USA spotlight – POTUS infection and White House Covid spread could influence the shape and size of sentiment shifts

5 October, 2020

The news that President Trump has tested positive for Covid-19 and been transferred to a hospital after having difficulty breathing and that coronavirus is spreading through the White House and Capitol Hill could have an adverse effect on the travel, transport and hospitality sectors across the US. But even before this congressional Covid crisis there were suggestions that conversations had again stalled over an agreement on a coronavirus recovery package despite it appearing talks between the administration and the US House of Representatives were trending positively.

Since the beginning of Mar-2020, the Covid-19 pandemic has resulted in over USD396 billion in cumulative losses for the US travel economy, while the continual depressed level of travel spending has caused a loss of USD50.9 billion in federal, state, and local tax revenue since 01-Mar-2020.

There has been little movement from trend in the latest week-by-week outlook for travel spending from Tourism Economics for the US Travel Association, although, positively, travel spending’s recent slide ceased in the latest week of data (week ending 26-Sep-2020) with a slight +1% uptick.

Weekly travel spending measured -44% relative to prior year levels, establishing the -45% range as a new normal as eight of the past nine weeks registered within that proximity, the lone exception being the Labor Day holiday week, which cannot be compared with any new normal week.

The data shows that national weekly travel spending rose to USD12.3 billion – a slight increase from last week but still lower than the preceding six weeks. The analysis week’s gains were supported by air and car travel, as both experienced slight growth, acknowledges Tourism Economics. On the flip side this still equates to a USD9.8 billion loss when compared to the same week a year ago.

Air travel continued to grow slowly but steadily with year-over-year year-on-year rates inching slightly better, but still down to less than a third of levels. Road travel improved slightly from the previous week but was significantly worse than its strong performance over Labor Day weekend. Domestic bookings for future air and hotel travel declined considerably, with many areas that have performed well over the summer now experiencing significant declines on a year-on-year basis.

The Transportation Security Administration (TSA) update on daily passenger screenings shows that after slowing down following Labor Day weekend, the latest seven-day average of daily screenings (through 29-Sep-2020) was slightly higher than the previous two weeks, hitting 737,000, up +3.6% on the previous week and the highest since the start of the pandemic when you exclude the obvious Labor Day anomaly. Still, screenings over the last seven days were -68% lower than in the same period last year.

Arrivalist’s Daily Travel Index, which measures consumer road trips of 50 miles or more in all 50 US states, shows improvement, but remains considerably lower than the Labor Day weekend. After experiencing levels that nearly matched those of 2019 over the Labor Day travel period (just -5% compared to 2019), road travel performed significantly worse in the past two weeks, down -14% year-on-year in our analysis week. The year-on-year levels of decline are similar to those of mid-August and significantly improved from lows of -70% seen in early Apr-2020.

Looking at the regional level, the Tourism Economics weekly data sees Northeast’s losses remain at USD2.4 billion, but the Midwest, South, and West all saw travel spending losses tick down to USD1.5 billon, USD3.0 billion, and $2.8 billion, respectively. The Northeast (-59%), Midwest (-43%), South (-38%) experienced one percentage point improvements. The West again registered travel spending -44% down on the prior year. Over the past 30 weeks, cumulative losses have tallied USD82.3 billion for the Northeast, USD61.9 billion for the Midwest, USD132.2 billion for the South, and USD119.9 billion for the West.

According to the Tourism Economics research, the number of states and territories experiencing losses exceeding -50% fell from nine to six, with Rhode Island, Washington, Connecticut, and Vermont improving beyond this milestone, but New Jersey regressing and rejoining that list. The weekly report acknowledges that while the travel recovery “has begun to stagnate in recent weeks, significant improvements have been seen over the previous three months”.

This can clearly be seen in the data. Travel spending as a share of 2019 levels has improved in every state and territory, except New York. The Middle Atlantic has lagged the rest of the country in the past three months, with New York and New Jersey severely underperforming the rest of the country. The West region has seen the most marked improvement, with 10 of the 13 states in the region improving by at least 10% relative to their 2019 level.

This week, 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, has a more pessimistic outlook. After consistently improving since early Jul-2020, domestic air and hotel bookings for future travel were significantly lower in the analysis week – falling from -54% year-on-year two weeks ago to -65% year-on-year.

While regional differences remain large, it recognises the gap has narrowed due to weaker performance in states that have experienced the lowest year-on-year declines, which are now largely driving the decline in overall domestic bookings. Domestic bookings to Wyoming (-38%), South Dakota (-33%) and Montana (-25%) experienced the lowest year-on-year declines but performed significantly worse than they did in recent weeks.

At the other end of scale domestic bookings to New York (-81%), Maryland (-76%), Massachusetts (76%) and Louisiana (-74%) experienced the highest declines, but levels that are stable with performance for much of the past two months. Meanwhile, international bookings for future travel to the US fared even worse than domestic bookings and fell for the second consecutive week—from -67% year-on-year three weeks ago to -84%.

After a month-long period of the lowest levels of concerns since May, the number of Americans with high degrees of concerns about contracting the coronavirus rose recently, according to the Coronavirus Travel Sentiment Index Report from Destination Analysts. Similarly, after a stable period in expectations for the course of the virus, the percentage of Americans who feel that things will get worse in the next month increased from 38% to 43%

These rising concerns appear to be affecting confidence that travel can be done safely; only 27% are now confident or very confident they can travel safely, down from 31% the previous week. Next week we will start to learn how the President’s ill-health is influencing sentiment and how it will impact the shape of the recovery.