The travel industry has taken a severe hit from the coronavirus’ spread both in North America and throughout the rest of the world. The virus, and its spread, has had a massive impact on leisure travel demand—the likelihood of taking a leisure trip in the next six months has declined by more than 50% in the past month according to MMGY’s Travel Intentions Pulse Survey (TIPS) from the end of March.
But when travel recovers, like it has when faced with other once-in-a-lifetime events, what might its path be? And how will it differ from the recoveries of the past?
Peter Yesawich, founder of MMGY Global, a travel and hospitality marketing agency, spoke with Travel Market Report about what travel recovery could look like, along with lessons from prior periods of travel turbulence and what makes the post-COVID-19 world different than those periods.
1. The recovery will largely be determined by the perception of safety.
When, and how quickly, people get back to vacationing and traveling on a regular basis will most likely be determined by how safe they feel doing so. It’s the perceived safety that will be the ultimate determinant of when that recovery begins and also how robust it will be, Yesawich told TMR.
Right now, the main thing driving the expectations of travelers down—MMGY’s latest TIPS survey shows that percentage of travelers who are likely to travel domestically in leisure for the next six months dropped from 82% to 39% because of COVID-19—is the perception of safety.
The true catalyst for the beginning of the full recovering will be a vaccine, which marks a stark difference between this travel period and the period after 9/11—a vaccine would provide a level of certainty that wasn’t possible after 9/11, but it’s still not a magic pill.
“If we get a vaccine in the U.S., that doesn’t take care of millions of people in less developed countries. We tend to be very myopic about this stuff, but we are living in a global environment.
2. Pricing will be the fuel to the fire.
Travel suppliers reducing prices won’t be able to lift the fears of travelers on its own, but is will be “the fuel to the fire.”
“The fuel that could accelerate the recovery is the pricing and the availability of attractive deals,” Yesawich said. “The amount of hesitation that people have about traveling in an uncertain world is inversely related to what they pay.”
The recovery after 9/11 was helped along by airlines and other suppliers listing fares at lower rates. Empty transatlantic flights began to fill when airlines began offering $199 fares. It didn’t happen quickly, but people were more willing to consider traveling when value was high.
But, Yesawich stressed, “if safety isn’t there, you can give seats away and you won’t be able to fill a plane.”
That’s backed by data from the TIPS survey—a higher percentage of travelers (63%) cited a slowdown in COVID-19 worldwide and a slowdown domestically (61%) as the factor that would have the most impact on travel decisions during the next six months than great travel deals (45%).
3. Leisure travel will recover first, corporate travel may change forever.
Despite some perceptions, leisure travel will drive the industry’s larger recovery, Yesawich said, and that’s good news for the travel agency community.
“As economists would describe it, demand for leisure travel is more elastic than inelastic. It’s driven by a whole bunch of things,” he said.
Part of that is travelers are more resilient than ever, because what’s happened over the past twenty years—events like 9/11 and the financial crisis, along with the Swine Flu and other widespread medical emergencies—has made regular travelers more resilient to get back on the road and back on a plane.
“If you’re a customer living through bad news, the first time it happens it’s really a shock and the recovery pattern is different. The third or fourth time it happens you’re a bit more immune to it,” he said.
Another part of that is that business travelers, despite according to the TIPS survey feel safer traveling than leisure, have been forced to adapt to a new work-from-home, social-distancing world and new technology will stick around post pandemic. That could very easily cut the need for business travel from all corners of the corporate world.
That’s evidenced by the growth in Zoom, probably the most used online meeting software and the one benefiting most from the new work-from-home environment, which reported a growth of its user numbers from 10 million to 200 million in just the last three months.
That growth in technology, Yesawich said, is extremely unlikely to impact the leisure market.
“I don’t think technology can have that impact at all. For ‘virtual vacations,’ we see no evidence at all in any of our work,” he said.
4. Some leisure segments will do better than others.
The airline recovery is going to be challenging, and the cruise business might take a longer journey, but leisure segments, once people do feel safe, will recover. Some segments will recover first.
“People may be driving, not flying, when things come back. And people could be more comfortable vacationing closer to home,” Yesawich said. MMGY’s last TIPS survey showed as much—most people (68%) said they feel the safest in their personal cars, even more than parks (40%), grocery stores (29%), and places of worship (17%).
After 9/11, Yesawich said, the family travel industry took off and he expects something similar to happen this time around as well.
“We saw a significant spike in parents traveling with children after 9/11 and I think that was a reflection of the evolved psyche of Americans. I think we’re going to see something similar today,” he said. Even after non-safety-related turbulence, including the 2008 and 2009 financial crisis, family travel returned first.
“We actually coined a term back in 2009 called ‘togethering’—it described the phenomenon that people wanted to spend more time together.”
The wildcards will be what happens with some of the standards of American family vacations—theme parks and cruise lines.
The crowds are a staple of both theme parks and mega-ships and in a post-coronavirus world, heavy crowds don’t lend themselves well to perceptions of safety, but, Yesawich said, “there are a lot of very smart people trying to figure out how you help people’s concerns,” including Disney’s Bob Iger, who on Monday announced he was reclaiming the helm at Disney to help transition the company.
Other family vacations, like the all-inclusive segment, might have an easier time attracting guest because of their ability to manage crowds better than those segments.