The road to travel and hospitality recovery in the COVID-19 era has been saved
The road to travel and hospitality recovery in the COVID-19 era
What is the impact on the travel & hospitality industry?
Within a few months, the global COVID-19 health crisis has turned into an economic crisis. The Travel and Hospitality industry is suffering from safety concerns, and financial cautiousness is growing. Will we ever get back to business as usual?
Struggling guests and travellers, struggling industry
Gaining insight into when vacation spending might return to a more or less “normal” is difficult. Are people most concerned about their health or are they struggling to afford travel? Are these concerns temporary or will they have an impact on the long run as well? Each outcome requires a specific strategic response. Also, the extent of the influence of health and finances may change as well as the COVID-19 crisis evolves.
Tracking vacation spending intentions and underlying drivers
In order to prepare for recovery, tracking vacation spending intentions and underlying drivers is pivotal. For instance, current travel spending and future travel intentions reveal a lot about the recovery of leisure travel demand. This is why Deloitte has been conducting biweekly consumer surveys across more than 10 countries, including the Netherlands – not just in Travel & Hospitality, but in all segments of Consumer Business. We explore a mix of data sources, including consumer leisure travel spending intentions, credit card data, and traffic volume to travel websites. The most recent insights and findings from this Global State of the Consumer Tracker and InsightIQ business intelligence platform are shared below.
What we found, is that health concerns have been gradually subsiding since their early-April peak. If the recent reopening activities do not impact the downward trajectory of the virus, caution will most likely decrease even more and travel aspirations will increase. However, in some places, the virus seems to be growing stronger again. China, for instance, was ahead of the COVID-19 curve and has shown some of the lowest concerns about flying in the last few months, but signs of new outbreaks might lead to growing cautiousness again.
Three signals that suggest that leisure travel demand has bottomed
Looking at data from Dutch consumers, net spending intention in the field of travel has decreased with 40%, which is by far the largest decrease in the entire Consumer Business industry. However, the sources that we used also offer reasons to be optimistic. Firstly, consumers with summer travel plans have been growing in number since mid-May. Consumer travel sentiment is certainly improving – with a 28% rise in ‘feel safe flying right now’, and a 37% increase in ‘feel safe staying in a hotel right now’. Secondly, travel spending sees a slight uptick. Credit card data suggest the humble beginnings of a recovery, especially for hotels, airlines, and car rental. And lastly, consumers are visiting travel websites again and are using travel metasearch engines: there is a 24% rise in active searching for travel deals.
Room for optimism
So while the road ahead is uncertain, early growth signals do create some room for optimism. In the long run, many of the fundamentals behind that optimism, such as global middle-class formation and strong demand for travel experiences, will further encourage recovery. Travel providers can prosper if they are able to respond to the health and financial uncertainty ahead.