Devastated by pandemic, travel and tourism sector looking for rebound in 2021
Ask Judy White, president and owner of Wilton Center Travel Ltd., how business was in 2020 and receive a succinct reply.
“Nonexistent.”
White”™s daughter Margaret Sanko, a certified travel consultant at the company, provided a bit more detail.
“New business gradually tailed off until it was nonexistent,” she told the Business Journal. “But there was a lot of rebooking of clients”™ vacations, starting in the spring of 2020, which kept us busy.”
The same song played at travel agencies across the country throughout last year. Travel”™s economic footprint in the U.S. declined by 42% last year, from $2.6 trillion in 2019 to $1.5 trillion, according to end-of-year totals prepared for the U.S. Travel Association by the research firm Tourism Economics.
In addition, the group”™s research found that travel-supported jobs fell by 5.6 million in 2020 (16.7 million to 11.1 million), representing 65% of all American jobs lost to the economic fallout from the pandemic. Travel and tourism had supported employment for 11% of the U.S. workforce prior to the onset of Covid, the group said.
“While the gradual progress of vaccinations has provided hope that a turnaround may be on the horizon, it is still unclear when travel demand will be able to fully rebound on its own,” said U.S. Travel Association President and CEO Roger Dow upon the report”™s release on March 17. “With the travel industry suffering such a disproportionate share of losses, policymakers need to understand that a nationwide economic recovery effectively hinges on a travel recovery.”
To that end, the group is pressing Congress to pass the bipartisan Hospitality and Commerce Job Recovery Act, which would provide:
- a temporary business tax credit to revitalize business meetings, conferences, and other structured events;
- a temporarily restored entertainment business expense deduction to help entertainment venues and performing arts centers recover;
- an individual tax credit to stimulate nonbusiness travel; and
- tax relief for restaurants and food and beverage companies to help restore food service jobs and strengthen the entire American food supply chain.
The organization submitted a letter to Capitol Hill signed by more than 80 major travel-related companies and organizations urging lawmakers to pass the bill.
According to a fact sheet issued by the bill”™s five co-sponsors, “Hotel employment is unlikely to reach pre-pandemic employment levels until at least 2023. More than 70% of hoteliers said they could close or be forced to make additional layoffs without federal assistance.”
The association is also among 26 organizations to sign a separate letter asking the White House to set a May 1 deadline to reopen international travel. According to the letter, international arrivals from Mexico to the U.S. fell by 62% in 2020; those from Canada plunged by 77%; and those from overseas markets plummeted by 81% ”” for a total loss to the U.S. economy of $146 billion last year.
The travel association estimates that, if nothing is done to lift international travel bans and bring back demand, 1.1 million American jobs will not be restored and $262 billion in export spending will be lost by the end of 2021.
However, if travel from the top inbound markets to the U.S is able to safely resume by July 4 ”” and can reach an average of 40% of 2019 levels for the remainder of this year ”” the group says that it would aid the economic recovery by adding $30 billion in incremental spending and bringing back 225,000 American jobs.
The May 1 deadline is in accordance with President Joe Biden”™s priority to make every American eligible for a vaccination by that date.
According to the latest available data from the American Hotel & Lodging Association, as of September 2020 Connecticut had lost 38% of its direct hotel jobs, and 23% of its total hotel-related jobs.
Bookings down at Booking Holdings
Travel behemoth Booking Holdings, based in Norwalk, was hit hard last year as well. Room nights dropped by about 58%, adjusted earnings before taxes, depreciation and amortization (EBTDA) swooned by 85%, gross travel bookings were down by 63% and total revenues plunged by 55% to $6.8 billion from 2019.
In announcing those results on Feb. 24, Booking Holdings President and CEO Glenn Fogel called 2020 “the biggest disruption to modern global travel the world has ever seen.” However, he added, “With many travel restrictions now in place around the world, we believe there is once again a high level of pent-up demand for travel. But when this demand will be fully unlocked is of course difficult to predict and it will depend on vaccination rates and other factors.”
“After a year spent at home, and missing so many of life”™s important moments, we”™re seeing a strong demand for travel,” Ben Harrell, chief marketing officer at Booking Holdings”™ subsidiary Priceline. “And the vaccination rollout continues and travel begins to ramp up, we want to make it easier than ever for travelers to enjoy additional savings.”
The company plans to offer a variety of promotions this spring, and in November introduced loyalty program Priceline VIP, which allows travelers to book at deep discounts while unlocking additional perks such as added coupons for flights, hotels, and rental cars. Harrell said consumer response has been strong.
“Travelers need to feel confident in both their personal safety and in their booking choices as they resume travel,” Harrell said. “That means in addition to vaccinations and regular precautions, such as wearing masks and social distancing, they”™ll want to understand cleanliness and safety measures onsite.”
In response, Priceline has added search filters to its platform that allow users to see hotel cleanliness scores and where new Covid-19 cleaning protocols have been put into place.
Connecticut Office of Tourism (COT) Executive Director Randy Fiveash told the Business Journal that, according to its February/March “Tourism Insights” survey, 69% of respondents said they plan to travel more this year than they did in 2020, with 41% saying they”™ll travel in the next three months, 54% in the next six months and 60% in the next nine months.
“The tourism industry was hit pretty hard,” Fiveash, who retired from his COT position on April 1, said, estimating that it was down by as much as 50% from 2019. (Under normal circumstances, the state”™s tourism industry brings in some $15.5 billion, generates $2.2 billion in tax revenues and supports over 123,000 jobs.) “But that data shows that there is pent-up demand to get out, and to do it safely.”
As proof, he cited additional data that found that 81% of New England residents said they didn”™t want to travel more than 100 miles, at least in the short-term ”” “which is pretty darned good for us,” Fiveash said. “A hundred miles pretty much takes in all of Connecticut, as well as Boston and New York. We”™re in a sweet spot in that travel realm.”
The COT”™s marketing efforts this year will be effectively split 50-50 between in-state and out-of-state initiatives; previously about 80% of its target was out of state.
“We want to get people to see their state with new eyes,” Fiveash said. “There are things right in their backyard they might not be aware of.”
The outgoing executive director predicted a “solid recovery beginning this summer. We”™ve added 1,300 jobs since January. But international travel is going to take a little longer to return.”
Priceline”™s Harrell agreed, though he noted that “the one exception is Mexico, where travel bookings are up almost 200% year over year.”
“As 2021 moves forward,” he continued, “we predict travelers will be increasingly interested in taking some of the trips they have missed out on over the past year, but with an eye focused on getting the best deal possible. While it will be a long road to a full recovery, we remain cautiously optimistic and expect to see leisure travel begin to rebound this summer.”
Meanwhile, Wilton Center Travel is experiencing an uptick in business.
“Over the past couple of weeks we”™ve received quite a few calls and bookings for this year,” Sanko said. “Here in Connecticut the vaccines are going well, which helps.”
“We just had some clients return from Hawaii,” White added, “and they said it was absolutely fabulous, because there were hardly any other tourists. They said it was one of the best vacations they”™d ever taken.”
White ”” who was in Africa last March when Covid reared its ugly head, and returned just in time to see everything shut down ”” said she hoped more customers would see the importance of relying on travel agents to handle the details of their trips, especially given the uncertainty that still pervades the world.
“When we reopened we saw people by appointment only,” she noted. “And that”™s something we”™re going to continue to do,” both for safety reasons and for improved efficiency.
Looking ahead, White said, “We”™re being a little more creative, given all the time and effort we spent last year working with clients to reschedule. It”™s been a bit of a trial, but we were able to get through it.”