As marketers, why do we always look to the past to inform our future, seeking out precedents and playbooks to help us accelerate out of a trough and avoid stepping on landmines? For a start, it makes practical business sense to do so. The only issue for the travel world right now is that there is no historic benchmark to cite, nor a recovery blueprint to reach for. Not in these unique times. So how might we expect the engine of travel to restart and emerge out of this unprecedented setback? And which segments will likely rebound first and at what level of intensity?
The new traveler profile
Firstly, we need to better understand the psyche of the new traveler that will reappear into the marketplace. An invisible virus that we have yet to fully contain has likely left an indelible mark in the minds of many of those contemplating traveling again. Our travel "muscle memory" will definitely be tested as we venture back out into the world. Travelers even expect that it will take some time after restrictions are lifted to build confidence that the virus is being held at bay or is on the decline before they are willing to travel again—according to Skift’s April Travel Tracker report, only 6% of travelers expressed a desire to resume travel immediately while 55% would wait somewhere between 1-6 months before they are comfortable. People will dream, plan, book, and experience travel differently. Spontaneity will be characterized by those anxious to get out while others will go deeper into research mode to find the best solution to allay their fears and concerns and protect their health and safety.
What seems inevitable is that the leisure market is likely to come back to life in a more predictable fashion, fueled in part by pent-up demand untethered by the lifting of constraints imposed by a sustained period of lockdown. Business travel will, however, recover more slowly as companies continue to impose restrictions on nonessential travel. Short-haul (domestic, intra- and inter-state) road trips will be the preferred mode of transport in short-duration bursts to relieve the pressure of being in containment as we humans go in search of civilization. “Staycations” will also be an alternative for travelers less adventurous but looking to venture out… just not too far from home.
Changes in behavior
The temptation to travel will not necessarily extend to large cities and more densely populated areas. This pandemic has rocked the core of consumers the world-over and travelers will tread delicately back, mindful of situations that might compromise their newfound interpretation of social distancing. Traveler behavior and spend patterns will recalibrate too. With travel returning in baby steps – shorter distances, shorter duration – ancillary activities like group experiences, dining, and local attractions will be more sparingly built into itineraries. People won’t cram too much into their days, avoiding large gatherings and allowing for more downtime and flexibility in their daily schedules. That will in part be exacerbated by supply – fewer tourism attractions and experiences will re-open, many falling victim to the harsh business realities of an extended shutdown.
The appetite to spend among consumers will be diminished, another by-product of a predicted economic slowdown. Some travelers will also turn to their travel loyalty and credit card point balances to redeem currencies in favor of cash, at least in the near-term. Consumers will prefer dining out over in-hotel restaurants, driven more by yearning for a change of scenery than for hygienic reasons (although dining choices will be compromised given limited supply, as some restaurants won’t re-open and those that do will be constrained by capacity-controlled seating). Over time, assuming no recurrence of the virus and assurances from travel providers that hygiene standards are being met, consumer confidence will grow as health and safety concerns minimize.
New yearnings and new norms
Ultimately, longer-haul and off-shore travel demand will experience an uplift (though not to pre-crisis levels for some time) once the crisis is under control, international borders begin to open up, and the "free trade" of travel resumes. But even that notion is in question. The virus has played havoc to varying degrees across the globe which could force travel “corridors” to emerge (moving from one "safe" region or country to another) rather than the skies completely opening up to all.
As stated earlier, business travel will likely endure an erratic path as it navigates through the recovery cycle. Corporate expenditures will go under the microscope. Finance departments will apply stricter controls and guidelines around travel and expenses, pushing for much less travel and entertainment activity even after corporate travel restrictions for safety reasons have been lifted, applying zero-based budgeting as operating plans are rehashed. This will have significant flow-on effects into local tourism economies as business travelers limit the use of their corporate credit cards.
Road warriors face new realities
The conference, groups, and meetings segments will be hardest hit—consumer sentiment and the optics of encouraging large group gatherings will be largely considered socially and corporately irresponsible for the time being. Hotel companies are likely to face a stuttered return. But limited service, mid-scale, and extended stay brands will fare better than others as budget-conscious travelers across all segments re-enter travel. These segments are already seeing small green shoots of regrowth and are anticipated to be the sustained benefactors of the demand upswing. Higher-end luxury brands will pay the penalty for the foreseeable future, with prices that are out of reach for business travelers due to constrained budgets. This will put pressure on revenue management practices to attract demand without decimating rates and completely erasing profits.
For frequent and infrequent travelers, any loyalty and digital offering that simplifies an experience and minimizes touch will be embraced as not only innovative, but a practical response and solution for the new normal of travel. Digital keys to bypass the front desk and access your room and in-room controls will be expected, not considered a limited offering for some in the future world of travel.
It’s unclear what the future steady state of travel will ultimately look like. None of us can predict if more unforeseen crises are lurking around the corner. The travel engine as we knew it is being rebuilt from scratch and could take upwards of two to three years to get back to an equilibrium state where all the cylinders are firing.