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APAC travel recovery: what's the data telling us?

July 14, 2020
Matt Webb
By 
Matt Webb

The world is watching as countries reopen their borders, carefully balancing risk and reward. When it comes to recovery, we’re seeing a huge variation between regions and by country — as different approaches to reopening determine progression along the curve. It’s clear that travel recovery is starting to take shape. But it is unlikely to be linear. 

The US is the perfect example of this — 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. Meanwhile, Europe is on a mission to save it’s summer and is making strong progress, while the Middle East is restarting too.

But I want to focus on the trends that we’re seeing in the APAC region. Interestingly, as the first market to be heavily impacted by the pandemic, recovery in APAC has started off slow. But the introduction of travel bubbles looks set to reconnect the region, holding great promise for the months ahead. In this blog, I’m sharing key APAC insights from Travelport’s new Confidence Index, as well as global recovery trends, APAC regional trends, and a spotlight segment on South Korea. ​

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. 

Travelport Confidence Index

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 APAC countries.

  • Laos leads the way with a score of 26
  • We all know how well New Zealand managed with the crisis, which is helping it get to rank #2. From a score of 5 at the start of April it is now at 21, and when intra-region traffic starts to flow, this will only improve this position
  • A little later we’ll cover South Korea in more detail

Emerging global recovery trends 

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 APAC data.

APAC region travel trends

APAC travel trends

As I mentioned above, APAC’s recovery started off slow, but travel bubbles are set to accelerate the pace. Here are some of the other key insights you need to know:

APAC country breakdown

  • With domestic (DOM) restrictions being eased, are we seeing the regions Australia and New Zealand — who have heavy DOM reliance — recover quickest. Australia is also seeing a rise in solo travelers, indicating cautious optimism.
  • Southeast Asia is seeing some solid week-on-week growth, with positive signs from the Philippines, Malaysia, and Thailand. The Philippines is seeing a spike in travel booked 2-4 weeks out, aided by DOM opening at the start of June. Thailand is growing, with further loosening of restrictions coming this month.
  • While improving, India growth is slower. Some of this is due to supply in the market. Recovery could be bolstered by international travel making a return in August. 

Spotlight on: South Korea

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 South Korea could be a model for many more countries in APAC. 

APAC Confidence Index Trend

The country is no stranger to health crises, as seen in 2015 with MERS — and it has made significant progress handling them since then. What’s more, South Korea is a country that loves to travel, and so it’s interesting to see how traveler behavior there has adapted in the wake of COVID-19. Some key demographics to keep in mind here:

  • South Korea has a population of 51M
  • Group bookings dominate travel in South Korea, with family booking a close second
  • South Korea is not a spontaneous travel market, with the majority of travel booked 2-4 months out
  • Intra-APAC-region destinations usually rank highest: including Japan, China, Vietnam, and Thailand

South Korea trends

We are comparing the last four weeks 2020 in green to an average in 2019 in grey. The table shows the top moving origin and destinations from the last four weeks. And then on the right we will look at key buying behaviors — personas and lead times for Seoul to Jeju City.

The Confidence Index allows us to analyze the change in traveler behavior in South Korea by the type of trips people are taking, buyer personas, and trip lead time. 

Type of trip

Confidence Index Geo Split

With international borders closed, the travel-loving population has made domestic travel their next option. Domestic traffic is already taking off, and where it only made 12% of total bookings in 2019, currently it domestic is over 75% of the bookings. Jeju City, Seoul, and Busan are just a few of the key domestic destinations.

Buyer personas
Families and groups continuing to dominate bookings, this means strong commercial opportunities for airlines and hotels. As is to be expected, group bookings are down compared to last year, while family travel is growing. So, for travel businesses in APAC, these buyer personas are a strong target for your upcoming marketing activities.

Trip lead time
The lead time/advanced purchase metric for Seoul to Jeju City breaks the norm for South Korea. Shorter lead times dominate, showing the pent-up demand. And if people can travel, they will. There’s also an interesting trend where we are seeing trips being booked more than 60 days out when compared to 2019. 

Use data to inform your recovery strategy

We can see that APAC, along with other regions, is 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 South Korea 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 APAC data insights on our recent Recovery Trends in Travel webinar — held in conjunction with Korean Air, Singapore Airlines, and UOB 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.

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Missed our Recovery Trends in Travel webinar? Watch it now on-demand.

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Want more data insights on how the APAC region is recovering? Contact us today.