Some financial leaders are predicting a global recession. Here’s what that could mean for travel

Recently, it’s felt like travelers (and everyone, really) just can’t catch a break. At the beginning of summer, inflation and high fuel prices were the talk of the town. Flash forward a few months and people are still paying out the nose for basics like fuel and groceries, and global economic trends have the heads of financial institutions like the International Monetary Fund, World Bank, and World Trade Organization warning of a global recession on the horizon. 

An economic recession, which is a period of time with decreasing economic activity, on a day-to-day level usually means higher rates of unemployment, stagnated incomes, and less manufacturing and trade.

According to research firm Ned Davis, there’s now a 98 percent chance of a global recession. CNN notes that the firm brings some “sobering historical credibility to the table,” with probability readings coming in this high only twice before, in 2008 and 2020. Several Wall Street CEOs in the US have said that the signs do seem to be pointing towards a recession, but it could be a relatively mild one compared to others in recent history. And US Secretary of Labor Marty Walsh pointed out on CNN that employment shouldn’t take too big of a hit even if the economy slows, thanks in large part to funding in the Inflation Reduction Act that will support job growth in certain sectors.

But the fact remains that plenty of signs point to recession, and the driving factors are deep within the inner workings of the financial sector. As an individual consumer, all you can really do is make a plan to weather the financial slump.

Travel might seem like the first luxury you’d cut when money is tight. Certainly, it’s a sector that has historically been hit hard during recessions. During the last major global recession (that wasn’t caused by a global pandemic that shut down travel altogether) in 2008, air travel dropped off by around one-fifth, the most it has since records have been kept. Other segments of the travel industry didn’t do much better—in October of 2008, the New York Times reported rising airfares and lower occupancy rates at mid- and high-end hotels.

But more than half of Americans report that travel is now a priority, even after months of inflation and higher costs of living have eaten into many people’s financial cushion. In the same survey, 75 percent of respondents said that travel is a “worthwhile” investment, even if a recession further strains people’s budgets. This is great news for the 1 in 20 people in the US whose jobs are directly or indirectly tied to tourism and travel.

But what about internationally? The Economist Intelligence Unit (EIU) recently released its Tourism in 2023 predictions. This report assesses the growth prospects, top risks, and critical trends that international travel will face in the coming year. This year’s report predicts that global tourism arrivals will increase by 30 percent in 2023, but will remain below pre-pandemic levels. The report hypothesizes that the economic downturn, sanctions on Russia, and China’s zero-covid strategy will delay the industry’s recovery to pre-pandemic numbers.

“The industry certainly won’t be immune to the economic slowdown,” Ana Nicholls, EIU’s director of Industry Analysis, says. “Costs have risen sharply for fuel, electricity, food, and staffing, and companies will have to pass those costs onto consumers who are already hurting from the higher cost of living. As a result, EIU has pushed back its forecast for a full recovery in international arrivals. We now don’t expect them to get back to 2019 levels until 2024.”

Recessions pose a challenge to those who own travel-related businesses, but they can be a good time for those who still have the means to take a trip. If fewer people are taking vacations, that can mean better rates and more availability for those who do. But this time around, prices may increase due to fuel prices, staffing shortages and supply costs. 

Even if your income takes a hit from the recession, vacations and travel don’t have to be expensive, international affairs. Getaways to destinations within a few hours’ travel are often more affordable and can be a saving grace for those in the industry hoping to weather the storm of the current economy.