Skift Recovery Index: January 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 January 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, Cendyn, Collinson, Criteo, Duetto, 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.


New Year, Updated Index

Below you will find our usual analysis of the travel industry’s strength during the first month of 2021, with a specific discussion on the importance of vaccines, tests, and health passports for a proper travel restart. The debate is hotting up; we add our two cents.

Before that, however, a brief announcement about some changes we have made to the Index as we move into a new year.

Together with our data partners, we provided a weekly data update to the Index during 2020, since the situation changed so much from week to week. While things are far from settled down now, we have decided to move to a monthly reporting structure for both our data and highlight reports. This will provide an insight into slightly longer-term trends, while keeping the near real-time aspect of the Index intact. It’s also important to note that the monthly index score for 2021 will be calculated against the same month in 2019 instead of 2020, so we can continue to compare current performance with pre-COVID levels.

We are adding new data partner Cendyn. Known for its hotel customer relationship management (CRM) system, the company is providing us with a new angle on hotel recovery through data gleaned from marketing campaigns, including numbers of marketing emails sent by hoteliers, hotel nights sold through the campaigns, and the average daily rates from the bookings. These data points provide an additional measure of the health and confidence that hoteliers and travelers have in the tourism recovery.

Finally, we have also improved the visual representations of the Index on our homepage research.skift.com/recovery. We will work on adding additional visuals. Get in touch at wg@skift.com with ideas or if you’d like additional data insights.

January Highlights

Where did we leave off at the end of 2020, and where do we stand now?

The global average score, which is weighted based on the tourism output of each country, remained pretty stable at an index score of 44 in January 2021. This means that the travel industry’s holistic performance was at 44% compared to January 2019.

Exhibit 1: Global and regional weighted scores over time

This does not tell the entire story, however. Some countries saw significant drops, while others registered considerable gains.

Russia took back the top spot in the Index. This is backed up by scenes on the ground, and the fact that almost all of the data sources are seeing relatively strong performance in the country.

We already observed an increase in travel movement in December, with images of busy ski slopes in Sochi indicating that COVID restrictions did not stop Russians from traveling. In January the score for Russia continued to climb. This is likely to continue into February, as routes to and from Russia are showing some of the highest capacity in Europe, according to OAG.

Exhibit 2: Russian routes remain in demand

The UAE, which had been climbing up the rankings, saw a significant drop in January, which is likely due to climbing COVID cases there. Particularly Dubai was in the news as it became the party city for the rich and famous during the December holidays, but this appears to have negatively impacted the containment of the virus, with cases rising sharply at the beginning of January.

China’s performance also dropped in January, as the country put around 20 million people in local lockdowns. There is a continued fear of the virus flaring up again.

Check out the dashboard on research.skift.com/recovery to see the latest country scores for all 22 countries.

When looking at the different travel segments broken out in the Index, we can see that the car rental segment continues to drop. Lodging also saw a small decline, although it continues to track better than car rental and flight segments.

Exhibit 3: Car rental scores continue to drop

Vaccinations, Testing, Health Passports – Will It Revitalize Travel?

The world has become obsessed with vaccination drives, rapid testing, and health passports. In the coming months there will be continuing discussions on the best approaches to reopen destinations to domestic and international visitors. The efficacy around testing, health passports, and vaccinations will undoubtedly play a central role in governments’ decision making.

Almost every country has its own unique approach to acquiring and administering vaccines. This is quickly turning into an arms race, with countries bickering over vaccine quotas and vying to be the first to inoculate their populations.

We have started tracking the rate of vaccination in the 22 countries we cover in the Index, and will continue to do so, to see if there is any correlation between vaccination rates and travel recovery. For now, it’s only a few countries that stand out as frontrunners, and the correlation coefficient (r) is low at 0.25. This makes sense as the overriding factors at present will be national lockdowns and travel restrictions, but as these start to lift later this year, we will track how vaccine rollouts impact travel performance.

As of the end of January, Israel is racing ahead with already more than 60% of its population having received at least one vaccination, according to data from Our World in Data. While not as advanced as Israel, the UAE, the Middle Eastern country we cover in the Index, has a much higher vaccination rate than the other countries in our Index..

Other countries that stand out are the UK and the U.S. The UK, which has just left the EU, is much further in its vaccination drive than its continental neighbors, causing ire in EU countries with some seeing it as a perfect promotion for Brexit. The UK, however, still has some of the highest daily new cases and deaths in Europe, and continues to track low in the Index.

Exhibit 4: Vaccinations have just started; will there be a correlation with the SRI?

Some airlines and governments are looking to use proof of vaccination as a way to allow entry on planes and into countries. Qantas Airlines has said in a statement that only passengers who have had the vaccination will be permitted to fly on its international flights. A number of destinations, including the Seychelles, Estonia, Georgia, and Romania have removed quarantine rules for visitors that have been vaccinated.

Many others, however, have stopped short, or have condemned, the need to vaccinate before traveling. The United Nations World Travel Organization (UNWTO) has hosted a Global Tourism Crisis Committee in January to discuss “the integration of vaccines into a harmonized approach to safe travel,” but has so far steered clear of any direct statement on using vaccinations as a way to allow travel to restart.

The World Travel and Tourism Council (WTTC) has been a little more outspoken, and has warned against the practice, and instead advocates the use of rapid testing. So far, most countries are following this path, requiring a negative test before entry.

Testing, however, isn’t without its own issues. Stories about test result scams are popular in the media, but this is not likely to happen on a large scale. More importantly, every country has their own requirements regarding which tests are valid, complicating things for travelers.

PCR tests are the most sensitive, but can take up to 48 hours to provide a result. LAMP testing, which is becoming a more popular option, provides results in less than 2 hours, but these tests are as of yet not accepted by many governments.

Skift Research spoke to Scott Sunderman, managing director for medical and security assistance at Collinson, one of our data partners for the Recovery Index, and a company that has worked with many governments and travel companies to implement testing facilities.

He said that: “One of the issues we’ll always have with the implementation of testing is differing global strategies, and each country having their own requirements based on their local situation and case numbers. In time, we hope to see continued coordination and bilateral agreements from governments worldwide around travel and, indeed, some form of uniform testing requirement.”

While travel testing protocols are increasingly driven by governments locally, airlines and airports have implemented their own rapid testing facilities to boost travel.

Sunderman believes this approach is needed, saying: “Ultimately, until there is some agreement in place, it’s on the industry itself to pull together so we can ensure anyone who needs, or wants to fly, has access to whatever testing is required for them, to ensure they’re safe to fly.”

Different companies approaching the issues at hand in their own way, without any universal coordination is an understandable response, but not necessarily helpful. This is the case with testing, but also with the discussions around health passports.

Health passports are touted as a way for travelers to prove they have been tested or vaccinated, but there are many different systems being piloted.

The first digital health passports to emerge included ICC AOKpass, CoronaPass and CommonPass. The International Air Transport Association (IATA) is proposing the industry use its system Travel Pass, and Ticketmaster is reportedly working on a passport system for live events. Clear recently raised $100 million in funding for its Health Pass.

These are only a few of the many systems proposed. Different airlines are looking at using different systems, and so far the acceptance by destinations remains limited albeit growing.

Sunderman said his company is in favor of health passports, but again provided a note of caution. “Before we can see them come to fruition and be a real success, we’ll need them to be introduced under some form of global coordination or bilateral agreement between worldwide governments, as well as worldwide travel companies. If we’re introducing these passports then we need to ensure doing so will guarantee little friction in a passenger’s right to travel. That will be key.”

Skift Research View on The Road Ahead

Over the coming months the debate around testing and vaccinations will continue to evolve. The tourism industry will want to shape and guide this discussion, as it has such a major stake in a sound outcome, but as we move into 2021 we believe the landscape will look as follows:

  • No unified solution: While a single test and trace system, utilized by all destinations, airlines, and accommodation providers would benefit the tourism recovery, this will not happen.
  • Disparate approaches: More than one system will be implemented, and for the foreseeable future there will be additional barriers to traveling, as travelers will need to find out the specific requirements for each country, as well as book pre-departure tests etc.
  • Information is key: Accurate and timely Information provision will be paramount. Airlines, hotels, and tour operators will need to jump in with accurate information.
  • Hard to find leadership: The UNWTO and WTTC have not had the ear of many governments, and have moved slowly so far. This has allowed (forced) individual companies to jump in and implement their own systems around testing and tracing.
  • Opportunity out of adversity: There are clear opportunities for companies, within and outside the travel sphere, to offer services related to the new requirements in travel, be it testing facilities or health tracking technology.
  • Vaccines bolster demand? TUI, in its earnings call on February 9 said that it is seeing the first effects of vaccine rollouts. In January 2021, the European tour operator received 2.8 million bookings for summer vacations, which is about 50% of 2019 levels. Most of these bookings were made by UK residents, possibly bolstered by the successful vaccine drive in their country. Let’s hope this is a harbinger of things to come.
  • Booking windows shorten: As indicated by the figures released by TUI, it will take a while before vacation bookings are back to 2019 levels, as also indicated by search results on Google. As pointed out by Bernstein analysts in a recent note, the normal January peak in Google searches for vacations did not happen. Like in 2020, expect shorter booking windows and more last minute travel this year. Cancellation rates will likely remain high.
  • Exhibit 5: The normal January peak in vacation “searches” stayed away


    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.

    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.

    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