Executive Summary

In the face of a changing global economic landscape, people are packing their bags and heading to domestic and international destinations. This has been the travel recovery story of the last two years, but what's different this year is how mainland China’s reopening could impact the worldwide travel industry.

So far this year, outbound tourism expenditures from mainland China are getting closer to pre-pandemic levels. By March 2023, Chinese spending on experiences abroad surged from virtually zero last year to now just below where it was in 2019 1 .

In addition to mainland China’s reopening, new travel corridors are emerging. Business travel is growing just as strong as leisure and spending on experiences is outpacing spending on things. 2

In the background of this continued travel recovery is a global economy facing uncertainty. Elevated inflation and interest rates are expected to pull worldwide real GDP growth down to 2.8% YoY throughout 2023 from 3.4% last year, according to the latest estimates from the Mastercard Economics Institute.

While inflation and interest rates impact consumers differently by market, discretionary spending typically takes the brunt of an economic slowdown. Notably, discretionary spending could prove more resilient this time around – given the state of the labor market and savings. These dynamics could become less favorable through year-end, but are expected to keep consumers prioritizing spend on travel and experiences.

The Mastercard Economics Institute's fourth-annual travel report, Travel Industry Trends 2023, explores today's traveler, the impact of mainland China's reopening on global tourism, new and consistent travel destinations, the pace of business travel recovery and how travelers are spending.

Central to the 2023 travel outlook is an emphasis on experiences like travel over things – a sticky preference that emerged after mobility restrictions eased. Also shaping this year’s trends in travel are the different ways people around the world travel and mainland China’s reopening. Travelers from mainland China could bolster growth globally with a concentrated impact in Asia Pacific expected to help the region outperform the rest of the world, according to Mastercard Economics Institute estimates.

Key takeaways:

  • Global leisure travel remains robust, up roughly 31% in March 2023 compared to the same period in 2019, representing an impressive 25% year-over-year-to-date change from 2022 to 2023. 3
  • In the second half of 2022, global commercial flight bookings caught up to leisure bookings, driven by regions with a strong return to office culture. Leisure and business travel are now growing at the same rate, up 33% from the same month in 2019 by the end of March 2023, a 42% year-over-year-to-date change from 2022 to 2023.
  • In mainland China, tourist demand for experiences has neared pre-pandemic levels in March 2023 (93% of March 2019 levels), with luxury and other retail yet to recover (69% and 58% of March 2019 levels, respectively).
  • Hotspot predictions for this spring and summer by region of origin based on Mastercard Economics Institute analysis:
    • Travelers from North America will travel to Italy, Germany and France
    • European travelers will head toward the U.K. Spain, Italy, and the U.S.
    • Travelers from Eastern Europe and the Middle East will explore the U.K., France, the U.S., Saudi Arabia and Egypt. Saudi Arabia and Egypt are in the top 10 destinations for the first time since the inception of this report.
    • Travelers from Latin America and the Caribbean will journey to the U.S., Spain, and Germany.
    • AP travelers will travel to US and Australia
  • Travelers are increasingly seeking unique experiences in destinations across the world, with spending on experiences up 65%, while spending on things up 12%, compared to 2019 as of March 2023. 4

  • Economic Tides, Traveler Choices

    The economy’s mixed signals create a complex backdrop for global travel trends for both leisure and business trips. High-income consumers, backed by wage growth and excess savings of $1.7 trillion in the U.S. and €1 trillion in Europe, are driving robust consumer spending. 5

    So far, leisure travel demand remains robust through the end of March 2023. Leisure travel bookings were up roughly 31% at the end of March compared to the same time in 2019, representing an impressive 25% year-over-year-to-date growth between 2022 and 2023. 6

    At a market level, travel demand remains robust, driven by travelers leaving Europe, North America, Latin America and the Middle East. Meanwhile, flight bookings in Asia Pacific are surging as strict mobility restrictions over the last three years contributed to high pent-up demand for travel.

    Rising mortgage payments, declining asset prices and tightening of credit lending worldwide could dampen spending and employment, leading to changes in travel preferences and spending habits through the rest of 2023.