By Frederick DeMicco
The summer of 2020 will be a year without many vacation holidays. The fear of Covid-19 will dissuade many tourists from traveling. So, in the United States especially, will loss of income from jobs placed on hold in response to the pandemic. From the “Fhobia of Flying” to those tourists lured by the sands of the Mediterranean, the Fear to take Flight now dominates the travel market. It does not help that some countries’ borders remain closed, and many also have Pre- and Post-Covid quarantines.
Few events short of nuclear war could be as devastating to the global economy. Tourism is its heartbeat and a major contributor of jobs and careers. We went on about 1.5 billion international trips last year. About 350 million hospitality and tourism industry jobs depend on travel – from the front desk agents to chefs to tour operators and cruise ship captains.
Optimism has increased for both business and leisure travel, with about 40 percent of those who have taken a business or leisure trip during the past 12 months expecting to travel during the next six months. Only 30 percent of business travelers and 36 percent of leisure travelers expected to do so when queried about a month earlier (MMGY Global, 2020).
Two-thirds of leisure travelers expect to book their next leisure trip within the next six months, with more than half planning to do so during the next three months. Just over half (55 percent) of business travelers expect to take their next business trip during the next six months. Sixty-seven percent of travelers are likely to travel by personal car during the next six months, more than double the percentage planning to travel by air during the same time period. However, when travelers return to the skies, they are most likely to take a domestic flight (MMGY Global, 2020).
International travel stuck on the tarmac….
However, all this is for the future. This year, the United Nations World Tourism Organization projects a drop in international travel spending of about $1 trillion! Tourist Arrivals will plummet by about 70 percent. Of the over 200 key tourism destinations modeled, more than 70 percent have closed their borders to international tourists.
Europe receives over one-half of global travelers in a given year. The fear of Covid-19 will keep these travelers closer to home, depressing the travel and hospitality industry throughout the Continent.
Facts: In April 2019, nearly 7 million passengers arrived or departed through London Heathrow. This April, the number was only about 200,000. Flights trans-Europe are down by about 85 percent. In the US, the Transportation Safety Administration screened only about 3 million passengers in its airports this May, a decrease from about 70 million during the same time period in 2019.
The majority of travelers who had confirmed air travel or hotel plans prior to COVID-19 have now cancelled those plans. However, trips that require longer booking windows, such as cruises and group tours, are more likely to have been postponed for later in the year (MMGY Global 2020).
Baby steps towards opening.
Predictably, countries that depend heavily on tourism are working hard to restart this sector. Italy and Greece for example, wish to welcome global tourists this summer and have started back this June. Cyprus is offering free medical care to anyone who contracts Covid-19 while visiting, plus free hotel room, food, and drinks for their traveling companions. Geo-Connected Regional areas within which vacationers will be allowed to travel freely, AKA the “Travel Bubbles,” are being considered in parts of Europe, especially eastern Europe, and in Australia/New Zealand. Despite all this, many would-be travelers will have to stay in their own home countries this summer.
At the end of Spring 2020, motor home rentals and car-rental searches are up, and the price of gas has plummeted, encouraging more travel to local destinations. We expect this to continue through the summer and probably long beyond. Events and conventions will benefit cities attendees can drive to. Think San Antonio, Phoenix, Orlando, even Vegas.
One-third of those likely to travel by personal car are willing to drive 300 or more miles one-way from home to reach their destination and one in five is willing to travel 500 miles or more.
While the number of people who say they are likely to stay in a hotel or resort during the coming months is increasing, they still make up only 38 percent of travelers. Interest in ocean/river cruising and visiting a theme park/attraction is rising.
Consumers continue to feel safer about overnight leisure travel within the U.S. Roughly two-thirds believe they are would be reasonably secure in taking an overnight domestic trip. Perceptions of the safety of international travel also has improved. Yet, both numbers remain historically low: one-third of Americans still have doubts about the safety of travel within the country, while three in five view international travel as unsafe (MMGY Global, June 2020).
Fact: At Airbnb’s home-rental website, domestic bookings have grown dramatically, now accounting for over 80 percent of total reservations. Many people are booking properties within 50 miles of home, with the majority staying within 200 miles driving. Being able to drive and find your way back home if travel conditions deteriorate rapidly on the trip is the new mantra.
Travelling within China, which was the first country to impose a lockdown and appears to have its outbreak largely under control, is returning to something close to normality. All, or nearly all, Marriott’s in China are now open.
The U.S.A., which has about 20,000 new Covid cases each day, also saw strong improvements in hotel occupancy this May.
Camping and Glamping (think Under Canvas), with its built-in naturalistic social distancing, are attractive options and will perform well. Also gaining traction is staying in Conestoga wagons near the Grand Canyon and living by the week in house boats on Lake Powell on the Colorado River (Aramark.com).
Travel to many cities has fallen flat, and consumers now find it unpalatable. Why go to Las Vegas if the casinos are shuttered, to Orlando, if Disney is closed, or to the Big Apple if Broadway shows are dark? Las Vegas and Disney Orlando are back to business, but daily guest counts remain greatly diminished.
Rural areas are more of a magnet for travelers and are in higher demand. The Big Box resorts and busiest hotels are the ones near the oceans, forest, and the scenic southwest deserts. Smith Travel Research, out of Nashville, found that some waterside destinations in America were running at about 60 percent room occupancy. Water parks are seen as too socially magnetic for now and will take longer to recover.
The Airbnb Covid Rebound
The pandemic is changing consumer travel habits and could have a long-term impact on future travel desires. When tourists discover new locations, they will want to return.
Airbnb calls it travel redistribution, with people taking trips to out-of-the-way places rather than the usual Big Cities. Airbnb can offer rooms in tourist destinations off the beaten path much more easily than traditional hospitality chains.
The economics of travel services will change in other ways:
Making things easier to clean and reducing touchpoints that might harbor the coronavirus will be priorities. See: http://www.safeplace.com/ and Ecolab.com. Hotels are discarding the throw cushions, removing carpets, and going with the de rigueur of bare floors.
Restaurant menus are becoming digital and disposable: Look at your phone for the menu, or at a prominent chalk board.
Kitchens will offer fewer dishes, to simplify the cooking process and to eliminate waste. This is Pareto’s Law of Restaurants: 80 percent of customers will purchase 20 percent of menu items – the most popular are in, the least accepted are removed.
The buffet has disappeared, perhaps forever; if it survives, it will be modified to prevent transmission of disease.
Check-In / Check-Out will be automated. Room keys will become telephone apps, and more room functions will be operated by voice controls.
Hotels will have their own medical staffs on call or in house. They will advertise this service on their websites as a competitive advantage and to assuage concerned guests. See RosenCare, and ProntoCare.
Using sanitation and cleanliness as marketing hooks, Marriott now advertises their “Global Cleanliness Council”. Hotels are associated with Mr. Clean, Clorox, and Cleveland Clinic as “Co-Brands” for Cleanliness.
Flying
The middle seat on airplanes has always been undesirable. In the pandemic, keeping it unfilled has provided some social distance. Yet, airlines state that eliminating the middle seat will undermine their business model. Their operations become profitable only when about 67 percent of seats are occupied. (Similarly, hotels need about 50 percent heads in beds to be profitable.)
Other precautions will be easier for airlines to implement temperature checks at departure and arrival points, widespread use of facemasks, and enhanced cleaning of the jet. However, adding many cabin cleanings per day also can reduce the number of flights a single plane and crew can fly and impact profit. That, of course, could raise costs for consumers.
Our industry still exists to provide happy and safe traveling. In this challenging time, this goal requires even more creativity and dedication from both companies and personnel.
References
DeMicco, F.J.; Cetron, M.; Davies, O (2020). Hospitality & Travel 2020. From the Fifty Trends of Hospitality and Travel Research, Forecasting International.
The Economist May 30, 2020
MMGY Global Research JUNE 2020 TRAVEL INTENTIONS PULSE SURVEY Impact of COVID- 19 June 2020; Personal communication with Peter Yesawich, Ph.D. MMGY Global
