Border restrictions are lifting, and this means countries must carefully balance risk and reward to begin their recovery journey. The approach taken to reopening varies hugely between regions and by country, which in turn determines the shape of their recovery curve.
For example, Europe is on a mission to save it’s summer and is making strong progress, while the Middle East is restarting with a similar campaign too. Elsewhere APAC, the first market to be heavily impacted by the pandemic, has started to recover slowly — but the introduction of travel bubbles looks set to reconnect the region, holding great promise for the months ahead.
But I want to focus on the Americas region, and the trends that we are seeing take shape there. The US is the perfect example of why recovery is unlikely to be linear, as after a strong initial restart, travel has dipped slightly following a resurgence of cases. But this isn’t unexpected, and other countries may follow suit if the anticipated ‘second wave’ transpires later this year. In this blog, I’m sharing key Americas insights from Travelport’s new Confidence Index, as well as global recovery trends, Americas regional trends, with a spotlight segment on the US.
So, let’s look at what the data telling us...As we all know, travel grinded to a halt in Q1 this year. To gain more insight into what's happened since the world has started to slowly open up again, I've chosen to focus on the dates from March 30 to June 30. This provides a more appropriate and up to date view of the market.
Measuring recovery through Travelport’s Confidence Index
Over the past few months, Travelport has been working hard to ensure our customers are well-equipped for the recovery period ahead. To support the industry at large, we have developed a Confidence Index — which measures a market’s appetite for travel, based on indicators on search and booking data. The data provides insights on where travelers are going, when they are traveling, and who is likely to be traveling — from both broad market view right down to different traveler personas.
The methodology works as follows:
- Air search is the highest indicator, as that shows the highest level of confidence and intent to travel.
- Hotel Search is starting to guide as to where travelers are looking to stay.
- Air Bookings actual conversion is the strongest indicator of recovery and carries the greatest weight in the algorithm.
This tool was created using some insight from activity from previous years, plus our week-over-week indexed view of gross traveler behaviors, transacting through the GDS for air and hotel products. While this is interesting, we wanted to avoid a subjective sentiment score, as we believe that real travel activity is a better gauge of consumer confidence. And you can see above, we have this covered across the broad array of Americas countries.
- Brazil is continuing a steady return
- Argentina is yet to see an opening of its domestic borders, which is really hampering its recovery
- The US is ranked number one both in confidence and volume. We’ll cover this in more detail below
Emerging global recovery trends
The following are some of the common trends that we’re starting to see appearing worldwide:
Consistent signs of travel recovery
The stage of the recovery journey varies greatly by region — and likewise, within that region, some countries are performing better than others. As mentioned above, the risk vs reward strategy has very much determined where a country sits on the curve, and it is unclear what shape that curve will take. But we are seeing a consistent pattern of recovery emerging.
Markets are reopening, and changing their border policies daily
As people realize they are allowed to travel again, bookings are starting to follow. This is helping the industry to return to business, but equally means that travelers and businesses are struggling to keep on top of the latest developments. Earlier this year, Travelport developed its COVID-19 hub to assist travel businesses with this exact challenge.
OTAs are showing the strongest signs of recovery first
As offline travel agencies have been forced to close their stores during lockdown, the value of being able to retail online is more evident than ever. The OTA market is currently ~40% above the recovery position of other travel retailers — presenting not only great opportunities for air bookings, but also in upselling ancillaries. As the online consumer market picks up, recovery rates across the other sectors will start to improve too.
Now, let’s jump into the Americas data.
Americas region travel trends
Closing down an economy is not a decision taken lightly, and starting it up requires confidence. As you can see in North America, when there is confidence, bookings rise and as fear creeps back — caused by news of spikes in COVID-19 cases — the recovery trend subsides.
But, it’s not just the US recovering in the Americas:
- There are also encouraging signs in Brazil, Mexico, and Argentina. Family bookings are up in Brazil, Mexico is up to 21 points, and Argentina is seeing a pattern of booking further out.
- Canada is recovering steadily, with a focus on shorter, more spontaneously booked trips.
- Overall, the Americas region is rebounding, and we are seeing encouraging signs of confidence return.
Spotlight on: the US
We know that recovery will vary greatly by region — and likewise, within that region some countries are doing better than others. As we were exploring and observing recovery trends, what became clear was that the US could be a model for many more countries in the Americas.
From the charts, the trend is clear. As I mentioned earlier, we should not expect to see a linear line back to where we were but a gradual rebounding with dips.
Some key demographics to keep in mind here:
- The US represents the largest travel market in the Americas. For trips booked outside of the Americas, Eastern Asia, Southern Europe, and Northern Europe rank high.
- On the whole, solo and corporate travel dominates.
- The majority of travel is booked 1-2 months out.
We are comparing the last 4 weeks 2020 in green to an average in 2019 in grey.
The table shows the top moving origin and destinations from the last 4 weeks. And then on the right we will look at key buying behaviors – Personas and Lead times for New York to Cairo.
The insights allow us to analyze the change in traveler behavior in the US by the type of trips people are taking, buyer personas, and trip lead time.
Type of trip
As we drill into the geo split, we can see domestic is leading the way, but international is starting to follow a similar pattern. As consumer verticals gain confidence and more borders open, we can be confident based on what we are observing that these numbers will see a steady rise too.
However, I didn’t want to focus only on domestic routes with Shanghai, Athens, and Cairo showing some interesting patterns on the previous graphic.
Taking Cairo as an example. We can see the split by persona is showing some focus is needed on groups. Solo travelers and families are the traveler personas showing strongest performance. What is very interesting to see is that corporate travel is actually up from 2019. So, for travel businesses in Americas, these personas are a strong target for your upcoming marketing activities.
Trip lead time
And staying with Cairo, if we go down to lead times, we can see in 2020 there is a surge in shorter lead times, further highlighting the pent-up demand. Bookings that would have happened previously 90, 150 to 300 days out are all happening within 30 days of travel, when comparing to a 2019 average.
Use data to inform your recovery strategy
We can see that Americas, along with other regions, are flowing into recovery — and this is encouraging. Though it remains to be seen how the region’s curve will take shape, the market is coming back to life.
The example above of the US shows the typical kind of data we are looking at with our customers right now. First, we identify the moving, growing city pairs. Then, we examine buying behavioral metrics, so that our customers can develop the most effective targeting and acquisition strategies.
This in turn makes tailoring additional products and services much easier. By leveraging this kind of data, you can feel assured that you are making informed business decisions that will accelerate your recovery.
I spoke more about Americas data insights on our recent Recovery Trends in Travel webinar — held in conjunction with Southwest Airlines and Fox World Travel. If you missed out, you can listen back here. To find out more about Travelport’s Confidence Index, or how our data services can help inform your recovery strategy, contact us today.