The effects of Covid-19 across the travel ecosystem

As Covid-19 began to spread in China, the travel industry braced for impact. Despite the fact that borders and hotels at the epicenter (and throughout China) closed for business, I still don’t think that the rest of the world was ready for what was coming. Today, however, we can see how the pandemic wreaked havoc with travelers, hotels and the ecosystem in general.

In our global study of Covid traveler trends, our largest ever, with feedback from more than 10,000 travelers across 10 countries, we uncovered that 67.6 percent of recent travelers had travel plans affected by Covid-19. More specifically, 40.4 percent of global travelers reported cancelling a trip and another 27.2 percent reported postponing travel due to Covid-19. While travelers certainly incurred costs around cancelations, hotels and airlines were impacted the most.

As the severity of the situation became clear, most hotel companies agreed to allow refunds. By early April, five major hotel chains—Hilton, Hyatt, IHG, Marriott, and Wyndham—had announced that prepaid, non refundable reservations for stays through April 30 could be canceled up to 48 hours before the original arrival date with full refunds provided to guests. As the pandemic stretched on, they continued to push out the date to protect their guests from cancellation fees.

As a result, hotels suffered tremendously. At the end of April, AHLA revealed that 70 percent of hotel employees had been laid off or furloughed as eight in 10 hotel rooms across the nation remained empty. In addition, CBRE Group predicts that 2020 will be the worst year on record for hotel occupancy, even lower than 1933 during the Great Depression. However, by doing the right thing by guests and refunding them for stays they couldn’t take, hotels will no doubt be seeing guests again when it is safe to travel.

Like hotels, airlines also suffered catastrophic losses. The International Air Transport Association (IATA) estimates that the largest seven public online travel agencies will lose at least $11.5 billion in revenue this year due to the virus. The impact could even go higher, potentially as much as $20 billion in missed revenue. Newly released IATA analysis shows that the COVID-19 crisis will see airline passenger revenues drop by $314 billion in 2020, a 55% decline compared to 2019. United reported that it lost $2.1 billion in the first quarter of this year alone. 

OTAs suffered as well. Chinese OTAs felt it early, seeing cancelations during the Chinese New Year in January. And, it got worse from there. As the virus spread, OTAs scrambled to enact new policies around cancellations while watching bookings plummet. 

And, let’s not forget about the scores of other businesses that support the hospitality industry. From technology vendors to amenity suppliers, every business that relies upon travel has been hurt, with the vast majority forced to lay off workers amid the crisis. Companies like Boeing, Airbnb, TripTease, Sonder and TripAdvisor laid off staff in an effort to save money. 

Of the cuts, TripAdvisor CEO Steve Kaufer said, “As an industry, we are currently experiencing the darkest of days. Industry data points show consumer demand down 80% to 100% year-over-year. Online travel agents, hotels, activity suppliers, destination marketing organizations, and restaurants comprise a majority of Tripadvisor’s revenue, and our partners have significantly reduced their advertising budgets to align with the reality that there is essentially no consumer travel demand.”

But amid the darkness there is light. Our traveler survey indicates that there is pent-up demand for travel, with 72.7 percent of global respondents planning to travel in some capacity within the next 12 months. That’s good news for the entire industry and great news for the companies that built goodwill during the pandemic by changing policies to take care of customers and working to stay top of mind. We can’t wait for things to return to normal and can’t wait to watch your recovery.

To see our survey data globally and broken down by region and country, visit https://www.covid19hotel.info/survey/.

Leave a Reply

Your email address will not be published. Required fields are marked *