COVID-19 has sent the hospitality industry plummeting, with hotels and resorts shuttered worldwide, and travel brought to a virtual standstill. But among the valuable lessons we have learned from previous devastating events such as the SARS outbreak and the Global Financial Crisis, the most important remains, global tourism is resilient and will indeed return.
Our decades of collective global experience in the hospitality advisory space tells us that the speed and strength of that rebound will be driven by the unique characteristics of different types of travelers. Understanding which traveler types will come back – and when — will help tourism business owners position their products and capitalize on the returning visitor momentum.
Using our experience combined with our analysis of industry trends and practices, we have outlined a few of the prevailing traveler types and their propensity to resume travel when the COVID-19 virus wanes and travel restrictions loosen.
Those that are generally young in age and fearless in spirit, the newly coined ‘influencers’, have gained traction as a strong component of hotels, destinations, airlines, cruises and other travel brands marketing initiatives. These individuals and their high social media followings will be an important component for hotels and destinations looking to show the world they are open, safe and ready to receive visitors. Influencers, who may be eager to get back on the road after months of social distancing, even without a widespread vaccine in place, will be particularly helpful for remote, unique and picturesque destinations – Instagram anyone?
After being isolated for so long, with only digital technologies to stay connected, even the less adventurous traveler will want to reconnect with friends and loved ones in-person. This return to meaningful human interaction will result in a significant volume of domestic visits to see friends and family, with higher than normal trips occurring by car. This will benefit a combination of roadside shops, restaurants, select-service lodging, and short-term rentals.
People will also want to reconnect with nature and nearby weekend getaways will offer immediate relief. There will be increased interest in health, wellness and well-being-oriented hotels, brands and destinations – a segment that was already seeing tremendous growth pre crisis. In February 2020, the US-based non-profit Global Wellness Institute (GWI) predicted that “By 2022, the wellness tourism market will reach a whopping $919bn – representing 18% of all global tourism – with well over a billion individual wellness trips to take place around the globe.” This should come as welcomed news to the domestic wellness tourism industry as GWI also states that wellness travelers at the domestic level spend roughly 178% more than the average traveler.
“By 2022, the wellness tourism market will reach a whopping $919bn – representing 18% of all global tourism – with well over a billion individual wellness trips to take place around the globe.”
National and State parks, beaches and other large outdoor spaces will experience increased visitation. Glamping operators like AutoCamp, an HKS client, are likely benefit from this post COVID-19 surge along with RV rentals as people seek adventure in the confines of their ‘home away from home’.
The leisure traveler segment is a bit of a mixed bag, with some parts of this category returning sooner than others. Most will begin to travel when they feel it is safe (i.e. a vaccine is in place, rapid testing is implemented, or a destination was not badly impacted) and their finances permit. Initially, shorter budget-conscious vehicular trips to nearby local and state destinations will be the trips of choice. Based on past recoveries, leisure travel tends to start locally, spread nationally and eventually go global. Large cities, especially those heavily impacted by the coronavirus, will likely see fewer and smaller groups of travelers for one to two years as people avoid planes and cruises in the short-term.
The luxury leisure travel segment is the least price sensitive and we believe the early returners in this segment will be those in their late 30s to early 50s with high incomes and some accumulated wealth. It is anticipated that those in their 60s and above will be a bit more cautious and may opt for travel via private jet to private villa or remote getaways until full confidence returns to the luxury hotel sector. On the flip side, bargain hunters will actively be on the prowl, carefully weighing the risk of infection versus the reward of venturing out of town for the deal of a lifetime.
Initially, travel abroad will likely surge for those with international roots (diaspora) eager to reconnect with friends and family. Years may have passed since they have gone back to their native country and a combination of concern and nostalgia after isolation will draw them home. Unfortunately, nations hit hard by the coronavirus and prolonged travel restrictions will likely limit such reunions this year. For example, China has actively discouraged its diaspora from returning home in an effort to curb any potential new spikes in coronavirus cases. Eventually though, as the restrictions are removed, there will be a surge of diaspora travelers, benefiting airlines and hotels in major urban destinations globally.
According to both the Global Business Travel Association (GBTA) and APCO Insight, convention and meetings travelers are itching to get back to these events once the pandemic has passed and social distancing requirements are lifted. According to a recent survey by APCO, 78% of convention and meeting goers say they plan to attend as many or more of these events when it is safe to do so. The fall conference circuit could be quite busy with already scheduled events on the books coupled with those that have been rescheduled from spring cancellations. Another survey conducted by the GBTA, more than half of the respondents expect conference related travel to resume within the next two (32%) or three (19%) months. Conference and meeting planners will have to modify protocols and ramp up communications to reassure this travel segment that measures are being put in place to ensure their safety. If they can do this successfully, this fall could be a major win for conference hotels.
Finally, discretionary domestic business travel will take some time to return to pre-COVID-19 levels. Virtual meetings have replaced business travel during this difficult time and could permanently replace some segment of travel that would have previously occurred in-person. However, most business leaders recognize the importance of face-to-face meetings and we estimate they will begin taking necessary business trips by mid-summer. Major epicenters of the coronavirus outbreak, like New York City, will likely maintain steep declines in both inbound and outbound business travel for the next four to six months. International business travel will likely lag as international travel restrictions vary and companies maintain tight control of their purse strings.
Global travel has grown tremendously over the last two decades, with the World Tourism Organization reporting that the 565-million visitor arrivals in 1995 skyrocketed to 1.6-billion in 2019 – 2.5 times the volume of the late 90s. While the current global pandemic has temporarily disrupted much of this growth, humans are by nature sociable and curious. These characteristics will drive the return of travel, initially at the regional and domestic geographies in the coming six months to a year, and then subsequently internationally.
So, business as usual? No. But day-by-day, the global tourism industry will return to pre-pandemic levels.