Severe downturns have impacted travel activity in the past, and each time the industry has adapted to new conditions and rebounded. The aftermath of 9/11 resulted in structural changes ranging from major consolidation in the airline industry to time-consuming security measures. The COVID-19 pandemic will also bring significant change, but no two crises are the same. Most notably, at the end of April the pandemic is estimated to have wiped out $910 billion in travel-related economic output – more than seven times the impact of 9/11.
A unique aspect of the current crisis is the impact to domestic and international travel. Aside from airlines, the impact is being felt everywhere from driving to restaurants. For example, the year-over-year global decline in seated dining in restaurants reached 100 percent on April 5, 2020. And U.S. road trips of 50 miles or more are down 69% in the two months between February and April of this year.
Some regions are gradually emerging from lockdowns, but the recovery in travel activity will be slow. Below, Wakefield Research presents four changes that will impact the travel industry:
- Domestic tourism will rise
Consumers will be wary of long-haul international travel until they believe that conditions have returned to “normal” – and that could mean a COVID-19 vaccination. Until that point, the pent-up demand for travel will provide a boost to domestic tourism. Instead of traipsing through airports, consumers will favor the convenience and perceived protection of their own car. This will provide an opportunity for lesser-known regions to cultivate their own tourist industry, especially as consumers will likely seek to avoid crowded cities.
- International travel will be periodic
Governments may be reluctant to allow a full-scale return to international travel in the coming months as they monitor the behavior of the virus. Instead, there may be periods where widespread travel is permitted, but is later shutdown if the virus activity moves in waves. These periodic openings will see heightened competition for airline seats among business people and consumers who are embarking on essential travel. Increased prices will be a possibility if these travel windows become the norm.
- Immigration lines will get longer
Testing could become a routine part of the international arrival process, resulting in long delays as authorities check for symptoms. Even if relatively quick testing measures are in use, the process will still cause a significant increase in wait times. The events of 9/11 brought about security changes that result in average wait times of 30 minutes in the U.S. for departing passengers. Now COVID-19 may bring similar wait times for passengers when they arrive.
- Air quality will be a competing feature
Hygiene will be top-of-mind for consumers once travel resumes, and that will include a focus on air quality. Airlines and hotels will seek to distinguish themselves from the competition by introducing technology and metrics to convey the purity of the air in their facilities. For hotels, the perception of their ability to conduct deep cleaning processes may provide them with an advantage over private apartment rentals as consumers seek peace of mind from established brands.
Over time consumer behavior will return to something resembling normality, but just like 9/11 the effects of the COVID-19 pandemic will linger, resulting in permanent changes to the way consumers travel.
This is the fourth in a series of articles examining the impact of COVID-19 on business. To learn more about market research solutions, contact Wakefield Research here.