Despite recessionary fears looming over the market, typically cyclical sectors like airlines, cruise lines, restaurants, and lodging are seeing their strongest demand in years. Along with this demand, hiring in the industries has sharply increased alongside the demand spike, making up for mass layoffs pursued amidst the pandemic.
Driving Demand
In terms of demand, multiple industries underlying the overall travel and leisure sector have highlighted a return and even rise above pre-pandemic trends.
For example, Delta (DAL) CEO Ed Bastian forecast record revenue for the second quarter, with improving profits as well. He noted that total unit revenues were 16% higher than pre-pandemic levels in a recent earnings call.
“Consumer demand was well ahead of pre-pandemic levels and drove strength in domestic and international travel,” he told analysts. “Business travel improved in the quarter with small and medium businesses ahead of ‘19 levels while managed corporate travel showed steady progress led by international.”
Overall, Barclays equity analyst Brandon R. Oglenski advised that a potential recession in 2023 is likely to be less negative for airlines than many expect given pent-up demand still playing out. That dynamic was echoed by American Airlines (AAL), Southwest Airlines (LUV), and United Airlines among other smaller airlines.
“I’d like to underscore, we see a strong demand environment this summer, and we’re highly confident that that will continue going forward,” American Airlines CEO Scott Kirby commented. “If there’s one thing that the pandemic has taught us, it’s that people innately desire to travel.”
However, that commentary spread beyond just air travel, with cruise lines like Norwegian Cruise Line Holdings (NCLH) and Royal Caribbean (RCL) touting record-breaking bookings trends, Expedia (EXPE) and Booking Holdings (BKNG) signaling continued demand into the heart of summer travel, and lodging names like Marriott International (MAR) forecasting stronger than expected revenue despite a darkening macro backdrop.
While a reopening in Asia is undoubtedly aiding recovery, the resilience of North American travel demand was called out by Marriott CFO Leeny Oberg to levels essentially in-line with pre-pandemic levels. She advised consumers in early May that consumers are “still really in good shape.”
Finally, continued resilience in restaurant spending has led to a spike in restaurant and food service hiring, flying aout 25,000 jobs higher in the month of April alone.
Room for Employment to Rebound
In the latest Bureau of Labor Statistics jobs report posted on Friday, job growth surged well beyond analyst expectations to 253,000 for the month of April. Leading the way, employment in leisure and hospitality added 31,000 jobs and continued a trend that has progressed for a number of months.
“Leisure and hospitality had added an average of 73,000 jobs per month over the prior 6 months,” the release stated. “Employment in this industry remains below its pre-pandemic February 2020 level by 402,000, or 2.4%.”
Accommodation and food services made up the bulk of the increase, rising by 25,000 jobs from the same period in 2022. Glassdoor Lead Economist Daniel Zhao noted that while the overall leisure sector has added 7.8M jobs since the pandemic low, the industry still has a ways to go to reach pre-pandemic levels.
Per the Bureau of Transportation Statistics, which tracks airline hiring, passenger airlines have steadily added thousands of jobs each month in 2023. A new data release due on May 10 and, if industry executives are any guide, the pace of hiring should remain very strong.
For example, United Airlines indicated in a recent presentation that it hired 15,000 new workers in 2022 and aims to hire another 15,000 by the close of 2023. A total of 50,000 new employees are expected to be hired by the close of 2025.
The airline is far from alone in ambitious hiring aims, particularly as a pilot shortage serves to push just about every major carrier to hike hiring plans. In short, a typical recessionary pullback in hiring for cyclical industries does not seem to be playing out as of yet given the pandemic’s effect on consumer habits. It would appear that so long as appetites for travel remain ample, so too will demand for employees to satiate this demand.
Travel & leisure hiring may stay hot despite recessionary risks
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