism. Pointing to an increase in conferences and business travel this year, he emphasized the "big city" trip isn't a thing of the past.

“There’s still appeal to go to New York City. There’s still appeal to go to New Orleans, Los Angeles,” he said.

In fact, Hawkins says her clients are so eager to travel that they are willing to spend more money on accommodations. (And they probably won’t have much choice since hotels cost about 15% more than they did before the pandemic.)

“I’m hearing from travelers that they want to go no matter what,” she says. “They’re spending money for nicer properties.”

Ultimately, that has turned out to be a feather in the cap for many New York hotels’ bottom lines, Dandapani pointed out.

“The luxury market just had bang-up numbers,” he says.

Business travelers are returning more slowly

The return of travel has been uneven since the end of the pandemic. Cities eased restrictions at different times and hotel occupancy rates have dragged, mostly due to the slow return of business travelers.

But if the demand for Europe and smaller markets in the U.S. this summer is any indication, city destinations will eventually rebound to be just as popular as they were before the pandemic.


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