Silhouette of young family and airplane at airport
The travel and hospitality sectors have been among the hardest hit by the COVID-19 pandemic, but news of several COVID-19 vaccines showing high efficacy rates in their clinical trials has lifted hopes for a recovery sooner than later. Some experts are estimating the turnaround will begin as early as late-spring in 2021, but it’s still too early to definitively tell, according to Alexander Field, the Michel and Mary Orradre professor of economics at Santa Clara University.
“I think it’s just extremely difficult to know how quickly this can be produced at scale and distributed at scale that would fundamentally change the situation we have at current,” Field said in November of 2020.
There are logistical challenges involved with mass production and distribution of a new vaccine, as well as challenges around the number of people who will take it, given the skepticism around vaccines in recent years.
“I think definitely things are going to get better for the travel industry than they are now, but the question is how much and how quickly,” Field added.
Some travel startups are already starting to see a recovery inching forward, when compared to the initial COVID-19 shock in March, and many are cautiously hopeful that trajectory will continue as the year progresses – perhaps with a slow build-up in 2021, and an actual boom for travel in 2022. Currently, the vast majority of bookings are domestic trips to visit friends and relatives. International travel is still way down due to continuing travel restrictions.
According to James Hardiman, managing director of equity research at Wedbush Securities, who covers the leisure sector, travel likely won’t return to normal until the vaccine is widely available and the majority of people have received it. Most of the online travel companies Hardiman covers are pointing to 2022 as the first “normal” year. Part of the reason: People tend to book travel ahead of time, so it’s difficult to get back to a “normal” without a widely available vaccine.
Hardiman thinks air travel will pick up significantly in the second half of 2021, but until most people have the vaccine, big trips to Europe and the like will probably be down compared to 2019 levels. A summer 2021 trip to Europe, for example, would likely have to be booked by March 2021, and Hardiman is doubtful that enough people will be vaccinated by then. People will likely dip their toes into smaller, local trips before jumping back into big far-flung vacations, he said.
“What we’ve seen is international travel – cross-border travel – has slowed down to a trickle, but clearly local, regional travel, drivable travel is alive and well, and within that, obviously, people are preferring to go stay at a vacation home, something where they can control their environment rather than a traditional hotel,” Hardiman said. “People are opting for rural and beach settings for obvious reasons… I think you’re going to see all of those and more in 2021.”
While travel hit the brakes in March, there has been a climb in bookings, but the distribution of who is traveling is different – with industries like health care, manufacturing and retail making up a greater proportion of travel. There have also been a large number of inquiries from travel managers regarding “best practices, policy management and hygiene,” showing a willingness to proceed, but with the appropriate amount of caution.
The latest COVID-19 member poll from the Global Business Travel Association (GBTA) finds a majority of respondents are optimistic that the travel industry will begin to rebound in mid- to late-2021, and the availability of the vaccine is top of mind for many business travel professionals.
Dave Hilfman, interim executive director, said that the latest poll offers a number of reasons for the business travel industry to be optimistic about 2021, especially toward the middle of the year. He added that, as the vaccine rollout gains momentum, and if there is a corresponding drop in positive COVID-19 test results, “this survey suggests something of a return to personal connections and in-person meetings and events in the business space.”
Three-quarters of respondents expect employees to attend in-person meetings in the second or third quarter of 2021, with 89% set to attend an in-person meeting or event with attendees outside their company by the third quarter. Also, 59% say vaccine availability is a “significant factor” in their company’s decision to resume business travel, while 23% say it is a “moderate” factor and only 14% are unsure of the impact the vaccine will have on the resumption of business travel.