Travel industry future: Where will the tourism industry be in 1 year?

The travel industry has been seriously impacted in the year 2020. Just before travel restrictions were introduced, there were signs of a downturn in the travel economy. Now, every individual working in the travel industry needs to address and tackle the new challenges raised by the coronavirus that appeared in the past year.

In this article, I will pass on what travel experts from the travel and hospitality industry shared yesterday at the WTM and Travel Forward Virtual Conference.

A glimmer of hope: Insights into the recovery of global travel had three speakers: Rachel Read (Head of Communication, ETOA), James Clarke (General Manager, UK, Travelzoo), and Stephanie Boyle (Group Head of Industry and Partner Communications, Skyscanner), and it was moderated by Paul Charles (Founder, PC Agency).

Read on to discover what key players in the travel industry need to do in order to adapt and bounce back in 2021, according to experts.

What changed in the way people traveled?

Money, means, and motivation have always had an impact on demand in the travel industry. Travelers need to:

  • Afford to go on holiday
  • Be motivated to leave home
  • Actually be able to get to their destination.

What we have seen in 2020 is that the travel industry is very resilient on motivation. Travelers still want to leave their homes and explore. What kept many back, however, was the quarantine at the destination. People were less worried about what happened to them after their vacations, than what they faced at what was supposed to be the beginning of their vacations. That is because breaking away and enjoying a change of scenery mattered most.

travel industry next year
Don’t panic: the travel industry will eventually be ok

Is 2021 looking more positive to the travel industry?

Compared to 2020, the next year is supposed to be better for the travel industry, as long as service providers adapt. When choosing to travel, the price will no longer be the main drive. Instead, travelers will consider flexibility and refundability more important.

While the cost will no longer be the main factor when choosing to travel, it will still play an important role in choosing a company or a destination over another. That is because people are more uncertain about their jobs and the economy in these troubled times.

Furthermore, service providers will need to make their businesses highly-customer-centric and to work harder on keeping clients loyal. In these difficult times, travelers remember who they booked with and how they were treated along the customer journey.

Overall value and security to make a booking with confidence will become the biggest factors.

Besides value and flexibility, businesses from the travel industry will also have to overcome new challenges unseen to this day. Travel has become more complex than before, so companies need to follow changes in real-time and be ready to adapt faster than their competitors.

There are no silver bullets that can help the travel industry recover overnight. But there are a number of important factors that will impact how the market recovers and grows in time:

  • Refundability & flexibility to change bookings
  • Number of infections at the travel destination
  • Government support for a testing scheme and vaccine administration.

Simply put, tourism companies will need to ask themselves: will the situation people find at their dream destination entice them to travel or not? And what can they do to improve that?

When should the travel industry expect to recover?

According to surveys, we should expect travelers to start booking their next trips as early as January. However, most people plan to actually travel in September.

In 2020 everything was very uncertain, and things changed rapidly in the travel industry. That is why many of us still suffer from a mental block and wish to wait several months before traveling, to see how things evolve. There are, of course, optimists among us, who are hoping for the next trip to happen sooner. But early departures are most likely to be preponderantly domestic instead of international.

Those who are more pessimistic feel too nervous to book international travel in the first quarter of 2021. Therefore, they prefer to wait for the second quarter for vaccines to become available and for countries to implement testing rather than quarantines upon arrival. This is why they are most likely to start traveling in the third quarter of the year and that’s when the travel industry will bounce back.

Bookings starting as early as the first quarter of 2021 represent a positive sign for the travel industry.

tourism industry planning
The travel industry needs o adapt in order to recover

What has changed in the way people travel?

We need to keep in mind that not everyone books that far in advance but they choose to do it right before they travel. The travel and tourism industry was used to people booking three to six months in advance, if not longer (especially to take advantage of early bird promos). But travel agents saw a big shift to shorter booking windows, travelers choosing to book their trips seven to 30 days in advance, but also in the last 7 days before their planned departure.

That’s a good thing, though. In 2020, people reacted fast when new destinations were added to travel corridors. Interest spiked and then converted to bookings. Some businesses and destinations even reached levels close to those from 2019. And it’s very reassuring to see such an impressive recovery, albeit temporary.

What we should learn from this is that travelers that feel less at risk convert faster.

That is why more travelers are choosing domestic travel, and that means more income from travel in markets which are already very domestic, such as USA and India. People chose to travel near because it felt more difficult to return if things turned sour when they went far.

There has also been an increase in booking one-way transfers, because travelers were unsure when they could return safely. People were unsure if they could go back home at the end of their holiday as planned or they will find themselves stuck or in need to return sooner or if they will have to find a new return route altogether.

Travelers will be more likely to opt for domestic trips or short haul flights in 2021. The level of health care they can expect at their destination and the possibility to get back easier will be deciding factors.

It’s also become clear that people are choosing to travel by rail or by car more often because they offer more flexibility to return. Especially in Central and Western Europe, where the rail system is very well organized, traveling by train will play a huge part in the recovery of near-neighbor and domestic tourism.

travel industry air travel
Air travel in 2020 & beyond

What will happen to airlines in 2021?

People who normally travel far away from home are more likely to spend their hard earned money on domestic travel in the coming year. The next safe choice is to travel to nearby neighbors (e.g. tourists from Belgium visiting France). While that is encouraging for service providers on the ground, it’s less so for airlines.

And if an airline becomes a casualty, that means flight capacity is removed from the market, causing prices to go up. This implies that hoteliers from those travel destinations will need to become more aggressive with their rates and reduce them to remain competitive. On the plus side, other routes will become more popular because they come with a higher capacity and a more affordable overall cost.

Keeping routes open is not the only challenge airlines will face. Business travel has tanked in the past year more than traveling for pleasure. And while people wish to go back to face to face meetings and signing contracts in person, airline companies will need to adapt to current events to help them do that safely. That may mean reducing the number of passengers and/or testing them before boarding, stricter mask-wearing policies, making sure everyone waits seated to get off board, etc.

In the near future, airlines will have to rethink their strategies and even redo their cabins. The flight industry needs to focus innovation and rebuilding sustainably. They need to make things happen on a large scale and at a fast pace if they want to recover and grow stronger.

Travel industry in 2021 and beyond: A glimmer of hope

Demand. Demand is always there in travel, it’s incredibly resilient. People are waiting to travel. As soon as they possibly have the means, they will go. And I think that’s really important for us.

Rachel Read, Head of Communication, ETOA

The love of travel. The absolute love of travel. […] I felt sad all the year for not being able to travel. Not just because I work in the industry, but genuinely love it, and I think that is shared across the entire world.

Stephanie Boyle, Group Head of Industry and Partner Communications, Skyscanner

Resilience. I’ve worked in this industry for a long, long time now. September 11… no one else knew what to say. We thought the industry was over. Then we saw things like an ash cloud. Again, we thought the industry was over. We keep coming back, we keep dealing with this, regardless of failures or economic crashes, or global terrorism. We keep fighting back. Let’s keep doing it this time, too. We’ll get back.

James Clarke, General Manager, UK, Travelzoo

Go to WTTC (World Travel and Tourism Council) for updates on the travel industry’s recovery from the Covid 19 pandemic.

About the author

Mirela Letailleur The Travel Bunny

Mirela Letailleur is a Romanian travel blogger living in the South of France. She writes on The Travel Bunny travel blog about affordable travel in Europe, creator of unique free travel guides, local travel expert. Problem solver. Wannabe coffee guru.

Read more about Mirela Letailleur

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