Skift Recovery Index: May 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 May 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, 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.


Europe Turns The Corner

The Skift Recovery Index continued its upward journey in May 2021, with the global average score hitting the 60% mark. This number indicates that the overall travel performance of May 2021 stands at 60% of the pre-pandemic performance in May 2019.

Exhibit 1: Skift Recovery Index hits 60 points, continuing its steady climb up

May 2021 was especially a turning point for Europe, which since the end of the summer season last year has been at the bottom of the pile in terms of recovery. Many European Union countries reopened their borders to visitors from within the block, and on May 19, the EU also announced an easing of travel restrictions for non-EU visitors. With case numbers declining rapidly in most EU countries, major European destinations hope they can attract U.S. travelers, although the booking window for the summer holidays is closing rapidly, and destinations might start to market to U.S. travelers for the fall and Christmas seasons soon.

Exhibit 2: Europe is still the weakest performer but performance rose considerably

The U.S. continued to power through and added another 6 percentage points to its score, now standing at 86%. Mexico also increased performance and is now close to 95% of pre-pandemic levels, which is extraordinary when considering that 15 of the 22 countries we cover in the Index are still below the 50% mark.

Asia Pacific, meanwhile, saw its performance drop, mostly tempered by India and Thailand, which have high new caseloads and strained vaccination rollouts. China also saw a decline in performance as small local flare-ups of new cases have a strong effect on travel behavior.

South Africa also saw its new case numbers increase in May with talk of a third wave and the country implementing stricter lockdown regulations at the end of May, showing an immediate effect on travel’s performance.

Exhibit 3: County performances in May 2021

Domestic Continues to Trump International

Although borders are reopening in different parts of the world, domestic is still the name of the game. The latest Skift Research Travel Tracker survey data shows that U.S. travel remains heavily focused on domestic destinations, although the mode of transport is shifting slightly towards the airplane and away from the car.

Exhibit 4: U.S. residents look to vacation in own country

Flight search data from Skyscanner also shows a trend for more domestic flights. In the Americas, domestic flight searches have increased to over 80% of all flight searches, up from around 50% pre-pandemic.

But especially in Asia Pacific, domestic flight searches increased drastically from around 30% before the pandemic, to over 80% at the beginning of 2021. Since then, international searches have increased slightly, but as the region is still challenged with fluctuating performances, we expect international travel to take beyond this year to get back to any semblance of normalcy.

Exhibit 5: Searches for domestic flights have increased everywhere

A Deeper Dive into the Link Between Local COVID Responses and Travel’s Recovery

With travel being more domestic, there is a clear link between whether and how people travel, and the local situation. At the beginning of this year we hypothesized that vaccine rates would have an impact on travel performance, but since then we have seen only limited correlation between the two. This has led us to instigate a wider analysis of the relationship between travel’s performance and vaccination rates, as well as new case counts, and local mobility.

Rather than just understanding the link between the current Covid situation and travel’s recovery, there is a bigger opportunity here. With 17 months worth of data on the pandemic’s impact on travel, we are able to analyze and possibly forecast whether recovery will continue or stall in each country. From the continuing volatility we know we are unable to forecast far into the future, but having an insight into where a country stands today can provide some indication of how healthy a country’s recovery is likely to be over the coming weeks and months.

We are working with three datasets here which we compare with the total country scores from the Recovery Index:

  1. We have taken data from Our World in Data on new Covid cases and calculated a monthly average, and compared fluctuations in case counts with changes in the travel score.
  2. We also took the number of vaccinations per 100 inhabitants from Our World in Data for the last day of each month, and compared if the vaccination rate correlates with travel performance.
  3. We used Google Mobility data on traffic at transit stations, which includes subway, bus, and train stations, and compared month-over-month changes in traffic levels at these places with travel performance.

Correlating the month-over-month changes of each variable with the month-over-month percentage point changes in Recovery Index scores shows how Google Mobility data has the closest correlation with the travel scores overall. New daily cases also provide a strong negative correlation, and when taking out a few outliers, vaccination rates actually provide a strong indicator for many countries too. There clearly is some nuance to all of this, so we will discuss each correlation in more detail below.

Exhibit 6: Correlation between travel scores and other variables

Local Movement as a Proxy to Travel Behavior

Google Mobility data, which Google collects from mobile phone usage, gives a strong insight into movements of people in their local area. It therefore is a great proxy for the strictness of local lockdowns, which has an impact on travel intent and sentiment, and more directly on travel behavior.

Our analysis of the change in the average monthly mobility scores with the average monthly changes in our Recovery Index scores showed strong positive correlation, highlighting that local mobility is a great indicator of travel performance at present.

As mentioned before, this highlights the importance of local restrictions and lockdowns on movement, and of domestic travel as a vehicle to travel’s recovery.

The average correlation for all countries was r=0.83, with the median at r=0.88. This was particularly due to one outlier in Hong Kong, which only scored r=0.27. This is likely because Hong Kong’s travel recovery is so strongly linked to performance in China, but we are not able to verify this since Google has no data for China.

When plotting the findings for the last month on a scatter plot, we can see that most Asian countries find themselves in the ‘red zone’, where both their local movement and their travel score have declined during May. Most Western countries now find themselves in the ‘green zone’, with societies opening up more and more, which benefits travel scores.

With only a few outliers which are further removed from the trendline, the scatter plot shows the correlation between local movement and travel’s performance.

Exhibit 7: Strong correlation between local mobility and travel

The Impact of Case Counts on Travel Behavior

The number of new COVID cases each day also has a significant impact on how travel recovers. The lag between case counts and travel performance is likely to be smaller, than is the case with local mobility and travel performance, for the simple fact that case counts are updated each day and will have a quicker impact on travel sentiment than local mobility which is ruled by political decisions around restrictions and lockdowns.

Unlike with mobility, new cases have a negative correlation with travel performance, meaning that an increase in cases results in a decline in travel performance, and vice versa. The strength of correlation is slightly weaker than was the case with mobility, with an average of r=-0.61, and a median of r=-0.66. The spread of r scores is also slightly bigger. Hong Kong is again a strong outlier, showing no relationship between cases and travel performance at all (r=0.01).

We hypothesized that there might be a lag between new cases and travel performance, so rather than just comparing the same time series, we also checked correlation where the travel score had one, two, and three months lag behind cases, but we found that correlation was strongest when comparing the datasets without any lag. This highlights that travel intent and actual travel behavior is a relatively short-term affair, and declines or increases in case counts have an almost instant effect on travel performance.

Exhibit 8: A like-for-like monthly comparison shows strongest correlation

We should note that there are very strong fluctuations in case counts from day to day, and even from month to month (we are using the average daily rates of new cases per month). Therefore, it is worth looking at this data in two ways. Analyzing just the past month provides a good snapshot of how recovery is shaping up right now, while taking a longer-term view of the average performance over the first five months of 2021 provides a better insight into the overall trend of recovery for each country.

If we look at the average performance over 2021, we can see that most countries are in the green zone, highlighting that things are going in the right direction, but India, Argentina, and Brazil have been in the red zone with growing case numbers and an average decline in travel scores.

Exhibit 9: Average growth in case numbers and travel performance during 2021

Thailand has seen cases increase, but on average had seen its travel recovery score increase in 2021. When we just look at the last month, however, this picture changes. The differences between the 2021 average and the last month-over-month visualization are telling about the current situation.

Here, Thailand and South Africa are showing a worrying trend, with also Singapore and Japan moving into the red zone. Russia and Indonesia are also edging towards the red zone. Likely on the back of a weakening performance in most Asian countries, Australia and China also saw a dip in travel performance, despite not seeing an increase in case numbers.

Argentina, which still has rising case numbers actually saw a rise in its travel score. The UK, which saw its travel score grow significantly, has seen the strong case number declines of the previous months stall in May, and if this trend continues will likely move closer to the red zone next month. All other European countries moved deeper into the green zone, with case numbers falling and travel scores increasing.

Exhibit 10: Month of May shows worrying signs for Thailand and South Africa

Do More Vaccines Mean More Travel?

Finally, we looked at the impact of vaccinations. The arrival of vaccinations at the end of 2020 made a big stir in the travel industry, and brought with them a sense of optimism for a swifter than expected recovery.

With vaccinations we have a much shorter dataset to work with, since vaccination rollouts only started at the beginning of 2021. We use a dataset from Our World In Data, which tracks how many vaccinations are set per 100 inhabitants. Since most treatments need two shots to be fully vaccinated, this is not an indication of the amount of people fully vaccinated, but it is one of the strongest datasets out there.

We looked at the speed of vaccination, with the average rate of vaccination per month in 2021, to see if there is correlation with the average growth of travel performance in 2021. When we did that, the data was all over the place. The average correlation was r=0.55, which does indicate a weak correlation, but some countries saw negative correlation, indicating that the data is seeing a decline in travel performance as vaccination rates speed up, or vice versa. This clearly is not what we would expect, and therefore we can conclude that we need to be careful to assume that vaccination speed positively impacts travel recovery.

When plotting the average speed of vaccination with the average monthly growth of travel performance, we can see that very few countries hug the red ‘correlation line’ where growth of vaccinations and travel are in sync.

Exhibit 11: Weak correlation between vaccinations and travel recovery

As with cases, here we hypothesized that building in a lag between vaccination rates and travel scores might provide stronger correlation, but at the moment we are not seeing this yet. We will not draw any conclusions from this yet, since our dataset is still limited to only five months of data. We will continue to track this and see if we can determine a longer-term model which forecasts how countries will perform based on their vaccination strategy. At the moment, the strongest correlation is still when comparing the rate of vaccination of each month with the travel scores in the same month, highlighting again that travelers are thinking and behaving short-term, with the caveat that there are a number of countries that see outlier performances.

A final test we performed here to gauge if vaccinations are starting to show a stronger impact month to month, we split each month’s travel performance and vaccination rates into 10 deciles, to see if for each country the current rate of vaccination matches up with their travel performance. By using deciles, we allow for slightly more variance away from a perfect correlation, and we chart each country’s performance in relation to the other 21 countries.

The theory goes that if there is a relationship between vaccinations and travel scores, the differences between the vaccination decile and the travel decile should be small. Below we have charted the differences between deciles for March, April, and May.

Exhibit 12: May data shows signs that vaccinations might impact travel performance

If we take a rudimentary -2 to +2 range as showing some sort of correlation between vaccination speed and travel performance, we can see that in March nine countries fell within that range. This declined to only seven countries in April, but increased to 12 countries in May.

The question of course is whether May’s strong increase in countries falling within the range shows that vaccinations are starting to have its effect on travel’s performance, or whether it is an anomaly? We will continue to analyze the vaccination rates, as well as the local mobility and new case loads to keep you informed.

What’s Ahead in June

All the data sets that we have investigated for this month’s highlight report, including our own travel recovery dataset, see major fluctuations month-over-month. It is therefore too early to forecast what will happen over the coming months.

What we can do, however, is use our insight into the strength of correlation, particularly the local mobility and case numbers, to see how June is shaping up at the moment for travel.

At the time of writing (June 14), we can see that Google data up to June 10, and data from Our World In Data up to June 13, show that cases have risen sharply over the first half of June in South Africa and the United Kingdom. Also in China cases have risen considerably, albeit from a very low base. However, with a strong willingness for local lockdowns, even at low numbers, the country’s travel score might be impacted.

In Europe, with the exception of the UK, as well as in the U.S., things continue to improve. Turkey has seen the largest increase in local mobility during the first 10 days of June, and as cases have also decreased considerably, the country might see a strong June.

Singapore and Australia both have extremely low case numbers, but both governments had the most restrictive lockdowns last year even with single-digit case numbers. Now we are seeing local mobility decrease again in both countries. This is worrying for their June travel performance.

India and Thailand, next to South Africa, were some of the worst travel recovery performers in May. Both are seeing new case numbers decreasing, and mobility slightly picking up in the first part of June, which might indicate that a travel turnaround is underway in these countries.

Exhibit 13: Partial June data indicates what June will bring


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.

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