Travel changed after 9/11; Here’s how it will look after the Covid-19 pandemic finally recedes – CNBC
May 13, 2020
The coronavirus has devastated economies around the world and disrupted life in ways that were unimaginable just a few months ago. The world will never be the same. But at some point, industries will start coming back online and people will start going out again.
We asked travel industry experts for their thoughts on what willrestore confidence for people to begin traveling once theCovid-19 pandemic finally recedes. In the latest installment of our series "The Next Normal," we look at where and how we'll actually travel once we're willing to hit the road again.
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A road trip to a national park or other attraction in a neighboring state.
A week-long stay at a sanitized vacation rental property nearby.
How does that sound? Your next outing might be booked through a travel advisor and insured, too.
That's what a typical family vacation might look like in the U.S. once travel and tourism starts to pick up again post-pandemic, say industry experts. Just when that might happen is up in the air, yet it could be as soon as early fall or as late as next spring or beyond.
The hypothetical trip incorporates several trends coming to the travel business going forward. These include traveler preferences for domestic destinations reachable by car and stays at private rental properties instead of crowded hotels and resorts.
What seems sure is that any rebound in travel and tourism, brought to a screeching halt by the coronavirus pandemic, will start slowly and stay closer to home. A recent study from Longwoods International found that 82% of travelers polled had changed their travel plans for the next six months.
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"Tourism recovery typically begins locally," said Elizabeth Monahan, spokesperson for Tripadvisor.com. "Travelers tend to first venture out closer to home, and visit their local eateries, stay local for a weekend getaway or travel domestically before a robust demand for international travel returns."
Omer Rabin, managing director, Americas, for Guesty, agreed. Guesty is an Israeli-founded property management software that enables users with properties across Airbnb, Booking.com and other travel sites to automate and streamline operations. "There will be a lot of demand for domestic travel," he said. "I think that's clear to everybody in the industry right now.
"We see a much better recovery and occupancy for drive-to destinations," he added. "People say 'we don't know what's going to happen with flights, but we do know that we're going to be able to get in the car and drive for three hours and have our own place and stay there for two weeks.'"
In fact, the Longwoods survey found that of those that had changed their travel plans for this year, nearly a quarter, or 22%, had switched to driving from flying . Aviation industry group Airlines for America says U.S. airlines have idled 3,000 aircraft, or half the nation's fleet, due to the downturn, while the number of passengers passing through TSA checkpoints at airports is down 93% over last year.
"Our clients are a little hesitant to get on an airplane right now," said Jessica Griscavage, director of marketing at McCabe World Travel in McLean, Virginia. "We're already preparing for the drive market for the remainder of the year, and probably into 2021."
For its part, online travel insurance comparison site InsureMyTrip is finding that the continental U.S. is indeed the top draw for future client travel but it's also tracking some interest in domestic destinations like Hawaii, as well as the Bahamas and Caribbean destinations like Jamaica.
"When people get more comfortable, they'll continue to go farther and farther away from home, starting with domestic and then moving to international, long-term," said Cheryl Golden, director of e-commerce at the Warwick, Rhode Island-based firm. (To wit, Sandals Resorts reportedly will open most of its Sandals and Beaches properties across the Caribbean June 4, and those in the Bahamas July 1.)
There is a small degree of interest in flying from die-hard bargain seekers.
"We've heard from a number of travelers that the low airfares available along many routes are tempting," said Tripadvisor's Monahan, although she cautions those willing to book flights that "airlines continue to adjust their cancellation and change policies for travelers across the globe in response to Covid-19."
Until the virus is under control and efficient systems are in place to restore confidence in travel, it's simply too soon to tell when people can expect to start booking again.
Erika Richter
senior communications director, American Society of Travel Advisors
"Every day and every week, it just seems like things are changing and it's really dynamic," said Golden. "It's hard for us to say right now when we think people will be ready to travel but travel will come back."
Erika Richter, senior director of communications at the American Society of Travel Advisors, said a new normal is probably necessary before bookings will pick up again. "We're still in that wait-and-see mode, because until the virus is under control and efficient systems are in place to restore confidence in travel, it's simply too soon to tell when people can expect to start booking again."
And when they do, things will be different, thinks Anne Scully, a certified travel counselor and president of McCabe World Travel. "Travel's going to come back [but] we'd need a crystal ball to say when," she said. "It will be changed, I think, at least for the next 12 months."
In the meantime, Scully's colleague Griscavage said she seeing a "standstill" in the agency's bookings through the holiday season meaning little in new business but not many cancellations, either. "Those [trips] are still bought, they are not cancelled yet, though it's just too soon to tell," she said. "I'm personally not seeing a surge in [holiday] travel bookings just yet though I think that can change very quickly as states are starting to open up."
There's been good news at Guesty, however, said Rabin. In the last two weeks of April, more reservations than cancellations came in.
Noel Hendrickson/Getty Images
"The most interesting thing is that there are more future reservations for the holidays right now than we have seen in that point of time in April 2019 for the holiday season last year," said Rabin. "Which means there's a lot of optimism and people are planning ahead."
Reservations for Thanksgiving, Christmas and New Year's stays are up 38%, 40% and 23%, respectively, compared to the same time in 2019, Guesty found. "This also means that a lot of people are unable to take summer vacations or don't feel comfortable making bookings and travel plans for June, July, August," said Rabin, so are planning for later in the year. New flexibility in vacation-rental cancellation policies is helping, too, he added.
"Travel has changed," said Scully at McCabe World Travel. "It changed after 9/11, and it changed after the economy blew up in 2008-09." Yet travel advisors then showed clients it was still possible to travel despite any economic or geopolitical changes, and perhaps "better than ever," she said.
Griscavage said she foresees a big surge in family and multi-generational travel once people are willing to book trips again. "They didn't get their spring breaks, they're unsure of their summer trips," she said. "Maybe you didn't get to go to Mom and Dad's 50th anniversary or Grandma's 80th birthday.
"All of these families haven't been able to be together," she added. "I think we're going to see a lot of family and multi-gen travel but in a different way, a safer way."
How so? Accommodations perceived as cleaner and more isolated will find greater favor. "The question on every traveler's mind will be 'what are resorts doing to make us feel safe?'" Griscavage said. "I think we're going to see a big increase [in bookings of] villas and private homes and less crowded experiences moving forward."
Scully suggested that traditional hotel properties may pivot to operate more like private villas, selling entire floors staffed "not so much with a butler but a handler who could go down to pool, for example, and make sure the lounge chairs are separated." Hotel rooms may also sit empty for several days and be completely disinfected before a new guest can check in.
"These are going be not only game-changers but maybe a healthier way for us moving forward," Scully mused. "You've probably seen ridiculous shows on TV where they ask 'Is that hotel bedspread really clean?' Well, I bet now that it's really going to be spotless."
Rabin agreed that sanitization will be "a very big thing." Many of Guesty's vacation home hosts are installing automatic locks that can be opened via cellphone app, are arranging for contactless food deliveries to guest units and space out rental periods, "sometimes for days," to ensure complete unit disinfecting, he said.
There's a definite move toward vacation homes over hotels, Rabin said. "People feel much more comfortable staying short-term rentals like vacation homes," he said. "Hotels have a lot of turnover of guests, a lot of volume, a lot of people at check-in and check-out and in the dining room."
The trend is even influencing how hosts market their rental units. "If you search today for apartments on Airbnb, you will see that a lot of the hosts will put in the name of the property 'Sanitized, highly clean, Covid-friendly' a lot of things like that to basically signal to their customers, 'We are a safe location.'"
It works: Those hosts are seeing more reservations, according to Guesty data. The firm is working to ensure all hosts can offer such contactless, cleaner stays to prospective guests, said Rabin.
InsureMyTrip, for its part, is seeing a 6% increase in vacation-unit rentals over 2019, along with a decrease in hotel bookings, said Golden. "It's a trend that's just starting to happen, but I do expect we'll start to see more of this as people look to travel closer to home for vacation."
If anyone booked without a travel advisor during this period, they learned they should have.
Anne Scully
president, McCabe World Travel
Other areas of travel and tourism from pricing and flexibility to insurance and booking methods are also evolving:
Flexibility: Once you've paid, you are now, in many cases, free to cancel flights, accommodations and other travel components almost up to the last minute. "All the vendors really need the revenue stream, and so they offer this kind of flexibility at the moment," said Rabin. "The biggest chance that they have to recoup a lot of the losses for a weak summer is in a strong winter," so they're doing what they can to encourage bookings.
Scully at McCabe World Travel would like to see another change when it comes to prepayment. "When we give a hotel, a tour operator or a cruise line money, those funds for that client should be held in a kind of escrow," she said. "They don't get to use it for marketing or for something else, so when something happens, they have to give clients back money that they paid in good faith."
Pricing: Costs for travel autumn-onward have not dropped much. "Most of the vendors really understand that their path to profitability and recovery in 2020 is trying to protect their prices into winter season," said Rabin. "And so we see that most of them, for very obvious reasons, want to actually sacrifice the flexibility and not sacrifice the margin."
Duration: Rabin said short-term accommodations rentals, once typically between 3.5 and 5 days, are trending longer in duration, with an average 8.5- to 9-day stay. The trend stared a few weeks back when urbanites were booking month-long escapes from city centers that pushed the length of the average stay up "but now we see it as something that's really a sustainable trend, for the last month or so."
Types of trip: Apart from close to home road trips, people seem willing to consider booking vacations that normally require a year or more of advanced planning, said ASTA's Richter. "While some travelers are booking for 2021, it really is going to depend on the traveler and where they're going," she said.
African safaris, for example, require a year or more in advance of booking, especially for popular times of the year. "Those are the types of planning discussions that travel advisors are having with some of their clients," she said. "You also have to think about all of the destination weddings and honeymoons that were put on hold and need to be readjusted, and then maybe readjusted again, and again."
Travel insurance: Travel insurance, once an afterthought shunned by travelers looking for a bargain, may seen an uptick. "Now more people than ever are aware of travel insurance and how it could possibly help them," said Golden at InsureMyTrip.com. "Every time we've had an event like this in the past, there's been an uptick in travel insurance that sticks."
Before 9/11, about 7% of people bought travel insurance; after a surge in post-attack sales, the figure reached around 15%, she said. "We expect there will be a similar rise after coronavirus," Golden said. "It's now spiked pretty dramatically." Twenty-five percent to 30% of travelers will buy travel insurance going forward, the firm estimates.
Advisor Scully has sold a lot of travel insurance of late, especially the comprehensive kind. "We upgraded our clients on insurance to 'cancel for any reason,'" she said, noting she also offers clients medical evacuation services. "Whenever we're taking a client's money and they say, 'I'm not going to insure this,' the first thing I'll say is 'Are you comfortable losing $25,000 should you not be able to travel?'"
Travel advisors: The rise of Internet booking engines and online travel agencies from the mid-90s hit the traditional travel agent industry hard. But the trouble many travelers have had getting self-booked plans refunded or rescheduled amid the pandemic may fuel a renaissance in the fortunes of agents, who've now rebranded themselves as "travel advisors."
"If anyone booked without a travel advisor during this period, they learned they should have," said Scully at McCabe World Travel. "Trying to even call the airlines because the phones were just so jam-packed could take 16 hours, could take two to three days."
It's not just consumers who are noticing. "Our partners, our hotel partners, our cruise partners, our airline partners, our partners on land, they all know moving ahead, how valuable that travel advisor will be to their future growth," said Scully.
"The role of the travel advisor has evolved so much and we are not merely transactional agents anymore," said Richter at ASTA, whose thousands of members represent 80% of all travel sold in the U.S. through the travel advisor distribution channel. "We believe strongly that the future will have a heavy emphasis on the travel advisor facilitating the future of travel."
She favorably compared the roles advisors can play in both travel and personal finance. "During this crisis, folks who are concerned about their 401(k), savings and investments, they're talking to their financial advisors, [who] are helping them reassess and make short-term and long-term adjustments to their financial portfolio," said Richter. "The same is true for savvy travelers.
"They are working with their travel advisor to adjust their short-term and long-term travel goals, and it's a relationship that is ongoing."
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Travel changed after 9/11; Here's how it will look after the Covid-19 pandemic finally recedes - CNBC
