USA spotlight – a dire outlook, particularly for business travel, as total spending is expected to decline by 45% and not return to 2019 levels until 2024 or 2025 as losses could hit USD1 trillion during 2023

24 November, 2020

The US Travel Association (USTA) has revealed that domestic leisure travel is expected to decline by -24%, domestic business by -60% and international inbound travel by a staggering -76% this year in an autumn update to its 2020 Travel Forecast. The results of this report are dire, particularly for business travel, though projections for domestic leisure have marginally improved since its spring update.

Even then, the numbers do not make positive reading. Travel spending is expected to decline by --45% and not return to 2019 levels until 2024 or 2025. Total losses will reach USD510 billion by the end of the year and hit USD1 trillion by the end of 2023 and the industry is on pace to lose 4.5 million direct travel jobs—that’s 50% of all travel jobs—by the end of 2020. More details of the scope of the recovery on a year-by-year basis is available here: US Travel Association 2020 Travel Forecast – autumn update

The latest week-by-week travel spending analysis from Tourism Economics for USTA shows spending rose +4% in the last week – recovering about one-third of the prior week’s -11% decline. For the week ending 14-Nov-2020, travel spending tallied USD11.9 billion, reflecting a -44% drop below last year's levels and equating to a USD9.5 billion loss. While an improvement from the -46% year-on-year decline of the previous week, it remains worse than the -42% level two weeks earlier.

Tourism Economics observes that the year-on-year decline in travel spending has remained in the -41% to -46% range for 14 of the last 15 weeks, the lone exception being the first week of September due to a boost from Labor Day holiday travel. The question is will Thanksgiving provide a similar boost?

The weekly performance is generally positive, albeit the Midwest was the only region not to improve from the prior week, likely a result of the rapid rise of COVID-19 cases in the region. The research shows that seven of the 17 states that experienced worsening conditions in the week ending 14-Nov-2020 were in the Midwest, with Minnesota, Iowa and Indiana experiencing some of the largest declines.

On the other hand, the severe declines in West Virginia, South Carolina, Nevada and Puerto Rico in the week ending 07-Nov-2020 proved to be a one-week phenomenon, as these states were among the best performers, according to this latest weekly data.

The rising travel spending coincides with a noticeable improvement in air travel with Transportation Security Administration (TSA) screenings tied at their best year-on-year performance since the start of the pandemic. The latest seven-day average of daily screenings through 17-Nov-2020 was +1.8% higher than the previous seven-day period, down -63% lower than in the same period last year.

Road travel has remained relatively flat in recent weeks and there is no change to that trend. While there have not been any significant weekly improvements since the end of the summer, road travel has generally maintained a relatively good performance over these last few weeks, with lower year-on-year declines on a consistent basis than any other time since the start of the pandemic, according to Arrivalist’s Daily Travel Index, which measures consumer road trips of 50 miles or more in all 50 US states.

ADARA's Traveler Trends Tracker, which taps into real-time travel data on travel-related consumer behaviour, including hotel volume and flight bookings for both business and leisure travel, indicates that domestic air and hotel bookings for future travel are slowing, down -60% year-on-year and slightly lower than in the previous week.

National and state-level booking data provided to USTA highlight strong regional differences in demand. Domestic bookings to Montana (-22%), Wyoming (-26%) and, for the first time, Delaware (-34%) experienced the lowest year-on-year declines, while domestic bookings to New York (-81%), Massachusetts (-75%) and Connecticut (-75%) experienced the highest year-on-year declines.

On a positive though, international bookings for future travel to the US at down-58% year-on-year marks the first time international bookings performed better than domestic bookings since Apr-2020 and represents a significantly improvement from earlier weeks.

While the numbers for 2020 do not make positive reading, there are positive developments. USTA has also released a new report focused specifically on the impact the coronavirus pandemic has had on business travel and the meetings and events sector. Though many businesses were able to pivot quickly and figure out how to connect and work effectively in a remote setting through an increased reliance on conference calls, webinars and virtual platforms, most agreed: there is no replacing face-to-face interactions, the report, ‘Getting Back to Business: Navigating the Safe Return of Meetings and Their Role in Economic Recovery’, observes.

“The fact is, the importance of face-to-face meetings is invaluable,” the report says, and the coronavirus pandemic complete with social distancing and endless Zoom calls and webinars has “accentuated the need and desire for human connection in person”. From growing new business, retaining and building existing relationships, gaining experience or training, or continuing to be informed and educated on the latest trends, technologies or products, “being together, in person is much more effective, efficient and genuine than a virtual setting can capture,” it adds.