The coronavirus (COVID-19) crisis is unlike anything the travel industry has seen before—the speed at which it made its presence felt across the industry was staggering in its impact.
But, it is not going to last forever – and when things do start improving, the speed of that recovery could match the speed of the fallout, according to new research from marketing firm MMGY Global.
MMGY, in a note titled “Looking Past This Crisis - The Future State of Travel,” described its best case for a recovery in the market focuses, which is a four phase change in consumer mentality—fear, understanding, action and recovery.
According to Clayton Reid, CEO of MMGY Global, though we are now in the “fear phase” of the crisis, consumers are heading towards the understanding and actin phases and “rational behavior will follow soon after that,” Reid said.
MMGY expects recovery mindsets to start shifting 45 to 90 days after the peak coronavirus (COVID-19) infections. According to that timeline and MMGY research, there will be a pent-up demand for travel “unleashed in late Q2 across global economies.”
“Given the $2 trillion+ Congressional package in America and stimulus programs throughout Europe, suppliers will be in a more tenable situation to operate with less disruption,” Reid said.
“And we know that travel confidence leads-out consumer confidence, therefore will be a leading indicator for the economy. Expect shoots of good news to emerge first with airlines then hotels, restaurants and cruise lines.”
Also, Reid told TMR, travel advisors will play a major role in that recovery.
"As the travel industry fights to recover, third parties and travel agents will be increasingly important for travelers, both as a source of calm and information, but also as an important guide on rates and booking in what will be an increasingly competitive market. Agents will also play a key role in lifting the cruise industry as tens of thousands tell the story of cruising," he said.
While there has been some consumer research that takes an alternative view, Reid says that MMGY has always historically seen that once a crisis passes, travelers come out with a more positive mentality.
MMGY predicts less than one-third of travelers will cancel their plans and the consumer will “more broadly exhibit behavior that answers that global call to travel.”
“Even with cancellations happening en masse currently, we expect to see re-booking rates quite high amongst all consumers as the days pass,” Reid said.
MMGY does not believe that new behaviors and trends stemming from the coronavirus—sheepish behavior in consumers and in business travelers, the disappearance of face-to-face-meetings, the shying away from visiting new places, and even the increase in network TV consumption—will last.
“We fully expect face-to-face meetings, visiting new places, cruising, socializing in restaurants, and yes even getting back to better personal hygiene, will be the norm before Q4,” Reid said.
“In fact, we have seen a long-term trend that proves out that travelers of all stripes are increasingly seeking out new and unique experiences, an appetite that will not be reversed.”
But what first?
That late Q2 timeline will start with leisure travel first, followed by corporate travel and then group travel, MMGY research suggests, which is good news for retail travel advisors who are suffering during the COVID-19 shutdown.
That leisure travel will most likely start with shorter, closer trips and lower spends before leading to international travel. Those first travelers back could include some micro-segments like older retirees, millennial families on road trips and high earning couples.
To that end, MMGY says that 2020 could very well be “the year of the car” as COVID-19 could make trips that avoid passing through airports more attractive, a segment of travel that had already been on the rise for five straight years before COVID-19 hit.
“Even in Europe where fares are relatively low and where cross-border flights are common, we would expect travel volumes to increase by car (or train),” Reid said.
In terms of segments of the industry, MMGY believe airlines will snap back quickly, bringing low-fare strategies to a head to attract guests.
Cruises, which are particularly hit hard by the crisis, will survive as “many people underestimate their ability” to persevere, but won’t snap back like airlines. Aside from the cash that a lot of cruise lines have on hand, MMGY writes that they also “have a built-in sales force of international travel agents that will help grow back demand.”
“Yes, there has been some association with COVID-19 to cruises, but as the virus proliferates to all reaches of society cruise will not be the lasting narrative.”
Hotel return will follow general traveler sentiment—MMGY believes there will be a “great deal of early ‘local’ occupancy to start the recovery, followed by leisure in the economy and luxury/resort segments and then, eventually, corporate and group across all segments.”
What can advisors do?
Advisors need to look at their marketing and messaging in order to take advantage of what could be a snappy recovery in the travel space.
MMGY says that travel marketers can help their chances of taking advantage of that return to normalcy by doing a few things. The first is to adopt a conservative advertising presence initially “to capture the ‘resilient traveler’ subset as well as other early adopter consumers.”
That includes starting social engagement to keep the most valuable and most engaged clients informed; boosting campaigns that “encourage near-term travel such as weekend, last minute and holiday packages as well as short-lead summer travel packages that incorporate loosening cancelation and re-booking fees;” and geo-targeting campaigns that “work community-out for stimulating demand.”
Above all else, travel advisors, and their clients, need to take be more optimistic. COVID-19 will be a defining moment for the industry and there is real suffering going on with an uncertain future, “but we know that recovery will happen, sooner than people can see clearly today,” Reid writes.
“It's time to begin the move away from the fear & reaction of now, and instead begin preparing for the future state as understanding, action and rational behavior take hold.”
Copyright 2020 Travel Market Report. All rights reserved. From https://www.travelmarketreport.com. By Daniel McCarthy.