Summer Travel Boom Helps Drive Record Household Formation

The post-pandemic travel boom will help all sorts of properties including retail, industrial and multifamily in tourist destinations, said John Chang, senior vice president, director research services Marcus & Millichap in a recent video.

Leisure travel is quickly picking up in vacation hot spots like Orlando, Las Vegas, Nashville, Miami but also in metros that are less dependent on tourism like Los Angeles, Washington, DC and Chicago, he noted. 

Chang pointed out that historically hotel occupancy is in the 73% to 75% range for July, but last year it was 47%.

For the week ending June 19 this year, it was 68% “Travel is about up to 75% of pre-pandemic levels,” said Chang.

Furthermore, he said, the revival of leisure travel can impact the performance of other asset classes, such as retail, industrial and even multifamily. Here’s how: Service jobs related to the tourism industry were severely hurt during the pandemic and as tourism starts to come back, these jobs as well are returning. This growth will help drive household formation, which is forecast to reach 2.1 million in 2022—the highest level on record, Chang said. “The last time household formation broached 2 million was in 1978.” 

The boost in tourism spending will likely be short lived, lasting through Labor Day, but it will mark an important quarterly transition that pays dividends well beyond the third term, Chang concludes.