• MMR Research Associates

THE STATE OF TRAVEL

COVID-19 decimated the travel industry. Initial, drastic declines in road and air travel at the onset of the pandemic were followed by slow recovery as governments around the world enacted various levels of lockdowns, travel bans, and quarantine protocols. As a result, according to the U.S. Travel Association, travel spending totaled "a mere $679 billion in 2020, an unprecedented 42% annual decline from 2019."



With the adoption of vaccines and the lifting of restrictions in 2021, the world is seemingly ready to pack their bags and book their trips all at once. However, travel and tourism aren't prepared for the sudden surge in travel. After suffering through a pandemic that prompted the laying-off of millions of hospitality and travel workers worldwide, businesses can't hire staff fast enough to serve the increased demand. (But, according to an article from the Washington Post, employment is slowly bouncing back, with 5.1 million more positions filled as of March 2021 compared to April 2020.)

With only about half to three-quarters of staffing positions filled, patrons have had to adjust their travel expectations. From checking themselves in to picking up their own room service and even cleaning their hotel rooms, guests feel less like VIPs and more like short-term tenants.

While travel rises and people feel like the world has gone back to normal, the Delta variant sits looming in the background, making a "full recovery" for travelers and travel industries alike, wondering which way to turn next.


Leisure Travel vs. Business Travel

As leisure travel has taken off, adventurers find the landscape of moving about the world cumbersome. A shortage of rental cars, skyrocketing hotel costs, soaring gas prices, unreliable flights, and unpredictable COVID-19 testing policies are making moving from point A to point B less than pleasurable. Short-term vacation rentals are also in high demand, hard to come by, and very expensive. Travelers need to book months in advance, and nightly rates increased by 21.7% above their June 2019 levels — 10.3% higher than June 2020.

With increased costs, staffing issues, and flight follies, leisure travel is projected to reach 99% of its pre-pandemic peak by 2022 and grow steadily thereafter.

Meanwhile, business travel is still finding it challenging to hit its stride. Why? The work from home experiment of 2019-2020 proved companies could survive, and at times, thrive, without the added cost of travel, office leases, or lost "work" time from long and stressful employee commutes. However, the June 2021 issue of U.S. Travel Association Travel Data notes that "Lingering COVID restrictions and a patchwork approach to reopening across the country will prevent the economically crucial business travel segment from recovering until at least 2024, according to Tourism Economics Analytics."

But not all companies have embraced the work from home or hybrid office models. Studies show that many businesses are eager to get their people back into the sky and in front of clients. For example, 77% of Global Business Travel Association members state that their people are ready and willing to pack their bags and get back on the road. Still, more than half of them feel like "government policies and restrictions relating to international business travel continue to impact their companies' ability to conduct important business functions such as networking, business prospecting, planning, and sales meetings."

International Travel

According to a recent Intelligencer article, as of Independence Day 2021, recreational travel in the U.S. returned to 98% of pre-pandemic highs as of Independence Day 2021. There were 5% more road-trippers compared to 2019 and 90% as many airline travelers. Though these numbers are promising for international travelers, there is more to consider before heading to the airport.

Let's start with the Delta variant of COVID-19. Due to the unpredictability of this virus, the White House has determined that it will not lift any travel restrictions in the foreseeable future, even though the international inbound traveler is vital to the nation's economy.

A recent New York Times article outlines countries where travel is allowed, but not without meeting vaccination or COVID testing requirements. However, these requirements are changing daily, creating uneasiness and uncertainty for international travelers. The website Skyscanner has an interactive mapping tool that can help determine what current travel requirements are for your destination country.

Travelers to Asia who are not considered essential may have to reconsider their plans. With borders closed, a long list of documentation needed for entry, and strict quarantine restrictions in place, travel to China and other areas in Asia seems almost impossible. The previously mentioned Skyscanner map notes that when traveling to China,


"All travelers must undergo health checks on arrival followed by a 14-day quarantine at the first point of entry, at a government-designated location. If traveling from the point of entry in China to another city or region, a further quarantine period of up to 14 days may be required if either location is considered high-risk. Travelers are subject to follow-up testing during this period."

For a more detailed interactive map specific to travel in Europe, this page is updated and managed by the European Union. It provides the most recent information for travelers considering a trip to Europe and includes requirements, restrictions, and other important travel conditions so visitors can be fully prepared. Though these tools help plan a possible journey abroad, regulations may be in place once you return. For example, Hawaii, Kansas, and New Hampshire have quarantine or vaccination verification requirements for those arriving in their states. Airlines like Delta, American Airlines, United, and Frontier have extended or adjusted their change and cancel fee waivers to accommodate possible travel restrictions or changes to help travelers feel a bit more comfortable booking their next flight.

Pent Up Demand and No Supply

The overwhelming demand for travel is stressing nearly every aspect of the travel industry, from dining and rental cars to airlines and hotels. Even the U.S. Government is struggling to keep up with demand. Passport offices around the country are overwhelmed and understaffed. With the mail-in list of those waiting for an updated passport hovering right around 1.5 million applicants, and most countries requiring that you have at least six months left on your passport before expiration, travelers need to plan far in advance. Desperate international travelers who can’t wait the required months are skipping the line by hopping on a plane to one of the 26 passport offices in the nation to get a new one. Some travelers are buying illegal reservations off of Reddit.

The staffing issues impacting the supply-side of the travel industry extend to airlines and airports. Beyond the airport terminal, a lack of drivers tasked with delivering fuel to the airlines results in canceled and delayed flights, multi-day layovers, and missed connections. Airlines like American and Southwest laid off so many employees and pilots that they are not prepared for the surge of pent-up adventure seekers, let alone the eventual return of business travelers. Online bookings for Delta are above 100% compared to 2019, but the airline cannot offer the required number of flights to accommodate those bookings. Additionally, American Airlines recently announced that they would need to cancel roughly 1,000 flights due to this staffing shortage.

With the high demand for travel and low new hire turnout, airports also find it challenging to keep restaurants within the terminals open. Travelers are finding themselves with delayed flights, long layovers, and nowhere to buy a meal. These travel woes are not only impacting the industry but are seriously affecting the sanity of travelers. A recent New York Times article recaps nightmare stories of unruly passengers hitting, biting, headbutting, and even trying to open the cockpit door mid-flight prompting flight attendants to duct tape the passenger to her seat.

So, with all of this chaos and uncertainty, what should companies be thinking about as they move forward?

Planning Ahead and How to Move Forward

Travelers are looking for flexibility. As mentioned earlier, airlines waived cancelation fees to give travelers confidence in their purchases. Offering travel insurance and flexible booking options for hotel stays give travelers a sense of security if restrictions are put back in place.

Further attention to health and sanitation protocols will boost guests' sense of safety with the rapidly changing COVID-19 variants. An article from BBC travel notes that many travelers living with elderly relatives are worried about exposing their loved ones to illness. As a result, the hospitality industry is adopting stricter sanitization, cleanliness, and guest screening standards to address this concern. Reduced touchpoints with guests, self-check-ins, and the use of thermal scanners may seem excessive to some but may become the new norm to keep guests and their loved ones safe.

The current state of travel is at a critical point, forcing companies to find ways to either adapt or flounder and fold. Communication will be critical to ensure operations run smoothly and expectations are met. This includes communication with current guests, future guests, and staff. Setting guest expectations with a complete view of what to expect upon arrival regarding policy and procedure will lead to fewer opportunities for frustration. When given the complete picture and ample details on expectations and roles, this will help ensure consistency across departments, create an informed and confident team, and enable staff members to assist with the needs of their guests effectively.

Want to learn more about the current state of the travel industry and how travelers are viewing your brand? Start the conversation with our researchers to get started!