The C-Series explores the impact Covid-19 is having on consumer behaviour; how we live, work, play and shop, both now and in the post-pandemic world. This time, we focus our attention on the travel sector and how the pandemic is likely to affect it in the months and years ahead.
The impact of Covid-19 on travel in the here and now is plain to see. Flights are grounded. Hotel bookings are cancelled. The World Economic Forum predicts that 50 million jobs in the global travel and tourism industry will be lost. It’s believed Asia will end up the worst hit by losing 30 million jobs, with substantial losses elsewhere: 7 million in Europe; 5 million in the United States.
The longer-term impact of the pandemic on the sector is substantially less clear cut. How and when restrictions will lift in each country is still largely unknown. If and when lockdown restrictions are lifted, until a vaccine is found consumers are going to have to decide whether their urge to get away from their homes, at last, outweighs the risks of coming into contact with others while travelling. Which consumers can be persuaded to travel and what do travel brands need to do to reassure them it is both safe, and worth it?
One logical assumption we can make about demand for travel in the wake of the pandemic is that leisure travel will recover faster than business travel. Travel will continue to be essential for certain aspects of business, but as we explored in our previous instalment on changes to the world of work, there are a vast amount of tools available which can bring people together remotely, including software like Spatial, and these are improving and proliferating constantly. Data from the ONS shows that business travel has been in decline since 2000 while leisure travel has continued to rise, and coronavirus is likely to widen that gap. Any travel that doesn’t hinge on the traveller’s burning desire to go is going to fall, and coupled with the huge savings companies can make by not having to fly their employees around the world, it’s a relatively safe bet to predict both that business travel will be more severely affected in the long term, and that airport hotels in particular are at risk.
Leisure travel is much more difficult to replace. One of the more surprising statistics we’ve seen during the pandemic is that cruise bookings for 2021 actually rose 9% in March compared with like for like bookings from last year, suggesting that many consumers are bored of being at home and looking forward to travelling again. When travel restrictions are lifted, it is also likely that travel to see friends and family will spike after a long period of consumers being unable to visit their loved ones.
It would be a fallacy to assume that leisure travel will bounce back straight away, however. In a recent survey, 58% of Americans said they still intend to travel between May and September as long as their destinations aren’t in quarantine. You might consider that surprisingly high, but it still points to a significant reluctance to travel on the part of a large proportion of travellers.
New focus on domestic travellers?
Hoteliers in various markets may need to rethink their propositions in order to appeal to domestic travellers. For one thing, it could be months before international travellers are allowed to visit certain destinations abroad. Authorities in Tenerife recently indicated that its tourism industry would first be opened up to domestic travellers, with international travel from key markets such as the UK halted until at least October. Even when restrictions are lifted, consumers may wish to holiday closer to home anyway. Destinations that can be reached in a car or by train within a few hours will present themselves as a safer bet than those that require air travel. It might also be much harder to travel. A number of airlines have already announced redundancies – including 12,000 from British Airways alone – and this could result in restricted supply and prohibitive pricing.
This raises the question for hotel brands about the type of consumer they have built their offer around and how that might need to change in the short and medium term to entice customers from the local market. Should there be less of a focus on exotic cuisine and big tourist attractions in favour of leisure activities or relaxation?
Might there need to be a more fundamental reframing in which the hotel itself becomes the destination? In Hong Kong, hotels are in demand from returning travellers who need to undertake a period of quarantine: one hotel has reported that its occupancy rates have risen from 15% at the start of the outbreak to 60% as a result. Japanese short term rental firm Kasoku is pitching its empty rooms at stir crazy couples who need time apart, in order to avoid a ‘coronavirus divorce’. A less depressing proposition comes from game developer Atari, which recently announced it was opening a chain of gaming and e-sports-focused hotels in the United States where consumers will come to play video games together. Hotels where the location and its environs are largely incidental because consumers are visiting for the unique services offered by the hotel itself might be able to attract a greater number of customers while Covid-19 remains a threat.
To entice corporate customers, there is an even greater imperative for travel brands to rethink their propositions. Businesses are realising that they can continue to connect with their partners and clients without spending huge amounts to travel to them in person, and conferences and other large corporate gatherings aren’t going to be viable for some time. Travel brands, and hotels in particular, will have to work hard to convince these customers that they offer something that they cannot get elsewhere.
In reality, this is a timely opportunity for the hotel industry to bring their business offer into the 21st century. The way we work is changing dramatically, yet the corporate facilities offered by hotels look much the same as they did 20 years ago. Other sectors are realigning their business services to the needs of the modern workforce. US stationery brand Staples is traditionally associated with office supplies, yet its new Connect concept delivers a raft of contemporary services including dynamic coworking spaces, professional podcast recording studios and free consultations with experts in the fields of marketing, accounting and law.
These are the types of services that might enable the hotel industry to attract domestic business customers. In the shorter term, with occupancy rates set to be lower than usual for the foreseeable future, all of the hotel’s assets should be on the table. How might those empty rooms be repurposed in a way that continues to generate revenue? In Germany, a digital service is connecting workers seeking a quiet place to work with hotels selling use of their vacant bedrooms. Demand for virtual services, such as livestreamed fitness classes, have exploded in popularity as consumers stay at home, yet for many would-be providers or vloggers, their own homes aren’t fit for purpose. There could well be an opportunity for hoteliers to play a role in hosting such services.
The rise of virtual travel and innovations in travel marketing
One trend we’ve been monitoring closely since the beginning of the pandemic is that travel brands have been replicating their offerings digitally for consumers in lockdown. In the US, several National Parks have partnered with Google Arts and Culture to offer virtual tours of their estates. Quick to pivot in this way was Airbnb, which through its new Online Experiences is managing to monetise compelling digital experiences for users without them leaving their homes. Small groups of Airbnb customers can pay for sessions on goal-setting with an Olympic gold medallist, meditate with Buddhist monks in Japan or learn to cook with a Moroccan family, paying anything from $1 to $50 each per hour. Whether or not these types of virtual experiences have legs for travel brands in the long term, they offer potential right now as a means of staying connected to consumers and fanning the flames of wanderlust.
Travel programming on television was hugely popular in the late 1990s and early to mid 2000s, before social media stepped into satisfy consumers’ appetite. In a world where consumers are more reluctant to travel themselves, the time is ripe for new forms of dynamic vicarious travel content. Take, for example, Beauty Adventure, a livestreaming concept from Chinese beauty influencer Melilim Fu. Ahead of each episode, which will be streamed from a different destination, consumers can order a curated box of the cosmetics that will be featured to arrive by post, complete with ritualised unboxing opportunities. Less well-organised viewers can simply shop directly from the livestream. Entertaining, shoppable content like this will allow travel brands to promote their destinations while generating revenue from a completely new channel.
Ultimately, travel brands are going to have to innovate to win back trepidatious consumers, and they’re going to face fierce competition to do so. As far back as 2017, the Cayman Islands’ Department of Tourism partnered with Chef’d on a range of meal kits celebrating Cayman cuisine. That campaign stood out for us at the time because it demonstrated the potential of food as a marketing tool for travel. More recently, it was an airline that made this point clear again when Malaysian carrier Air Asia launched a permanent restaurant in Kuala Lumpur selling the food it serves on its flights. As well as a powerful expression of confidence in its food and a new revenue stream for the airline, the restaurant also served as a permanent piece of marketing, reminded customers why they should book with Air Asia and introduced new customers to the quality of its in-flight meals. In Japan, Arima Omsen hot springs has brought its experience to consumers through virtual reality. Provided they have a VR headset, consumers can access free YouTube videos from the brand that, when watched in the bath, recreate the multisensory experience of relaxing in a hot spring.
With customers stuck at home, it’s even more crucial that travel brands can find innovative ways of bringing key elements of their offering to consumers so that they will be front of mind later on.
Hospitality in the era of social distancing
The last point is one that will certainly affect travel in the coming months and could have a much longer-lasting impact. Hygiene and cleanliness is going to be more important than ever to consumers, and they will want to see clear evidence that travel brands take them seriously too. In the UK, food delivery app Deliveroo recently tinkered with its user experience so that restaurants’ hygiene ratings appear right at the top of the list of filters that users can use to search for restaurants. Consumers will expect similar assurances from travel aggregators and providers.
Another factor at play in the short-term is that travel brands will need to answer the question: what does hospitality mean in the time of social distancing? Masks, gloves and a two-metre minimum distance are not typically considered the hallmarks of warm service, and yet this is going to be a reality for many brands once lockdowns are lifted. Making customers feel special in spite of these hurdles is going to be a vital challenge for brands to rise to.
For Zoku Amsterdam, whose Loft offering is tailored towards long-term residents, all guests have been assigned a team member who conducts daily check-ins on their wellbeing while communal areas remain closed. In Asia, travel brands have been experimenting with automation and robots in service delivery for the past couple of years, and the necessity now for contactless hospitality is likely to speed up their rollout. In Singapore, for example, both Yotel and Millennium Hotels & Resorts have deployed robots that can serve guests in a range of ways, from delivering room service to wayfinding and calling the elevator. Pre-pandemic, robotic automation in hotels was held back from mass adoption because for many providers, human warmth and service can never be replaced. That might still be true, but in the current context, robotic intermediaries will be a much more attractive prospect to brands and consumers alike.
If you’re interested in talking to us in more detail about any of the themes discussed in this article, or the challenges you’re facing as a business, we’re here to help. Get in touch with firstname.lastname@example.org