Consumer travel spending intentions fluctuate

Consumer travel spending intentions fluctuate

Unsurprisingly, leisure travel is not a high priority for UK consumers, as uncertainty across multiple factors persist, such as health and financial concerns, fears regarding a second wave, lack of clarity on safety measures, mandatory quarantine and cancellation policies, etc.

In mid-April when we started tracking consumer spending patterns, we initially saw a severely affected category, with a negative net spending intent in travel at -63%. Which indicates that UK consumers do not plan to spend on travel activities, over the next four weeks. Less than 20% of respondents considered leisure travel over the next 3 months, across all leisure travel components of flights, hotels, vacation rentals, etc. and only 13% of respondents were actively looking for leisure travel deals. Concern over health and finance were the likely drivers for this low response, 24% of respondents said they were anxious, 46% were delaying large purchases and 38% of respondents are concerned about losing their job.

In the survey that followed two weeks later, results indicated that the consumer intent to spend on travel, moved upward to -47%, as anxiety levels dropped to 9%. Conversely, in the third survey wave, despite government announcements on the lockdown lifting, consumer intention to travel dropped back down to -54%, even though the anxiety level remained at 9%. This may be attributed to lack of clarity on social distancing measures and mandatory quarantine periods. The restaurant and takeout food sector, fared much better, where responses moved from -50% to -39% and remained static.

Likelihood of leisure travel with regards to hotels and vacation rentals remain uncertain. In mid-April only 17% of respondents considered staying in a hotel, which moved up to 19%, merely to drop back down to 18% by mid-May. Vacation rentals saw a similar pattern moving up from 12% to 16% and then back down to 15%. The movement may only be by a percentage point, but as the lockdown eases further, we are likely to see more variations.

Industry prepares to address consumer needs

For the sector, return to normality is likely to be influenced by the ability to keep accommodation offerings virus-free and using innovative ways to attract visitors.

Our Hotel sentiment survey as of 15 May 2020, indicated that hotels which were primarily focused on cash management (82% vs. 89% three weeks ago) in the past weeks, are now also focusing on propping up/supporting and streamlining operations (28% vs. 22%) and workforce safety and health (52% vs. 49%).
Hotels are exploring novel ways of adapting to a post-COVID world. Facial recognition in lifts, self-service wine bars, room service instead of buffets, digital room keys and highlighting hiking or cycling trips instead of swimming pools are just some initiatives, being deployed. Specialised deals, medical support provisions and flexible booking dates, etc. are other ways hotels are trying to entice future guests.

A perception of increased risk is likely to weigh on travel and leisure activities, with only 23% of respondents saying they feel safe staying at a hotel, moving by just two percentage points in a month. However, there is a flurry of activity in the industry, as hotels prepare to assuage the safety concerns of potential travellers. For example, hotels are consulting with the medical boards and hygiene product manufacturers, on a creating new standard of hotel cleanliness and safety.

Whilst the effectiveness of these initiatives remain to be seen, recovery, is unlikely to be a linear process. The hospitality sector will need to constantly monitor consumer demand and plan for different eventualities.