By all accounts, 2020 was shaping up to be a record year for the travel industry. The first two months showed a promising start to Q1, as the global demand for travel soared to new heights. But the industry was in for an once-in-a-lifetime challenge, a global pandemic that all but halted travel in March and April before resuming over the summer.
To see how the industry has been affected by COVID-19, Skift Research in partnership with McKinsey & Company, analyzed the state of the travel industry six months into the COVID-19 pandemic.
1. Latent demand for travel.
Customers are interested in traveling again when restrictions lift, the report said, and are even willing to do so before a vaccine is available at scale. China is seeing both the leisure and business travel segments recover domestically. And led by Germany, Europe shows encouraging first signs of recovering travel demand. Other geographies, including the United States, have not yet effectively controlled the spread of the virus; even so, we see a considerable increase in searches and advance bookings, the report said.
2. Travelers want to travel but feel restrained.
Due to necessary public-health measures and safety precautions—such as quarantines and closures—the leisure travel segment “may be curbed by the inability to do anything meaningful at a destination.” People still have the desire to travel, but want to do so unencumbered by restrictions. The report cited a recent travel sentiment survey, where 40-50% of travelers indicated they are willing to travel even when the virus is still a threat. “The fact that many fewer are actually traveling might be explained by the inability to enjoy activities indoors and with other people,” Skift researchers wrote.
3. The working-from-anywhere trend could blur the lines between leisure and business travel.
Digital nomads and “bleisure” travel predate COVID-19, the report said, but the pandemic and the rise of remote work will accelerate the growth of these travel segments. There’s already a growing number of hotels, including Accor and Hyatt, and several Caribbean islands that have courted remote workers, inviting them to work from the comfort of their locale.
4. Non-price factors have become more important to customers.
According to the report, travel companies have experimented with pricing, which has seen much greater fluctuation in the past few months than during the same period last year, “but price is not the most important factor right now,” According to Skift Research, less than 10% of survey respondents said discount pricing had an impact on their booking behavior.
5. Rather than trusting sentiment data, other leading indicators can help pinpoint recovery.
Travel companies cannot rely only on stated preferences; they need to improve the way they keep a pulse on travelers’ actions through several leading indicators, Skift found, including COVID-19 spread indicators, such as confirmed-case counts, recovered-case counts; Mobility indicators, including air quality, weekend and weekday traffic congestion, travel restrictions, usage of other types of transportation; and economic-activity indicators, including price of crude oil, and stock exchange index.