Skift Forum: The Post Covid World of Travel

Top airline, hotel, booking service and agency executives pondered what getting back in the game and full recovery will look like this week at Skift’s Global Forum, a three day, 65 speaker event that went virtual this year.

Right now, event speakers noted that the major sustaining areas in travel are drive-to suburban hotel locations and short-use apartment rentals like Airbnb. Cruises are a big zero; and business travel isn’t much better. The modest recovery in leisure air travel also doesn’t amount to much.

United Airlines, for instance, is operating just 45 percent of its normal flight schedule; seat occupancy is down to 45 percent. It had been 85 percent before the pandemic. Its average ticket prices have also become depressed. Without many business tickets to offset lower leisure fares, average tickets are off by 50 percent.

On the hotel side, Marriott CEO Arne Sorenson reported that its business is off an unbelieveable 65 percent. “We thought that the worse we would ever see would be something like the Great Recession, which was minus 25 percent,” he lamented.

The situation is akin to a widely used analogy about Swiss cheese, said Sorenson. “If you have one slice, you know there are holes in it, and you can get through it. When you have four or five slices” piled on top of each other, you may get blocked, he said.

Overall, as local economies begin to re-emerge, executives were optimistic that many travel segments would recover. It was noted that China’s travel business is already nearing normal — at least for domestic travel. Is it a model? Some executives think so. “The idea that big cities are going away is close to laughable,” said Expedia CEO Peter Kern. Is everybody “going to hide in their suburban cul de sac? That gets pretty boring.”

IAC and Expedia Chair Barry Diller predicted that “everything will substantially return” but will also be different. Work from home, for instance, will likely be supplanted by regular team meetings in central locations. Diller said that’s one of the reasons for IAC’s new $1 Billion investment in MGM Resorts. MGM has many local properties to work with in Las Vegas and other markets. “If there is life, there is travel,” he said.

Other executives expressed similar optimism in travel’s recovery. They suggested that many things, in fact, will be better. Technological and business fixes have given rise to Internet check in, QR-based digital local information, scheduled housekeeping, deep cleaning of facilities and no fees for changed itineraries.

New players will also be entering the industry, post recovery, as existing franchise owners move on. “We’ll see hotels increasingly change hands,” said Marriott’s Sorenson. “The new owners… will determine their best positioning.”

Accor CEO Sebastien Bazin seconded the thought, suggesting that a new crop of decidedly local owners and investors will come in. Local people are ideal because they bet on their community and focus on new sources of revenue,” he said.

The timing of the recovery, however, can only be guessed at. The vaunted “V Shape” instant recovery anticipated for this Fall doesn’t seem realistic. If science cooperates and vaccines become available, the speakers at the Skift event speculated it would be at least 15 months before there was significant pickup in business. It could be up to five years before there is a complete economic recovery.

One key is just to get people to conquer their fears and literally, get on the plane. “Once they travel, intent to travel skyrockets,” said Southwest Airlines Chief Commercial Office Andrew Watterson. “The intent to travel is currently about 50/50, but after they travel and have a positive experience, it is 80/20.”