Travel: Hilton, Puerto Rico, Vrbo, IHG ads amid inflation, recession fears

As it promotes Puerto Rico as a travel destination in a new campaign, Discover Puerto Rico, the island’s marketing organization is considering several factors when it comes to media placement. One big one? A potential recession. When looking at where to advertise, the agency is targeting U.S. markets where airfare to Puerto Rico is lowest and avoiding regions with costlier flight increases.

“The economic uncertainties we’re building into the formula today are those increases in airfare,” said Leah Chandler, chief marketing officer at Discover Puerto Rico, which has run the island’s marketing since 2018. The organization is making its media buying decisions on a regular basis, taking a market-by-market approach for the new campaign, which is called “Live Boricua” and comes from creative agency of record R&R Partners. “If airfare is increasing 50% or 60% in some markets, versus others, we have a better chance of capturing those visitors who are going to pay less for airfare,” she said.

It’s one of a host of strategies travel brands are taking as inflation and economic uncertainty continue to weigh on consumers and a recession becomes more of a reality. After COVID-19 caused travel to grind to a halt in 2020, the industry has spent the last year enjoying a robust return to growth. For many brands, business is now exceeding pre-pandemic levels as consumers engage in so-called revenge travel—taking trips that were postponed during coronavirus lockdowns. Travelers are also combining business and leisure trips in the new “bleisure” trend. Hilton recently told Ad Age that its business this summer has surpassed the same period in 2019. “At the moment, we’re seeing a robust amount of travel,” said Mark Weinstein, chief marketing officer at McLean, Virginia-based Hilton.

Yet there are signs of a slowdown. As prices rise on essential items including groceries and household necessities, consumers may begin to pull back on spending on travel. MMGY Global, a travel and tourism marketing agency that tracks demand, found that following an all-time high in April of 2021, demand and intent to travel for leisure have leveled off and begun to dip. Consumers appear to be noticing that trips are not as affordable as they once were amid rising costs elsewhere and perception of affordability has dropped, according to data MMGY tracks.

“We have now seen a drop in travelers that say they have finances available to travel,” said Craig Compagnone, chief operating officer at MMGY. “That tells me that you’re starting to have a segment of travelers who say, ‘We are circling the wagons, we have to start protecting our income with a potential downturn on the horizon.’”