“The crisis of right now is real for workers, owners and investors tied to the travel category,” MMGY Global CEO Clayton Reid said in an article on LinkedIn. He adds, “The hopeful among us, however, will recognize that this will be over relatively soon, and albeit difficult to see, perspective and future planning is now what is necessary.”
According to Reid, consumers will go through four phases throughout the coronavirus (COVID-19) pandemic: fear, understanding, action and rational behavior. Although we are still largely in the fear phase, he says the understanding and action phases are in their nascent stages; rational behavior will follow.
Here is how Reid sees the marketplace playing out:
1. Travel sentiment, activity and spending will return more quickly than many have predicted. Reid anticipates 45 percent of consumers to postpone their travel plans. Another 32 percent will select another destination and 22 percent will take a home-based vacation. Thirty-one percent will cancel altogether. (It’s important to note this is not a current study, rather the “typical pattern post-crisis” of consumers; MMGY’s first study on traveler sentiment will be available April 1.) The good news: Travel search volume in Asia has doubled in March versus February and travel app downloads are up.
Insight: “Don't wait to engage travelers; they're coming back to you quickly and will book with short lead times and lower rate expectations.”
2. Consumer behavior will shift in the short-term but not in a lasting way. Reid does not expect many short-term trends to remain structural. “We fully expect face-to-face meetings, visiting new places, cruising, socializing in restaurants, and yes even getting back to better personal hygiene, will be the norm before Q4,” he says. MMGY research shows that “travelers of all stripes” have been increasingly seeking new experiences and destinations and that isn’t expected to reverse course. One negative is Reid expects to see a move back to travel aggregators and OTAs (although travel advisors coming to their clients' rescue should more than prove their worth in the face of a crisis.)
Insight: "Consumers traditionally evolve their core behaviors slowly and, even a crisis, while creating atypical ‘flash’ reactions, don't dramatically shift trends. Stay the course with proven strategies once the crisis ends."
3. Marketing tactics will... well, basically, fall back into place. MMGY’s client search marketing performance over the last 20 days shows traffic for travel sites is down 47 percent but e-commerce CVR is down only 3.7 percent, suggesting that people are still booking, although in much smaller volumes. Travel marketers, Read says, should expect time-proven tactics to be important as the recovery mindset shifts to normal behavior (45-90 days after peak infections), and markets will be re-shaped by smart brands who remain present.
Insight: “Most reaction to today's marketplace should be minimal as it will be too late to capitalize once implemented; better to build 2020 Q3/4 and 2021 strategies that respond to the post-crisis mindset and were germane prior. Don't overthink it.”
4. The industry will come back in a way that's predictable. MMGY research and economists around the world expect “pent-up demand will be unleashed in late Q2 across global economies.” Reid adds that travel confidences always leads-out consumer confidence; good news will first emerge with airlines then hotels, restaurants and cruise lines. Leisure travel will precede business travel (which usually rebounds a quarter later). Typically, however, travelers “tip back in” with shorter trips that are closer to home and with lower spends. “Road trips have been on the rise for five straight years, and 2020 could well become the year of the car,” Reid says.
Insight: “There is a relatively reliable cadence to the way industry and travelers will recover. Paying attention to these patterns help make marketing investments more efficient and guide investments in partner and sales programs across industry.”
5. Long-term strategies still apply. A knee-jerk reaction to “data of the moment” could mean missing out on opportunities tied to core strategies that travel brands have been building for years, Reid says. For example: The travel industry must resist a long-term, deeply discounted rate/fare strategy; while it might be necessary in the early stages of recovery, maintaining rate integrity will help a faster and more sustained long-term recovery. Sustainability and social responsibility will also be key, he says. Other factors include a more interconnected travel economy and the use of data remaining a game-changer.
“Things will get better—a notion more people need to embrace,” Reid says. “International travel has always been a steadying and vital part of the global economy … There is no way for anyone to know for certain what the next 60, 90 or 120 days look like, but we know that recovery will happen, sooner than people can see clearly today.”
This article was originally posted on Luxury Travel Advisor.