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14 Oct

2020 Spotlight: Travel

Author: Megan Rainey

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No industry has gone untouched by the pandemic of 2020, but it is safe to say that the travel industry is likely at the top of those that have been the most impacted. Today, we will focus on how the U.S. travel industry including cruise lines and hotels have had to pivot in the face of Coronavirus.

2020 Spotlight: Travel

Although 2020 was a dismal year for U.S. travel industry growth, according to a June 2020 U.S. Travel Association forecast, total travel spending in the U.S. is projected to grow 37.5% in 2021 and continue the growth trend to 14.2% in 2022.

In mid-March when the spread of Coronavirus “officially” reached the U.S., not only did personal and professional travel come to a screeching halt, but one of the most notable sectors of the travel industry came under direct fire of this unstoppable pandemic, cruise lines.

Putting the Wind Back into Their Sails

In mid-March after most cruise lines voluntarily ceased operations, the CDC issued a “No Sail Order” for ships carrying more than 250 passengers. With so many cruise ships sitting idle along the coasts of the U.S, with ever-changing dates on when they will return to service, what does this mean for the once booming cruise industry and how have they been working to ensure confidence when the time comes to sail again?

Norwegian Cruise Line is one of the largest operators to have announced new policies. These new measures include touchless temperature checks when guests enter public spaces, reduced passenger capacity, and frequent reminders to wash hands. Group sizes for onboard activities will be smaller, to promote social distancing. Gone are self-serve buffets and pour-your-own coffee. And all ships will now have medical-grade H13 HEPA air filters, Norwegian says, which can eliminate 99.95 percent of airborne pathogens. (Travel & Leisure)

Additionally, in July it was announced that two major cruise lines Norwegian and Royal Caribbean teamed up to create an expert panel that will advise them on safely restarting cruises. Members of the panel include former Utah Governor and Secretary of Health and Human Services, Mike Leavitt. This panel was created with the purpose of crafting recommendations about getting ships back to sea safely. The panel has broken their project into four broad categories including: exposure reduction, environmental operations, response contingencies and destination planning.

The effort that cruise lines and the industry, as a whole, are putting into securing a safe and healthy experience are paying off. Many dedicated cruisers are anxious to get back to sailing around the world. In fact, according to a recent forum poll among Cruise Critic members, 66 percent report that they’ll continue to cruise the same as always. An additional 10 percent said they would cruise more than ever. (Travel & Leisure)

Hotels and ‘Coronacation’

When the pandemic first struck the globe, one well-known hotel chain publicly disclosed their quarterly results. Hilton, which offers nearly a million rooms in more than 6,200 properties across 118 countries, second-quarter revenue per available room — or RevPAR, a key financial metric in the hotel industry — tumbled 81% from the same period a year ago, as the company swung to a net loss of $430 million from net income of $260 million. (MarketWatch)

So, how have hotels been pivoting to accommodate bookings? As travel restrictions and lockdown measures spread across the globe, hotels have been forced to temporarily close buildings, furlough employees, cut salaries and other costs to provide some financial breathing room. Some smaller hotels have applied for grants and the Small Business Administration disaster loan in order to stay afloat.

But, over six months into the pandemic, people are feeling pent up and ready for a “home away from home”. After having spent so much time in lockdown, the idea of leaving your home for a few nights away is starting to appeal to consumers. This is commonly referred to as the “Coronacation”. According to the Urban Dictionary, Coronacation is “a vacation that takes place because of cheap flights and hotels that exist because of the 2020 coronavirus.”

How have hotels benefitted from this year’s events? Next to setting a “Coronasafe” standard with social distancing and safety measures in place, hotels have had to step up their technology game. With so many professionals working remote and online education in full swing, ensuring that your travelers are able to connect virtually while away from home has become a priority for hotel owners.

One small innkeeper recounts her experience with making several pivots in a recent story in MarketWatch. When local liquor stores were closed, this owner and innkeeper decided to broaden one channel of revenue by continuing to sell alcohol. If she could not book hotel rooms, she could provide a resource for consumers through the sale of liquor. This quickly expanded beyond alcohol into candles, branded sheets, and soaps.

On a technological front, she realized consumers who were seeking a work-cation could not access Wi-Fi between her 18-inch thick walls. This prompted her to use the SBA disaster loan to hardwire every room with internet access and invest in smart TVs. She also bought smaller individual coffee pots for each table in the dining area, plate covers and trays, so she could deliver food to rooms for people who wanted to remain socially distanced.

How This is Impacting Marketing

There is no question that with the devastating impact Coronavirus has had on Airlines, car rental agencies, hotels and resorts, cruises, destination marketing organizations, and business travel support services most have dramatically pulled back their advertising budgets.

In fact, eMarketer forecasts that US travel digital ad spending will drop by 41.0% year over year (YoY) to just $3.24 billion. This comes after a previously estimated 19.3% growth for travel digital ad spending, a relatively healthy figure in line with trends across nearly all verticals.

And, although hard to predict, eMarketer estimates that total US digital ad spending (nationwide, all industries) will recover from a stagnant 1.7% growth rate this year to a healthy 21.1% next year. They currently estimate that travel digital ad spending will rebound to a 15.3% growth rate next year. However, overall spending for travel will not reach pre-pandemic levels. In fact, the $3.74 billion we forecast for travel ad spending next year barely exceeds the industry’s outlays in 2017 ($3.64 billion).

Final Thoughts

While the above news seems to ebb and flow between devastation and rebound, one thing remains consistent. Although faced with some of the darkest challenges they have had to endure, the travel industry is innovating and following the guidelines necessary in order to get their travelers back to doing what they love doing most…traveling.

Professionals will need to fly again. Baby boomers will want to sail again. It is critical for marketers in the travel industry to remain focused on retaining their most loyal customers through rewards programs and incentives and acquiring new customers who are searching your services and browsing your pages.

Stay in front of your audience through all channels: TV, direct mail, online during this time. Once consumers feel it is safe again to travel, your brand will be top of mind and that vacation will be a welcomed interruption to the year 2020.

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