Of course it's a challenge, frankly it's just as or more interesting than if the group had succeeded.
I didn't say it wasn't interesting, I said it wasn't a challenge. Choices aren't challenges, otherwise the challenge is over the moment you make a decision.
There's that binary thing again.
The challenge now is figuring out what the heck to do next. Presumably the DM has plans for if the group doesn't get there in time (or can improvise) and the challenge has now shifted to salvage and CYA mode. Challenge doesn't mean direct conflict or direct threat. The princess has died, her family will be pissed and we're right in the middle of it - heck of a challenge!
Okay, see, that is a different presentation that makes all the difference.
"Do you turn back or do you pursue the murderers" isn't a challenge. "How do you deal with the royals blaming you for failing" is a challenge. It may seem like I'm splitting hairs, but what you are presenting makes all the difference.
But, to make sure I drag this back on topic before we get too far afield in the nature of challenges and how to present them, this isn't an exploration challenge. It is definetly a social challenge. And potentially none of the things that delayed the party were exploration challenges either. I'll actually add that another thing that makes the "the royal family is mad at you" challenge particularly good is that you have given the players all of the relevant information, making this more engaging to them. They don't know the outcomes, but they know enough about people, the royals they met, their enemies, and the circumstances to make informed decisions based upon that information.
Counter that with potentially the "challenge" that came before it. Do you take the road or the dangerous forest. One takes 5 days one takes 2.
How long do we have til the ritual? The players might not know, quite often it is kept as a vague "soon"
How dangerous is the forest? You don't know.
Where are they once you are through the forest? The players might not know. If the cult took the princess to a city, they still need to track her in the city.
Do they know we are pursuing them? Don't know.
The less information the players have, the more their decisions feel like they don't matter. Did the princess die because they took the road, or was she always going to die and they were never going to be able to rescue her? You don't know. So when the time comes to make the next choice on the fast but dangerous road or the slow but safe road which leads to where you want? You don't know.
At its core, a good exploration challenge is to simply have an interesting environment and a reason for the party to interact with it - go from there. The DMG, granted often in a confusing manner, provides decent guidance on interesting environments and how to interact with them.
No. I fully disagree with you. The keys are information and rewards. I'll never be able to guarantee that an environment will be interesting, and even if it is interesting in concept that doesn't mean it is interesting in practice. And "a reason" is too weak. They don't motivate enough.
We had an interesting environment (an eternal blizzard raging in the northern-most mountains) and a reason (need to get through to complete our mission to find a dragon) and it was the most boring "challenge" I've had in years, because we had zero information to base decisions on, so none of our decisions mattered. Do we go left, right or forward? From our perspective, the three choices were identical.