Global Trends 2020

Beyond bailouts, quarantine and empty hotels: what does coronavirus mean for travel?

As COVID-19 put a stop travelling and grounded planes, the travel and hospitality sector has been left wondering when – if at all – we will ever return to a world of cheap flights and global adventure.

The entire short-term future of the aviation industry is in doubt.

Polling reveals a nervousness about using public transport, whilst two-thirds of the public globally support a ’green’ recovery to the virus.  Business travel faces an uncertain future as companies adapt to remote working and with massive hits to profitability, try and cut costs anywhere they can. The industry does not expect to return to pre-COVID levels for several years. While confidence in the sector longer term has also weakened. At first glance travel looks like one of the clear victims of COVID-19 and emission controls.

While headlines featuring redundancies and administrators have caught the eye, less attention has been paid to the billions pumped into the sector from governments keen to stabilise a tottering industry, particularly in the US but increasingly in Europe. This is a crucial lifeline that in the short term will allow some airlines to survive. Positively,  some of this state-aid comes with conditions that focus on a green recovery, with the €7 billion support package approved for Air France coming with substantial green strings attached: a commitment to halving emissions per passenger by 2030 and halving domestic emissions by 2024. Post-COVID, the future of aviation may rely on the industry facing up to the environmental impact of flying. If Delta’s billion dollar investment aimed at becoming the world’s first carbon-neutral airline announced in February is followed by other airlines and increased regulation, environmentalism will play a substantial role in the future of the sector.

Away from emissions and financial assistance, some airlines have introduced novel ways to engage and reward customers as they battle for relevance. By downloading the ’Stay home mile exchange’ app, Thai Airways hope to nurture relationships with frequent fliers by enabling them earn air miles in real time when staying within 100m of their home.

The response from other airlines, however, has angered some consumers. British Airway’s decision to make 12,000 staff redundant at a time when the UK Government’s furlough scheme is available, as well as and parent company IAG securing a €1 billion loan to save BA’s sister airlines, has angered the 120,000 signatories of a petition stating that BA’s behaviour is illegal and immoral. We can expect more discerning choices to be made in the future.

For the wider industry, the key question is when demand for flights and accommodation will return. While the volume of travel is a fraction of what it was, there are signals that, even in lockdown, the lure of travel remains powerful. A huge range of websites are offering a virtual glimpse of destinations ranging from the Northern Lights to the Great Wall of China.

As with many facets of our lives, physical spaces have been traded for their digital equivalents during lockdown, but virtual tools are no replacement for the real thing. Holiday-makers attention has jumped ahead, with searches for holidays to Spain in January 2021 reportedly jumping 2000% even before Health Minster Matt Hancock indicated that overseas holidays in summer 2020 were unlikely. While the European Commission has published a series of recommendations around member states gradually opening their borders, the prospect of a two-week quarantine on return – including for Britons – means that demand for international holidays is likely to remain subdued.

Evidence from China suggests a strong demand for local travel after lockdown is initially eased, and we can expect the same elsewhere, with domestic flights the first to be re-introduced. The UK Government has indicated July is the earliest the hospitality sector is likely to re-open, and its intention is to encourage domestic travel. Meanwhile Visit Britain has proposed an additional Bank Holiday in October to boost the industry. COVID-19 means that in 2020, travel will be limited and local as consumers seek authentic, traditional holidays.

Despite discussions around opening borders in regional pockets or between states in the US, signals indicate that our travel aspirations will be national and regional rather than truly global. However there have been So with long distance travel curtailed, traditional and trusted partners are likely to be prioritised by governments, and consumers’ travel aspirations will need to be dialled back compared to previous years.

As the sector slowly rebuilds, airlines and hoteliers alike will need to prove to the public – and likely to governments – that they are adapting measures to minimise the spread of the virus, leaning heavily on science and technology to demonstrate hygiene and build trust. Emirates has already undertaken blood tests before some of their flights, whilst swabbing at airports is anticipated to become routine as restrictions on travel slowly ease. In the hospitality sector, major hotel chains have teamed up with brands famous for household cleaning products to demonstrate their commitment to cleanliness. For business and leisure travel alike, hygiene and health will be key factors when consumers choose how to travel and where to stay.

Brands will need to adapt to the biggest disruption they will have faced, and some will not survive. Even as restrictions are slowly eased across the world, the aviation sector – which has made the world feel like a smaller place over the last 50 years – will need to adjust their businesses in a world that suddenly feels much bigger. With government loans and grants in the billions, the sector will not collapse, but what survives will have changed. As consumers expectations and needs change, would-be travellers will make more discerning decisions when planning holidays in the longer term. Travel fills an important and timeless need, but to emerge successfully from this pandemic, organisations will need to demonstrate that their values have evolved.

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The Future of Health

The COVID-19 pandemic has changed the way people manage their health. It has challenged our medical systems and driven demand for new solutions. However, our data suggests these changes are not new but rather an acceleration of existing trends.