Not a Cruel Summer: Travel Advertisers Keep Shaking Off the Pandemic Blues

Taylor Swift can sing “Cruel Summer” all she wants, but travel advertisers are having the time of their lives after almost three years of limited spending during the pandemic.

According to MediaRadar data, more than 14,000 travel advertisers spent over $2.4 billion between January and May 2023, representing a 6% year-over-year (YoY) increase. This aligns with the fact that more than half of Americans plan to travel in the coming months.

TV Ads Aren’t Getting As Much Love

In Q1, spending from travel advertisers increased by 17% YoY to $1.6 billion, with January seeing the biggest jump at 37% YoY to $512 million. February, March, and April saw 12%, 6%, and 4% YoY increases, respectively. Although spending dipped in May by 20% YoY, due to reductions from The Walt Disney Company (down by 51% in May), travel advertisers are gearing up for a historic season. Travelers are expected to spend an average of $9,000 on their trips this summer, up by 6.8% from last year and 26.7% from 2021.

Despite the surge, advertisers decreased their investment in TV ads by 10% YoY to $709 million (30% of their overall ad investment). Much of that decrease came from advertisers promoting airlines (down by 71% YoY) and cruise lines (down by 27% YoY). For example, Delta Air Lines decreased TV spending by 95% YoY, while Expedia and Royal Caribbean did so by 10% and 53% YoY, respectively.

However, the decline in TV doesn’t mean travel advertisers are abandoning traditional formats entirely. Through May, spending on print ads increased by 7% YoY to more than $477 million, with much of the increase coming from Norwegian Cruise Line Holdings (up by 191% YoY) and Royal Caribbean (up by 40% YoY).

Travel Advertisers Embrace Online Video (OLV)

Travel advertisers reallocated some TV ad dollars to online video (OLV), increasing their investment in OLV by 18% YoY to over $573 million (24% of total ad investment). Advertisers at Airbnb, for example, increased spending on OLV by more than 385% YoY as they continue to compete with hotels and other lodging alternatives.

Spending from Airbnb comes after a banner year, with Airbnb reporting its best Q4 ever despite fewer bookings on the horizon. According to Nicholas Cauley, an analyst at Third Bridge, pressure on household budgets led to consumers choosing more affordable accommodation. He noted that Airbnb is now facing fierce competition from rivals like Booking.com and Expedia’s Vrbo, making its future less certain.

Advertisers for Bookings Holding (Booking.com and Kayak) responded by increasing their investment in OLV by 270% YoY.

In addition to OLV, travel advertisers are branching out into other digital channels, including display and newer platforms like TikTok. According to the Portrait of American Travelers survey by MMGY Global, about 34% of travelers were influenced by TikTok last year, a 10 percentage point increase from 2021. MMGY Global CEO Clayton Reid said, “Early decision-making is where a lot of our respondents talk about how TikTok influences their decision of where to go and where to stay.”

That said, social spending from travel advertisers fell through May.

Not All Travel Advertisers Are Lovin’ Life

Advertisers in six categories were responsible for 85% ($2 billion) of the spend through May: Lodging, Travel Websites, Cruise Lines, US Tourism Bureaus, Parks and Recreation, and Airlines.

Despite the looming travel rush this summer, some advertisers aren’t spending as much as they were during last year’s peak season. Parks & Recreation advertisers, for example, decreased spending by 15% YoY to $293 million, mainly due to a big decline from The Walt Disney World.

Low pre-summer crowds at Disney World likely contributed to this decline, but a shift in their advertising strategy is also a factor. In early 2022, the company announced it was hiring a social media content coordinator to expand DPEP’s (Disney Parks, Experiences and Products) social media presence, especially on TikTok.

More recently, The Walt Disney Company named its first Chief Brand Officer, Asad Ayaz, to “spearhead marketing for the holistic Disney brand, including setting franchise priorities and overseeing a global consumer research and analytics unit.” This began with the “Disney100” campaign celebrating the company’s centennial anniversary.

At the same time, airline advertisers reduced spending by 33% YoY, including those for American Airlines, Delta, and Southwest who decreased their investments by 31%, 80%, and 17% YoY, respectively. However, advertisers for United increased spending by 32% YoY.

The decrease in airline advertising comes at a time when much of the industry is optimistic about travel during an economic downturn. United Chief Commercial Officer Andrew Nocella said, “If we’re in the middle of a recession, this is the best recession the airline industry has ever seen.”

Still, the industry’s operating model is changing. United Airlines’ CEO Scott Kirby said, “You can’t run your airline like it’s 2019 … the world really has changed.” For airline advertisers, that could mean fewer ad dollars to spend, or existing ones spent in different ways (like on TikTok).

Travel Advertisers Look Ahead

The chance of a recession in the US is decreasing, and travel advertisers are responding accordingly.

Through May, Lodging advertisers increased their investment by 7% YoY to over $513 million, with companies like Airbnb (+82% YoY), Centerbridge Partners (+90%), and Marriott International (+25% YoY) all spending significantly.

At the same time, ads for Travel Sites (+31% YoY to $458 million), Cruise Lines (+10% YoY to $360 million), and US Tourism Bureaus (+31% YoY to $305 million+) also increased.

Travel advertisers are clearly shaking off any remaining bad blood, and with consumers showing little hesitation to give up their travel plans this summer, it’s a safe bet advertisers will continue to spend.