Managing Director & Senior Partner
Paused. A relaxing Mediterranean cruise; a let-loose weekend in Vegas; a family trip to a theme park; or a regular drill of a business trip. Paused. But for how long?
In many countries, consumers are anticipating the end of lockdown phase, and the percentage of those who believe that the worst of the virus lies ahead continues to drop. (See Exhibit 1.) With these points in mind, we focus this week on how consumers are thinking about travel and tourism—one of the sectors hit hardest by the pandemic—and what the journey back to pre-COVID-19 levels of activity might look like.
We are approaching not only the start of the summer, which is usually a strong period for leisure travel in most countries around the world, but also Memorial Day weekend in the US, which is normally one of the busiest travel weekends of the year, with more than 40 million Americans taking to the roads, rails, and skies.1 Notes: 1 AAA (American Automobile Association).
But COVID-19 has muted the allure of summer holidays and US Memorial Day travel this year. For many people, vacation plans have evolved into staycations or short-distance getaways—or fallen by the wayside altogether. The number of passengers going through TSA screenings is down by more than 90%, hotel and cruise bookings are down by more than 80%, and Las Vegas casinos are currently closed. (See Exhibit 2.)
Despite these grim statistics, we are starting to see consumers’ concerns about travel stabilize and even decline in some countries. Across various metrics, we see slow but steady improvements in daily numbers. In addition, although the number of airline tickets worldwide is still only a small fraction of last year’s number, China’s domestic travel rebound (which is now back up to about 50% compared with the same trailing 14-day rolling average in 2019) offers an encouraging sign for other countries’ travel and tourism sectors. On the other hand, international travel remains limited, likely due to would-be travelers’ concerns over the coronavirus risk in other countries, along with the fear of getting sick or stuck in a foreign country. (See Exhibit 3.)
When consumers identify the activities they miss most while waiting out the pandemic, they consistently rank leisure travel number one, across countries, age groups, and income levels, with over 60% agreeing that they “can’t wait to start traveling again.” (See Exhibit 4.) Although lockdowns are just starting to lift and concerns about catching the virus remain relatively high, 36% of US consumers say that they can envision themselves going on a vacation this summer—indicating that some level of activity is possible, depending on how infection rates and government restrictions evolve over the coming months. In addition, business travel ranks in the top five most missed activities for older and higher-income consumers around the world, and gambling makes the list for mature (baby boomers and older) and high-income US consumers. This pent-up intent to travel is undoubtedly good news for travel companies in the long term, but when will the good news shift from inclination to action?
The barriers to consumers’ readiness to follow through on their intent to travel are real. In general, baby boomer+ consumers (ages 56 and up) are more concerned about catching the virus while traveling, and younger groups (Gen Z and millennials) are more stressed economically and may be inclined to hold off on travel until they feel more financially secure. (See Exhibit 5.) Taken together, these concerns suggest that Gen X may be the sweet spot for companies to target, since they have enough disposable income to afford travel, but more moderate concerns over catching COVID-19.
Their lower level of concern about contracting the coronavirus may be fueling younger consumers’ desire to return to travel sooner. (See Exhibit 6.)
Across age groups, however, consumers are more likely to resume flying and hotel stays before visiting a casino or going on a cruise. Still, past frequency and recency do seem to have an impact on the timing of a consumer’s return to each activity. (See Exhibit 7.) Frequent travelers are more likely to return sooner to the skies and to hotel rooms, and people who have visited a casino or gone on a cruise in the past three years are more likely to engage in those activities sooner. Not surprisingly, all of these observations point toward engaging one’s “best guests” early and assiduously to accelerate demand in the recovery.
When we look at how long consumers will take to move from intention to action, the majority still assert that they will not travel until things are “normal,” and 70% or more across countries believe that it is irresponsible to travel until the virus is under control. (See Exhibit 8.) As we have noted in prior Snapshots, opinions about what key indicators would signal that the virus is under control vary widely among consumers who are theoretically willing to travel again under certain conditions but are not yet actively doing it. Many are waiting for their governments to announce that it is acceptable to resume everyday activities, while others (especially for cruises) are holding out until a vaccine is available. Although this may sound like dire news for travel companies, consumers may actually be ready to hit the road sooner. When asked to estimate the likely timing of their return to travel in weeks or months, rather than in relation to indicators that the virus is under control, about 40% of those who say that they are awaiting a vaccine also say that they expect to travel within the next year despite best estimates of a vaccine first being available at 12 to 18 months or longer.2 Notes: 2 Mayoclinic.org, COVID-19 (Coronavirus): Get the Facts. May 8, 2020, “Realistically, a vaccine will take 12 to 18 months or longer to develop and test in human clinical trials.”
What type of trips do consumers expect to take when they return to leisure travel? Most express an interest in using their first post-COVID-19 trip to relax and get away or to visit family and friends. (See Exhibit 9.) In countries that remain in or only recently left lockdown, such as the US and France, consumers are more focused on visiting family and friends—an activity that the lockdown likely impeded.
Among travelers who are interested in taking a trip to relax and get away, we find that the most frequent trips planned are visits to a beach/resort or to nature and the outdoors, followed by trips to big cities and to casinos (for the US only). (See Exhibit 10.) Couples are planning to take the largest percentage of these trips, followed by families. The trips are likely to be no more than a few days long and to be to domestic destinations within driving distance from home. In fact, the percentage of people who are choosing to drive in the post-pandemic era has grown substantially—to 50% or more compared with only 33% in the days prior to COVID-19.
Despite the myriad changes to the travel environment due to COVID-19, many factors that are important to consumers when selecting a travel brand remain familiar, with price, the quality of the experience or product, and convenience topping the list. (See Exhibit 11.) But at least in the near term, several new drivers of choice in travel have emerged as well. Most notably, consumers cite virus safety measures as being nearly as critical as price. In addition, support for employees and COVID-19 relief efforts has become an important decision factor, as consumers recognize the significant impact that the health crisis is having on society and the people around them and look for companies that are working to help soften that impact. Consumers also acknowledge that a number of additional incentives might sway them to travel—everything from cheap prices to health and safety measures such as best-in-class hygiene, fewer crowds, and enforced social distancing.
Among the most critically valuable travelers to win back are business travelers—especially premium and high-frequency “road warriors.” As we mentioned earlier in connection with Exhibit 4, a number of consumers say that they miss business travel, but the companies they work for will have a significant say in determining when they will return to the skies and to hotel rooms, and when travel-dependent meetings and conferences will resume. The timing and extent to which companies reinstate business travel remains to be seen. Many corporations have announced that their work-from-home models will remain in place for many months ahead, and both the desire of companies to protect their employees’ health, and the potential liabilities surrounding COVID-19 transmission make it more likely that we will see a lag in business travel uptake in 2020—unless either testing availability or medical treatments progress more rapidly than currently anticipated.
In the near future, COVID-19’s impact on the travel industry landscape will remain considerable, with many companies unable to survive, and others forced to sell or consolidate. Nevertheless, many will weather the storm and see travelers return. As our research findings indicate, despite the fear and negative impact that COVID-19 has generated in the travel industry, consumers have not lost their wanderlust.
Our next Snapshot will be published on June 1 (as your writer team looks to support the travel recovery over the US Memorial Day weekend). That Snapshot will further explore the New Normal Predictors (NNPs) that we introduced in Snapshot #8 and will assess which consumer behaviors and spending changes are likely to be lasting and which ones more evanescent.
BCG’s COVID-19 Consumer Sentiment Snapshot series is based on data drawn from an online survey of consumers that is conducted every one to two weeks across multiple countries worldwide. Each Snapshot highlights a selection of insights from a comprehensive ongoing study that BCG provides to clients. The survey is produced by the authors, who are members of BCG’s Center for Customer Insight (CCI), in partnership with coding and sampling provider Dynata, the world’s largest first-party data and insights platform. The goal of the research is to provide our clients and businesses around the world with periodic barometer readings of COVID-19-related consumer sentiment and actual and anticipated consumer behavior and spending to inform critical crisis triage activities, as well as rebound planning and decision making. The research does not prompt consumers about the virus when asking many of the key questions, including questions about spending changes in the next six months, in order to avoid biasing the results. A team composed of BCG consultants and experts from CCI completes the survey analytics.
The situation surrounding COVID-19 is dynamic and rapidly evolving, on a daily basis. This COVID-19 research is not intended to: (i) constitute medical or safety advice, nor be a substitute for the same; nor (ii) be seen as a formal endorsement or recommendation of a particular response. As such you are advised to make your own assessment as to the appropriate course of action to take.
We would like to thank our key contributors for this article:
We appreciate the generous support that the following people have provided in producing COVID-19 research and the associated article series:
We also thank BCG’s Center for Customer Insight (CCI) team globally, Scott Wallace, and Dynata.
Boston Consulting Group’s Center for Customer Insight (CCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG’s various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCI is sponsored by BCG’s Marketing, Sales & Pricing practice and Global Advantage practice. For more information, please visit Center for Customer Insight.
Dynata is the world’s largest first-party data and insights platform. With a reach that encompasses 62 million consumers and business professionals globally, and an extensive library of individual profile attributes collected through surveys, Dynata is the cornerstone for precise, trustworthy quality data. The company has built innovative data services and solutions around its robust first-party data offering to bring the voice of the customer to the entire marketing continuum—from strategy, innovation, and branding to advertising, measurement, and optimization. Dynata serves nearly 6,000 market research, media and advertising agencies, publishers, consulting and investment firms and corporate customers in North America, South America, Europe, and Asia-Pacific. Learn more at www.dynata.com.