Tech Execs See Signs of Weakening Travel Demand

Most tariffs are now on pause, but recession risks have risen from the start of the year. Behind the scenes, companies that provide tech to travel companies are seeing early signs of weakening demand in the U.S. and a shift toward domestic travel. 

Lighthouse, which tracks hotel market data, is already seeing some market adjustments based on data pulled on April 1. 

“Average hotel prices across major U.S. destinations have decreased by 3-5% in just 30 days, and we’re tracking continued downward revisions for summer bookings. Concurrently, Canadian interest in U.S. travel has notably declined, with the share of searches dropping from approximately 25% to 15% of outbound queries,” said Sean Fitzpatrick, Lighthouse CEO, in a statement.

Skift spoke with executives of several late-stage travel tech startups — Lighthouse, Flyr, Guesty, Hostaway, and Mews — on what they expect and how they’re preparing. 

These companies collectively raised over $1 billion dollars in capital in the past year on the back of their growth since the pandemic. That growth came after the pandemic halted travel, and the low-tech industry realized it was grossly unprepared. 

These companies — though young and still navigating the competitive landscape — have gained ground by building modern tech platforms and convincing their customers that it’s time for an upgrade. Their basic sales pitch is to help airlines, hotels, and short-term rentals do more with less. That means tech to help hotels run operations with fewer staff, automatically adjust airfare prices to maximize revenue, and create new streams of revenue through upselling and cross-selling. 

Early Signs of Decreased Hotel Bookings

Richard Valtr, the founder of hotel operations tech company Mews, also said there are early signs of weakened summer bookings. Mews raised $75 million in March and raised $110 million in 2024.

“Some early signs of softening in booking aren’t entirely surprising given the broader macroeconomic environment. When people feel the pinch of economic uncertainty, travel often becomes one of the first discretionary spends to take a hit,” Valtr said in a statement. “Generally, we see that there is an increased amount of volatility in all aspects, and we see these in cancellation rates, and shortened booking windows, as well as shifting segments travelling.”

Fitzpatrick of Lighthouse, said there are early signs of decreased bookings but that these are “signals worth monitoring rather than cause for immediate alarm.” Lighthouse’s tech is meant to help hotels with pricing, promotion, and distribution. The company raised $370 million last year.

All the execs that Skift spoke with noted that the travel industry has demonstrated resilience. But in the short-term, Fitzpatrick said that some companies may be hit harder than others: “Properties with significant exposure to cross-border tourism and international travel may face unique challenges in the months ahead.”

More Americans May Vacation Domestically 

Executives at Hostaway and Guesty, which both provide operations tech to short-term rental managers, believe that an economic strain may encourage Americans to opt for less expensive domestic trips rather than traveling abroad.

“Given the size of the U.S. internal travel market, this is likely to offset much of the anticipated loss in international visitors,” said Marcus Rader, the CEO of Hostaway, in a statement.

Rader also believes that operating in multiple countries benefits his company. Hostaway raised $365 million in December.

“At the same time, demand for travel to the Caribbean, Central America, and Europe is on the rise. We launched our product in France, Spain, and Italy earlier this year, and we’re seeing that Europeans are very busy booking trips for the year,” he said.

David Angotti, the chief evangelist at Guesty, said that about 12% of total demand is from international travelers. 

“While that segment is significant … the vast majority of U.S. demand is domestic, and we expect an impact to be manageable,” Angotti said in a statement. “Destination markets are continuing to experience growth and this is fueled by the accommodation advantages that short-term rentals provide, and we expect strong domestic and international bookings to continue.”

He added: “During the pandemic, we saw a significant compression in international demand that persisted for quite some time. However, short-term rentals performed well due to the domestic travelers also shifting travel trends.”

Guesty raised $130 million last year.

A Reminder to Be Nimble 

If the economic uncertainty leads to fewer travelers and tighter budgets in the long-run, then travel companies may benefit from leaning into tech that’s meant to streamline operations, maximize existing revenue, and create new revenue streams. 

“The pandemic taught Guesty and our property managers that improving our domestic offering — whether through marketing, pricing strategies, or partnerships — can help offset any international headwinds,” Angotti said. 

Many hotel brands and airlines, in particular, did much of that work during and after the pandemic. Some examples: Hotel apps that sell room add-ons and ticketed experiences, airline apps that sell retail items or hotel rooms, hotels that sell day-use of spa facilities, and rentals that offer remote check-in and digital entry. 

Cross-selling is one of the products that Flyr, an airline retail platform, emphasizes to its airline customers. The company raised $225 million last year.

“I expect leisure travel to be impacted as price increases on electronics, cars, and more force consumers to prioritize their elective purchases. Not dissimilar to the traffic lows of 2020, these changes force airlines to seek maximization of revenue from the customers that do fly,” said Flyr CEO Alex Mans.  

“For Flyr this means an increased demand for modern retailing capabilities, enabling better up and cross-selling of both the airline’s own ancillaries and those of third parties, including hotels, insurance, cars, transfers, in-destination events, and more.”