"Initially when we started on this horrible expedition, there was an assumption it would be over in six months, Governments thought as well but it's obvious now that won't be the case," Peter Harbison, chairman emeritus highlighted this week at the inaugural CAPA Live - a new monthly virtual "summit" offering insights, information, data and live interviews across a next-gen virtual event platform.
"This is a big downturn, beyond comprehension and a vaccine won't have a widespread impact at least before the middle of 2021," he warned. "Consumer confidence will be a key part of recovery, if consumers don't come back then obviously there is no industry … finding a uniform formula is key but still remains elusive."
It is clear that travel and transport will remain subdued through 2021 and into subsequent years and we need to now come to terms with the new landscape. But within this space there are pockets of demand that can support those that are adaptable and accept the world for what it is right now. That is a world where leisure demand dominates and business travel remains heavily diluted.
While this has hit many businesses hard, others are seeing some benefits, among them online travel agencies, or OTAs, online sites acting as third party agents reselling travel related services such as trips, hotels, cars, flights, holiday packages etc via there own independent channel.
A survey from BVA BDRC for one of the biggest, Expedia Group, looking at the contributions of OTAs to the US travel and tourism sector, the spending patterns of OTA travellers, and the role of OTAs in the hotel booking journey has highlighted their increased value at the current time.
It found that travellers are 57% more likely to book their travel through an OTA now than before Covid-19 with more than two-thirds saying value is the most important factor in booking decisions. Two out of three travellers already use OTAs when planning or researching their trips, but that could now translate more heavily into bookings too.
Emerging traveller booking motivations are contributing to a rise in preference for OTA, including to get the best nightly rate (69%); to get the best room (40%); to compare properties in one location (35%); as well as to earn reward points (32%), one-stop shopping (28%), direct promotions (26%), and buying a bundled offer, such a flight and hotel, in one transaction (25%).
The research also shows that Domestic OTA travellers spend 16% more per trip and 5% more on-property than direct bookers. They also spend 12% more on meals and drinks, 6% more on activities and 27% more on car rentals. Domestic OTA travellers stay nearly five nights, compared to just over four nights by direct bookers.
Increasingly we are seeing studies showing that the existing optimism that this would be a short-lived tremor, followed by the immediate pessimism after discovering it will be a lengthy issue is now finding some middle ground as people come to terms with living with the Covid-19 threat. But, corporate travel especially remains on an uneven recovery path.
Egencia, Expedia Group's corporate travel management company has said that nine in ten companies believe their workforce will return to some business travel by Jan-2021, as government restrictions lift and the risk to employees declines. The important word here is 'some' and the level will certainly be down significantly on pre-Covid times for an extended period of time.
Interestingly, the survey does indicate the emergence of a new trend. Replacing 'blesiure' a blending of business and leisure travel, we are now seeing the advent of the 'flexcation', an extended vacation that provides the benefit of a holiday and the practicality of a remote workspace - four out of ten travellers in the Expedia survey said they were likely to book this type of travel.
A positive optimism was also unearthed in a travel leaders group survey of nearly 3,000 frequent travellers in Canada and the US published by the World Travel & Tourism Council (WTTC) this week. It found that almost half (45%) of respondents have already made plans or are starting to make finite plans for their next holiday, and 54% are dreaming of when they can travel again. More than two thirds (70%) of respondents intend to holiday in 2021 and almost a quarter (23%) expect to travel by the end of 2020; 18% will wait to 2022.
A majority of survey respondents said the health and safety initiatives at airports, aboard aircraft and at resorts will make a big difference in their decision to travel in the future. These include mandatory masks, social distancing, enhanced cleaning, temperature checks and access to sanitising gel. For resorts, contact-free services and customisable room cleaning were also cited.
However, more than half are still concerned about the risk of being infected onboard an aircraft or cruise ship. More than 50% also expressed concern about getting stuck while away from home or being quarantined on a cruise ship or at a hotel. A lesser number named concerns about them or a family member contracting the virus while travelling, worries about getting a refund if the trip is cancelled, and concerns about family members with higher risk health conditions.
Nearly 60% of respondents said the requirement of a negative PCR test prior to arrival in a destination would make no difference or would be viewed as a positive, while about 40% said such a requirement would be a deterrent.
In terms of destinations on the travel wish list, Europe (38%), the Caribbean (34%) and Mexico (15%) are the top-ranked international markets of interest, followed by Canada (for US travellers), Central and South America, Australia, Africa and Asia. For US travellers, uncrowded, outdoor and beach experiences topped the list of desired domestic destinations, while traditionally popular sites, such as New York and Nevada, scored lower. For Canadians, British Columbia, Atlantic Canada, Alberta, Ontario, "anywhere uncrowded" and National Parks led the list.
There are some strong pockets of demand for travel, most are small, but they are enlarging as this crisis lengthens. The spread of Covid-19 and government reaction to increasing infections will remain a significant hurdle, but the industry is adapting. According to Mr Harbison: "Cost will become king again".
About 70% of US domestic bookings now take place in the two weeks prior to departure, compared with 90 days previously and they are more highly price sensitive, both for leisure and business travel, a factor not helped by the fact that the speed of passenger traffic return will be in inverse proportion to yield, he acknowledges.
"Recovery is about borders and confidence. A vaccine won't quickly solve those," he explains. We shouldn't expect miracles, but things look a lot more encouraging now than they were six months ago. The challenges will continue through 2021, but we approach the coming 12 to 15 months with a little more optimism, even if the path ahead remains a challenging one.
