Skift Recovery Index: August 2021 Highlights

Overview

This report highlights the latest insights from the Skift Recovery Index. The index covers travel’s performance since January 2020, up to and including August 2021.

The Skift Recovery Index is a real-time measure of where the travel industry at large — and the core verticals within it — stands in recovering from the COVID-19 pandemic. It provides the travel industry with a powerful tool for strategic planning, of utmost importance in this uncertain business climate.

We work with Amadeus, Aviasales, Beyond, Cendyn, Collinson, Criteo, Duetto, ForwardKeys, Hotelbeds, Key Data Dashboard, OAG, Onyx CenterSource, RateGain, Shiji Group, SimilarWeb, Skyscanner, Sojern, Transparent, and TrustYou as data partners to provide you with a monthly update of travel performance in 22 countries around the world.

Index Decline Obscures General Strengthening

After the upward recovery trend came to a halt in July, August saw the overall recovery score decline by six points. A quick look at the country scores, however, shows that this decline is mostly due to struggles in especially large tourism markets like the U.S. and China.

In the Recovery Index, each country gets an individual weighting based on the size of its tourism industry, so that large tourism economies like China and the U.S. count heavier than smaller countries, like Hong Kong and Singapore.

If for a second we remove this weighting, and look at the global average score using a simple average of all 22 countries (where each country’s score is weighted equally), we see that the Index is still increasing. Overall, then, much of the world continues to recover from the Covid crisis and travel performance is inching closer to pre-pandemic levels, but the decline in the U.S. and China weighs heavily on global recovery.

Hotels Steal Momentum From Rentals

Before we look more closely at the performances in different countries, we want to highlight an interesting finding that we pulled from our data. Hotel bookings are now consistently outperforming bookings for vacation rentals.

In 16 of the 21 countries we were able to analyze (Argentina had insufficient data), hotel booking levels are now higher than vacation rental bookings. In January 2021, this was only the case in 2 countries (China and Indonesia).

For all countries, the compound annual growth rate during the first 8 months of 2021 was higher for hotel bookings than for vacation rentals (for Australia they were the same), indicating the strong rise that hotel bookings have made.

We should, of course, keep in mind that most countries still see bookings, rates, and occupancies far below 2019 levels, but this shows that hotels have taken back the momentum from rentals.

U.S. Sees Weakened Performance

Skift Research’s U.S. Travel Tracker highlights the growing uncertainty amongst U.S. travelers with regards to the economic condition and its Covid response, which has an impact on the expectation of travel spending.

U.S. residents that expect the Covid crisis to be under control by the end of 2021 have decreased from 43% in June, to only 18% in August. A similar turnaround can be seen in expected travel spending. In June, 45% of respondents indicated they expect to spend more in the next 12 months on travel, but this fell to only 29% in August.

This sentiment is mirrored by the U.S. Index score, which dropped from 92 in July to 80 in August. All travel verticals were seeing declines in performance.

In the recent earnings round, travel CEOs had been largely bullish about the recovery in the U.S., despite increasing Covid case numbers. Ashford Hospitality Trust CEO Rob Hays was more realistic in a recent interview with Skift, saying: “It seems like the U.S. is hanging up in the high-60s to 70 percent occupancy levels, and I don’t think it’s gonna go back to 30 percent like it is in China. But … it’s going to be choppy, and I am really nervous about this fall.”

In the hotel industry, STR shows recent occupancy and revenue declines, with revenue per available room (RevPAR) at $100 in the last week of July, but only $80 at the end of August. Preliminary data for August shows that RevPAR declined by 6% compared to August 2019, while occupancy dropped 7 percentage points compared to 2019. The vacation rental space is also impacted, with Airbnb warning that the Delta variant could impact its recovery.

Business travel, still significantly down, is also being scaled down for the remainder of the year. A survey by Deloitte found that only a third of 150 travel managers expected their companies’ business travel would reach or surpass 50% of pre-pandemic levels by the end of 2021. And a survey by Morning Consult, on behalf of the American Hotel & Lodging Association, found that 67% of 414 U.S. business travelers were planning to take fewer trips for the remainder of 2021. Just over half said they would likely cancel existing travel plans, while 66% said they would only travel to places by car.

With borders remaining largely closed, and a clear policy around border reopenings with Canada and the EU still missing, domestic travel continues to be the driving force for U.S. tourism. One exception seems to be Mexico, which still has largely open air borders with the U.S.

Our data partner ForwardKeys shared interesting data that highlights how the U.S. is seeing strong demand from Latin American countries, and how particularly Mexico is benefiting from this, because U.S. border policies mean that many Latin American travelers are forced to stay in Mexico for two weeks before being allowed to move onto the U.S.

This, and continued strong demand from U.S. travelers, saw Mexico’s Index score rise to 101, despite new Covid cases increasing considerably to an average of over 16,000 new cases per day in August.

Flight data from the U.S., meanwhile, shows that flight searches and bookings have both declined in the past two months, and interestingly, searches by U.S. residents for domestic and outbound travel declined sharper than searches with the U.S. as the destination (which includes inbound travel to the U.S. and domestic flights). Bookings by U.S. residents also saw a slightly stronger decline than bookings for the U.S. as a destination. This indicates that interest in inbound travel has been more resilient than interest in domestic flights over the past months..

China Sees Recovery Evaporate in August

The U.S. isn’t the only country struggling. China, another country that showed great resilience from early on, has been struggling to contain the Delta variant, and has seen the effects in its travel performance.

While case numbers are insignificant when compared to most Western countries, China has seen a number of local lockdowns to try and stem the spread of the virus. The result was a sharply falling hotel performance, with STR reporting a fall to 40% occupancy in the middle of August, much lower than the 70% occupancy at the end of July.

Data from Shiji Group, another data partner, shows that hotel bookings were down 23% compared to 2019 levels, with room nights booked down by 31%, indicating that trips are also getting shorter. Booking levels haven’t been this low in China since May 2020.

However, we might have seen the worst of it with Covid cases declining and local restrictions being lifted. New Covid cases averaged 100 per day during the first 7 days of August, but declined to only 27 during the final 7 days. Amongst improving figures, Guangdong Province reduced travel restrictions. Major hotel operator Huazhu, however, dampened its recovery forecasts for the remainder of 2021, highlighting that the situation remains fragile.

Europe Performs Strongly, Asia Remains Weak

We focused much attention on Europe and Asia at the beginning of the year, because it would have been easy to get swept up in the positive discourse that was taking shape in North America, when in fact much of the world was struggling to find any growth.

The same is happening now, but the tables have turned. There is so much disappointing news coming out of the U.S. that it is easy to forget that many countries saw a bumper August.

European destinations saw further improvements in August. Rising Covid cases did not seem to impact performance (in contrast to what we predicted last month), and we have heard from different industry sources that for many operators performance was above 2019 levels.

India, which has seemingly left Delta behind, continues to see an increase in its score, and Latin American countries are also rediscovering their strength. Russia saw the highest absolute increase in its score with 12 points, with Egypt being reopened to Russian travelers for the first time since the 2015 bombing of a Russian airliner, and Thai authorities approving Russian vaccine Sputnik V as a viable entry requirement. Our data partner Aviasales said searches for flights on the Moscow-Phuket route increased by 238% as the announcement was made.

Hong Kong saw its score increase by 5 points, despite the weakness in its largest source market China. The reason for the increase can be attributed to the announcement of its Come2hk marketing campaign, which will see the city state allow in 2,000 travelers per day from Macau and mainland China starting September 15. Hotel bookings saw a considerable uptick as a result.

Singapore has also moved to reduce travel restrictions for visitors from Hong Kong and Macau, notwithstanding their vaccination status. With the new regulations starting on August 26, we might see the effects of this starting in September, although August remained weak.

Japan would have hoped for a bump in performance as it hosted the delayed 2020 Olympic Games and Paralympic Games, but due to the complete absence of foreign visitors, July only experienced a small lift in performance, which largely dissipated again by August.

Australia also continued to freefall in August, with its score now at 30, which is the lowest since August 2020. Accor Pacific CEO Simon McGrath has said that hotel occupancies plummeted to 5% at some of its 400+ properties, and that many players are seriously considering shuttering properties to contain losses.

Data Partners

We would like to thank the following partners who are collaborating with Skift Research by providing their data which shapes the Skift Recovery Index.

Amadeus is a global travel technology leader that delivers the most trusted, critical systems across the travel industry to airlines, airports, hotels, travel agents, and car rental and railway providers. Amadeus is providing insight on travel search trends and behavior for the Skift Recovery Index.

Aviasales was launched as a blog on bargain air tickets in 2007 and grew out to become the world’s biggest independent travel search. Aviasales serves 20 million monthly active users from Eastern Europe & Central Asia, and provides flight and hotel booking data for Russian travelers for the index.

Beyond is a leading revenue management platform for short-term rental owners and managers to get, grow, and keep revenue. The easy-to-use platform includes a dynamic, demand-driven pricing tool with extensive market data that pairs with OTA distribution and a best-in-class booking engine. Beyond has supported over 340,000 properties in more than 7,500 cities worldwide and have enabled billions of dollars in booking revenue. The company provides data on Revenue per Available Night (RevPAN) for the index.

Cendyn’s software solutions drive sales, marketing, and revenue performance for tens of thousands of hotels across the globe with a focus on integrated hotel CRM, hotel sales, and revenue strategy technology platforms. The company provides data on hotel email campaigns for the index.

Collinson is a global travel services business, creating traveler experiences, loyalty strategy and programs, travel insurance, and travel and medical assistance. Priority Pass is operated by Collinson and provides frequent travelers access to over 1,300 lounges, with Collinson providing aggregated customer lounge visit data for the index.

Criteo is a global technology company powering the world’s marketers with trusted and impactful advertising. The company provides indexed data from various OTA, airline, and car rental partners. Criteo provides data for airline and car rental web traffic and sales.

Duetto delivers a suite of cloud applications to simplify hospitality revenue decisions and allow hoteliers to work smarter, increasing organizational efficiency, revenue, and profitability. More than 4,000 hotel and casino resort properties in more than 60 countries have partnered to use Duetto’s applications. Duetto provides hotel bookings and cancellations data.

ForwardKeys analyzes more than 17 million flight booking transactions each day, drawing data from all the major global air reservation systems, and selected airlines and tour operators. ForwardKeys is providing flight booking and passenger volumes data.

Hotelbeds provides over 180,000 hotels across the globe with access to high-value, complementary distribution channels that do not compete with the hotelier’s direct distribution strategy. The company provides data on hotel bookings and source market performance.

Key Data Dashboard is a provider of real-time, direct-source vacation rental data for the short-term rental sector, aggregating data sourced directly from more than 30+ reservation systems of 700+ professional property managers around the world. Key Data provides bookings, RevPAR and cancellations data for the Skift Recovery Index.

OAG collects and analyzes data about every journey, every booking, every take-off and landing, departure, and delay, totalling over 110,000 flights, 100,000 schedule changes daily and over 4 million flight status updates. OAG provides flight capacity data for the Skift Recovery Index.

Onyx CenterSource is a leading global provider of business-to-business payments and business intelligence solutions to the hospitality industry. With a legacy dating to 1992, the company facilitates in excess of $2.1 billion in payments annually, and partners with more than 150,000 hotel properties. The company provides hotel stay, cancellations, and commission data.

RateGain helps travel and hospitality companies with cognitive revenue management, smart e-distribution, and brand engagement. RateGain supports over 250,000 hotel properties globally by providing 240 billion rate and availability updates, and powering over 30 million bookings. For the Index, RateGain provides hotel bookings and cancellation data.

Shiji Group provides software solutions and services for the hospitality, food service, retail, and entertainment industries, serving over 74,000 hotels, 200,000 restaurants and 600,000 retail outlets across the world. Shiji Group provides China hotel bookings and room night data for the Skift Recovery Index.

SimilarWeb gathers digital data from multiple sources, including first-party direct measurement, public data sources, anonymous behavioral data, and external partners. For the Index, SimilarWeb provides unique visitor data to the top 10 travel websites per country.

Skyscanner has 100 million peak monthly active users, over 100 million app downloads, and more than 1,200 partners across flights, hotels, car rental, and more. Skyscanner’s Travel Insight product helps companies guide their COVID-19 recovery plans, and the company contributes flight search data from Travel Insight for the Skift Recovery Index.

Sojern provides digital marketing solutions for the travel industry, helping to drive direct demand for more than 10,000 hotels, attractions, tourism boards, and travel marketers. Sojern contributes flight and hotel search data for the Skift Recovery Index.

Transparent provides business intelligence serving the vacation rental industry, including insights around supply growth, demand patterns, rate changes, and property manager activities. Transparent contributes occupancy and bookings data for the Skift Recovery Index. The company draws on data from the 34 million vacation rental listings they track worldwide, in every geography.

TrustYou provides a guest feedback platform that makes listening to customers easy, powerful, and actionable. In response to the current crisis, TrustYou has put together a Travel Health Index, using hotel reviews managed through its platform as a proxy for hotel occupancy. TrustYou’s Travel Health Index is integrated in the Skift Recovery Index.

Data Tables