- CNBC spoke to experts across the health-care and tourism industries to understand the medical risks and the way consumers are thinking about travel.
- It could be 18 to 24 months before travel picks back up, they say. Air travel in particular will be slow to recover.
- In the meantime, “staycations” will become increasingly common, particularly those involving outdoor activities.
The coronavirus pandemic has rocked the international economy and disrupted our lives like nobody could have imagined at the beginning of 2020.
Things may never return to the way they were before the Covid-19 crisis. But the world won’t stay on lockdown forever.
In April 2019, more than 2 million travelers passed through U.S. airports every day.
A year later, the coronavirus pandemic all but shut down air travel, as people sheltered in their homes, scared that recycled air and close quarters will make airplanes a breeding ground for Covid-19 infections. Air travel has dropped by more than 95%, with some days seeing fewer than 100,000 air travelers across the country.
Is this the beginning of a permanent decline in air travel? Or will things return to normal?
While the experts acknowledge they don’t have a crystal ball, they all agreed that it would take around 18 to 24 months before there’s a significant spike in demand and the industry begins to return to regular levels. In the meantime, the travel industry will undergo some very big changes: Airports may institute new kinds of security checks to screen travelers who are sick, nervous tourists will vacation closer to home, and the travel experience will be dominated by large chains as small hotels and restaurants struggle or go out of business.
A survey published last week from Longwoods International, a market research firm focused on the travel industry, found that 82 percent of Americans have already changed their travel plans for the next six months because of the coronavirus. Fifty percent said they would cancel trips, and 45 percent expect to reduce travel in that time frame, according to the survey of 1,000 American adults.
“What we have seen since the country went into shutdown with talks to reopen is that intent was directionally heading up,” said Amir Eylon, the firm’s president and CEO, who has been conducting regular surveys since the pandemic was declared. “But now we’re seeing a plateau.”
Air travel: Risky and slow to return
Some countries are thinking about how to get people traveling again while reducing exposure.
But those in public health, like Harvard global health professor Ashish Jha, are skeptical.
Jha notes that the test results might be inaccurate, especially given the variable quality of the antibody tests. “The testing is still very flawed,” he warned. And even if people have recovered and have antibodies, it’s possible they could be infected again.
Temperature checks at airports could also become the norm. But Jha notes that these might not catch cases where the person is asymptomatic.
All in all, without “aggressive testing, tracing, and isolation,” he said, it will be very challenging for airlines to reassure travelers that people with Covid-19 aren’t on board.
“When it comes to resuming activities as before, it’s about your risk tolerance,” Jha said. “There’s no magic formula.”
People who do hop a flight will find the experience is very different. Airlines are starting to require passengers and crew to wear masks, and many carriers are leaving middle seats open and doing away with beverage service.
Many airlines are still canceling international flights through the summer and into fall.
Even as airlines and authorities put safety measures in place, people will have to feel safe before demand picks up.
Some people — particularly the one-third of Americans at high risk of hospitalization if they get exposed to the virus — will stay home until there’s a vaccine or some kind of proven treatment, which would likely mean a year or longer avoiding travel.
Others will wait for reassurance from senior health officials and scientists, not just airlines and travel experts.
“Many people are not going to feel safe going back to crowded airplanes … until they see that the number of new deaths from the virus has gone down to almost none in their region, or until there is a vaccine or much better ways of tracing and isolating who has it,” said Robert Reich, the former U.S. Labor secretary and a professor at the University of California at Berkeley.
The rise of the ‘staycation’
Safety is not the only factor. As the economy sours, people are also nervous about splurging on air travel to luxury destinations.
“We’re still talking about whether we might see a U-shaped recovery, or more of an L, or even a W, if there’s a second wave of coronavirus cases,” said Josh Collins, who runs marketing for Streetsense, a branding firm that specializes in hospitality, travel and real estate. He thinks the days of taking a lavish annual trip to a tropical destination might be over for a while until people feel confident about their finances again. Instead, they might look for local options, like camping or road trips, that are easier on the wallet.
For example, Noble House Hotels & Resorts in San Francisco, which includes the high-end Argonaut Hotel and Hotel Zoe, is fielding calls from European tourists who say they need to postpone their trip for later in the year or even into 2021, according to area manager Stefan Muhle. He’s also seeing a drop in bookings from business travelers because of the cancellation of conferences, including Dreamforce, which brings 200,000 people to San Francisco every November.
Now, he’s considering a new market: staycationers. Rather than the standard excursions, which might involve booking a tour bus for a large group, he’s thinking creatively about marketing the hotel as a luxurious place to spend the night after a hike in a nearby national park, such as Muir Woods. Trips with an emphasis on the outdoors might be particularly appealing after people have been cooped up in their homes for months.
After studying consumer sentiment, Longwoods’ Eylon said this strategy has the best shot of success for many hoteliers. He expects that travel will resume in a slow, careful and highly phased manner. It will kick off with local outings as the economy reopens. From there, some people will increasingly feel confident driving for a night or two away from home. It could take much longer before most people are comfortable getting on a plane for a long-haul trip.
“The first signs of a new normal will be that parents start taking their kids to the zoo or the park,” he said. “From there, they’ll venture a little further for a night away from home.”
Big chains will dominate and deals will be available
The industry has already been devastated by Covid-19, and business are shutting down or laying off staff. As of early April, the World Travel & Tourism Council expects that the travel industry to lose as much as $2.1 trillion by the end of the year.
That means fewer options for travelers once demand picks up.
Many smaller businesses will have shut their doors, leaving behind larger, high-end chains that have more runway and can still attract people with spending money. The hotels that are still in business might have offloaded their restaurants, which were once profit centers but are now sitting empty.
Streetsense’s Collins said many of his clients are kicking off plans to bring visitors back in to their hotels and restaurants, but with a lot more social distancing than before. That might keep some businesses afloat for a while. But not every vendor will be able to sustain that kind of reduced capacity for long. “Many of these small businesses are operating with razor-thin margins already,” he said.
On the plus side: deals, deals and more deals. Businesses will probably cut back on travel and look to do more virtual meetings. That means airlines and hotels will find themselves catering to leisure travelers and may offer major discounts as they desperately look for business.
“Everyone is getting acclimated to web-based conferencing in general, myself included,” said Dr. Peter Bach, a physician and epidemiologist at the Memorial Sloan-Kettering Cancer Center, where he also runs the Center for Health Policy and Outcomes. Bach was once a frequent business traveler, but those trips are now on hold as the virus spreads. “If the airline industry becomes purely for pleasure, it becomes a very different business,” he said.