October 14, 2020
The COVID-19 pandemic is perhaps the greatest challenge and biggest disruption that the travel industry has experienced. By May 2020, 100% of all world destinations had travel restrictions in place, borders closed, planes grounded, and a complete shutdown that put an immediate stop to domestic and global travel. The impact of COVID-19 has been overwhelming with economic recession and widespread hardship for many, especially countries, regions, and destinations that are heavily dependent on travel and tourism.
As borders slowly reopen, restrictions lift, and travelers take to the skies, the impact of Coronavirus still looms large for the travel industry. International travel will take time to bounce back as traveler confidence reacts to the containment and outbreak of the virus, quarantine orders, pre-flight testing, and the potential enforcement of a controversial COVID-19 vaccine weighing heavy on the mind of many travelers.
But there’s always a positive! The trends are showing that after months of lockdown, stay at home orders and isolation for many, people want to be outside, they want to travel, they want to see family and friends, but first and foremost they want to feel safe. The COVID-19 travel recovery is gradually trending upward and while scenarios suggest full global tourism recovery by 2023-2024, recovery is by no means linear and differs from sector to sector and destination to destination.
Let’s Take a Look at the Travel Forecasts and Insights
A recent report by Skift Research in partnership with McKinsey & Company takes a detailed look at how the industry has been affected by COVID-19 and shares insights into the future of an industry turned upside down. The report states that tourism will progress through four stages: a crisis period, a pandemic recovery, an economic recovery, and finally a new normal.
- Airlines have been hard hit with 2020 international tourist arrivals showing a full-year decline of between 58 and 78 percent. The opening of domestic flights will slowly begin the recovery process however airlines are looking to 2024 for a full recovery.
- Leisure Travel has been the first travel segment to recover with local and domestic destinations topping the trend as Americans choose to travel within their home states. In a recent travel sentiment survey, 40 to 50 percent of travelers indicated they are willing to travel even when the virus is still a threat.
- Before COVID-19, 30% of all personal trips involved at least one flight, this has dropped to 9% and remains stable. In Skift Research’s July travel tracker, 67% of Americans said their first trip since the beginning of the pandemic would be by car, and of the trips taken in August, 82% were for leisure with only 18% business travel.
- Business travel recovery has historically been slow after an economic crisis and with travel budget constraints, remote working, and advanced virtual technology the postcrisis return of business travel could take years. The resumption of business travel is expected to vary by proximity of destination, the reason for travel, and industry sector. In a McKinsey survey, 48 percent of respondents expected to have in-person sales meetings again in 2021 while 62 percent expected to have less than 50 percent of in-person interactions.
- Outdoor travel is on the rise with traveler attention moving away from the urban markets. Travelers are looking for wide-open spaces, natural isolation, outdoor activities, and adventure travel. Matt Roberts, CEO of Vacasa predicts, “I think this notion of space is a big one, and I think it’s going to be one of those enduring things. I think people are also discovering more of the benefits of being outside and incorporating outside travel.”
- The tours and activities sector is the third-largest in the travel industry after flights and accommodations and has seen one of the highest growth rates of venture-capital investment in travel, implying strong post-pandemic confidence for this sector. Guided and self-guided tours have started to show signs of recovery since May and with a change in traveler behavior, demand will continue to grow in this space.
- Vacation rentals have claimed the #1 seat as traveler preferences are turning from hotels to the safety of a vacation rental home. A study by STR and AirDNA average RevPAR was down by 65 percent for hotels in June 2020 but down by only 5 percent for short-term rentals in the same month. Technavio’s Global Vacation Rental Market 2020–2024 report from May 2020 brings more good news to the vacation rental industry, estimating a compound annual growth rate of 7% over the next five years.
Emerging trends gathered from data insights and booking patterns show that the US has shown a strong domestic travel response in both confidence and volume, with the strongest global performance ahead of China, Germany and Japan. Travelers are looking for a balance of risk and reward and while international travel remains volatile and airlines continue to move ahead with furloughs, the power of local and domestic travel has risen.
The Time is Now to Prepare for Recovery!
COVID-19 has boosted e-commerce and consumer behavior has shifted online for most of their needs. Working from home, online counseling, grocery delivery, virtual travel (and impulsive lockdown shopping sprees!) all took center stage during the global lockdown! A strong online presence and the value of your guest being able to book online puts you in the forefront. There is no returning to business-as-usual for most of us and it’s vital to take this opportunity to be well-equipped for the recovery ahead with a modern approach to the new norm. Strengthening your customer relationships and boosting traveler confidence with the reassurance that you understand your guests’ needs with flexibility and reassurance for a safe stay, is imperative.
As we head into the Fall & Winter Seasons with new travel buzzwords and online searches for flexcations, workcations, bleisure travel, and extended stays on the rise, it’s time to be on the front foot, know your market, build your brand and play your part in the recovery of the travel industry.