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When the COVID-19 pandemic struck, worldwide travel saw a precipitous decline.
But the travel industry is seeing a major rebound, with international tourism levels expected to be upwards of 80% of pre-pandemic levels in 2023, according to the United Nations World Tourism Organization.
And Marriott International (MAR) is among the many hospitality companies benefiting from the surge in travel.
"I think the psychological impact of being locked down for some portion of the pandemic has only accelerated the trend that had already started," Marriott International CEO Anthony Capuano told Yahoo Finance Live in an interview this week. "I think people were reminded how much they love to travel, explore new places, try new foods, immerse themselves in new cultures, and some of the events that were postponed."
Marriott's latest earnings report showed revenue per average room jumped 29% over last year in the fourth quarter of 2022.
Capuano said demand remains strong so far in 2023 amid an emerging increase in travel for leisure.
According to an Ipsos poll released earlier this month, nearly a quarter of Americans plan to travel more for leisure in 2023 than they did in 2022. Capuano notes Marriott saw demand this quarter increase 10% compared to the same quarter in 2019.
"Leisure was outpacing business travel pre-pandemic. We've seen that trend accelerate as well over the last number of quarters," Capuano said.
Capuano also noted Marriott has begun to see increased booking activity out of China as the country begins to open its borders.
"As we came out of the pandemic, it was fascinating to watch the data. Every time a destination opened its borders or eased travel in and out of the country, we saw immediate spikes in search activity on Marriott.com. We saw booking activity start to build," Capuano said. "China's obviously just started to open its borders. But we're already seeing similar trends."
Still, the tourism industry has seen obstacles, especially in the realm of hotel development.
Capuano, who used to be a hotel developer, cited several obstacles to growth, including supply chain issues, construction cost environment, and interest rates.
"I think our developers understand they are developing in a cyclical sector. They understand that interest rates ebb and flow," Capuano said.
"It maybe squeezes the margins and the returns on their projects, but it's the availability of debt that's the biggest challenge right now. There is plentiful debt for the acquisition of existing assets, more limited for new construction."