The US travel industry is bracing for a challenging 2025 as declining demand from lower-income consumers prompts major companies to reduce budgets and workforce.
Firms including hotel operators, online booking platforms, and resort companies, are implementing cost-saving measures to address slowing revenue growth.
Economic Trends and Revenue Outlook
A drop in demand for budget hotels has already curbed growth in the hotel business throughout 2024. This trend that is expected to persist into 2025.
Real estate analytics firm CoStar and global travel data provider Tourism Economics recently downgraded their 2025 outlook for room revenue growth from 2.6 percent to 1.8 percent.
Aran Ryan, director of industry studies at Tourism Economics, showed some optimism.
He said:
“We anticipate these recent trends to moderate and for overall demand growth to be slightly stronger next year,” driven by higher-income consumers who continue to show strong intentions to travel.”
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Major Layoffs and Budget Cuts
Marriott International: The hotel giant announced plans to reduce its annual pre-tax and administrative costs by $80 million to $90 million.
As part of this strategy, Marriott will lay off over 800 corporate-level employees in the first quarter of 2025.
According to Sylvia Jablonski, chief investment officer at Defiance ETFs, the layoffs are aimed at making Marriott “leaner and more efficient” following weaker-than-expected earnings.
Booking Holdings: The parent company of Booking.com has also signaled potential job cuts after already slowing its workforce growth.
In the third quarter, Booking’s workforce increased by just 3 percent year-over-year. This is compared to 13 percent growth in the previous year.
CFO Ewout Steenbergen, said: “We are being more efficient and we are very careful with hiring,” said Booking CFO Ewout Steenbergen.
Vail Resorts: The ski resort operator plans to achieve $100 million in annualized cost savings by 2026,. Plans include a 14 percent reduction in its corporate workforce.
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Automation and Technology Adoption
Several companies are turning to automation to lower costs and streamline operations:
Norwegian Cruise Line Holdings aims to save $300 million by 2026 by consolidating back-office activities and leveraging low-cost technology.
This move comes despite record demand for cruise travel.
Marriott Vacations Worldwide, a timeshare company that separated from Marriott International in 2011, plans to save $50 to $100 million annually over the next two years, partly through increased use of automation.
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Industry Challenges and Adjustments
The wave of layoffs and cost-cutting highlights the travel industry’s efforts to adapt to shifting consumer behaviors and economic conditions.
While high-income travelers continue to support some demand, companies are preparing for a period of constrained growth in key segments such as budget accommodations and mid-tier leisure travel.
Despite the challenges, companies are optimistic about leveraging technology and efficiency measures to weather the economic slowdown and position themselves for long-term resilience.
