The environment for travel will begin to change significantly in the second quarter of 2021, according to the latest projections from the U.S. Travel Association.
Adam Sacks, president and CEO of Tourism Economics, speaking on a USTA webinar called "Assessing Recovery," said that with vaccination of a large segment of the population by the second quarter, "that sets the stage for a strong leisure travel summer." He also said that after Labor Day, business and group travel will begin to recover, although those markets will take longer to return to 2019 levels.
"There's no question," said Sacks, "that leisure travel will lead the recovery" and will get back to pre-pandemic levels as far as volume in 2022. Business travel will not reach that level until 2024. He said comparing this crisis to the financial crisis of 2008-09 is useful. At that time, it took two years from the trough in hotel room demand until recovery. He said this time that process will take three years "because the crisis is still very much with us."
The mantra for the industry, said Sacks, should be "Hang in there." He said the next few months will be "very difficult" but beginning in the third quarter of 2021 "things will start to look a whole lot more normal."
Sacks also said that the recovery would be led by higher income households because they have been "shielded" from the worst impacts of the pandemic because they were able to work remotely. He said the unemployment rate for college graduates is just 4.2 percent against 6.7 percent for the population overall. In addition, they have saved money because they did not spend it on travel and other services that would ordinarily be a large part of their expenses.
A recovery for group travel will take longer, said Sacks, because it is difficult to plan ahead for large numbers. However, he added that meetings continue to be essential to the success of organizations and corporations. The planning of hybrid events - combining virtual and in-person, will help on the path to recovery. Sacks said many events are already being scheduled for 2022.
Sacks said domestic travel would return to normal by 2022, but international travel will take quite a bit longer - with an 85 percent recovery by 2024.
Spending will take longer than volume in all segments to recover, said Sacks, but leisure travel will reach parity with 2019 spending levels by 2024.
There are a number of encouraging signs, though. He pointed to a recent survey by the International Air Transport Association showing that 80 percent of travelers would return to air travel within six months of virus containment with 15 percent saying they would wait a year and just five percent saying they don't know when they might get on a plane again.
Sacks said that everyone in the industry should advocate for more government stimulus and other relief. He said those who work in travel should let political leaders know that no industry has been hit as hard as travel with about a third of all jobs lost being in travel and tourism. That has resulted in a loss of $62 billion in government revenue.
Sacks said he thought the legacy of the crisis would not be that people will travel less but that they will be feeling gratitude that they can travel and that it will not be taken for granted.
When asked what he thought of Bill Gates' saying that business travel would not return to the way it was before the pandemic, Sacks said, "I think he's wrong." He said that similar sentiments were expressed in 2009 and that did not bear out. He said that one reason virtual technology has worked to this point is that "we are working off relationship equity." He explained that meant the technology worked because "we know each other but eventually that in-person equity burns off and you have to replenish it."
Speaking about the overall economy, which will have a strong impact on travel, Sacks said downside risk is lower than it was a few months ago because of the success of vaccine trials. He also said economic proposals from President-Elect Biden should bring an infusion of funds and other relief, even if much of it is blocked in Congress.
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