Skift Recovery Index: October 2020 Highlights

Overview

This report highlights the latest insights from the Skift Recovery Index. The index currently covers travel’s performance from December 29th, 2019 to November 7th, 2020 (weeks 1 to 44). This report focuses on the performance during the month of October.

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, Arrivalist, Aviasales, Collinson, Criteo, Duetto, Hotelbeds, Key Data Dashboard, OAG, Onyx CenterSource, RateGain, Shiji Group, SimilarWeb, SiteMinder, Skyscanner, Sojern, Transparent, and TrustYou as data partners.


Is that a light at the end of the tunnel?

As we write this, November is turning out to be a month of optimism. Not because of any hard travel data yet, but because of a rapid succession of changes in the political and medical landscape.

In the space of two weeks, the U.S. elected a new President who is widely expected to deal better with the current pandemic and offer more support to the travel industry and wider economy, and news broke about two preliminarily effective vaccines that could be ready for mass-rollout next year.

Exhibit 1: Slight decline in the total score in October

October, then, almost feels like an inconsequential month, wedged between September, a month of decline in travel performance after months of strong growth, and November, with the arrival of some positive news that rekindles hopes that we can return to strong growth as early as the beginning of 2021.

In October we saw an initial uptick of performance, but then a steep decline at the end of the month which has continued into November. The decline is mostly driven by stricter lockdowns in Europe, with the region in the middle of a second wave.

East vs West: A world split by the virus

New daily coronavirus cases have dropped to single digits in many Asian countries, but most country borders remain closed. There are still countries with outbreaks, and countries including India and Indonesia continue to have high, albeit mostly declining, numbers.

There are some careful steps being taken to restart travel, with China now open to Hong Kong, Macau, and Taiwanese nationals. India is set to partially open its borders at the end of November if cases continue their downward trend they are currently on, while Hong Kong and Singapore will open their air bubble on November 22, with initially one flight going each way every day.

In the West it is a very different picture. October saw new cases flare up in most countries in Europe, and cases also went up again in the U.S. and Canada.

Exhibit 2: The East is down and improving, the West is up and getting worse

In Europe, as coronavirus cases spiked and several countries went back into partial or full lockdowns, tourism performance plummeted. Travel performance in the U.S., as it has done since the start of the recovery, is remaining largely constant despite setting new case records almost every day.

Exhibit 3: Europe went from top performer to laggard within two months

Tourism in India, in particular, seems to be finally increasing considerably, seeing strong growth for three months running now. We have said from the start that India has great potential for recovery due to its strong domestic traveler base. It appears that, as new coronavirus cases slowly decline, we are seeing the first signs of India starting to flex its domestic muscle.

Exhibit 4: Country-level performance, ranked by October performance

Drive continues its downward trend

Car rental was one of the most resilient sectors at the start of recovery, but since we have seen some of its strength ebbing away. In September, drive dipped below accommodation, and this downward trend continued in October.

Exhibit 5: Drive performance falls in October

Again, Europe is seeing strong declines here as the volume of travel is declining. But the October Travel Tracker, a survey conducted each month in the U.S. by Skift Research, also provides evidence that flying is increasingly seen as an alternative to driving.

Exhibit 6: October Travel Tracker shows decline in travel intent by car

Peter Kern, CEO of Expedia Group, said during their Q3 earnings call that: “Air continues to lag lodging … but I think generally air has been improving. We’ve seen that across domestic air. And we think that people are getting more comfortable with the safety protocols and understanding the safety of flying, and we think that’s good news.”

Strong domestic flight markets have indeed registered some increase in flight searches over the past months, but this is still showing a very slow recovery. Searches are still below 50% of pre-COVID levels.

Exhibit 7: Flight searches are slowly creeping up

There is some positive news for car rental providers as well. In a recent webinar, RateGain talked about the performance of car rental, noting that overall 2020 rental prices have been running at about 25% higher than 2019, even when demand is lower than normal. The company expects that the remainder of 2020 will continue to see lower rentals at airports, while rentals to locals increase. Due to this usage shift, larger and more expensive cars are in higher demand.

Lodging keeps its relative strength

Two months ago we noted how vacation rental and hotel bookings were converging, after months of vacation rentals outperforming hotels. This was an indicator that the hotel industry was starting to register strong recovery. Updating this graph shows that this trend has largely held, with new hotel bookings largely in line with new vacation rental bookings.

One thing that is clear is that vacation rental bookings are currently much more volatile than hotel bookings. This might be due to the actual smaller numbers of vacation rental bookings, which makes fluctuations more pronounced. But we also assume that this is due to the nature of the guests served by both lodging segments. Hotels have a more stable base of customers (like essential workers) that are less likely to be impacted by travel restrictions. With restrictions changing regularly, vacation rentals are seeing stronger spikes and troughs as they cater more to family leisure travel.

Exhibit 8: New bookings for hotels and rentals track similarly since August

Another indicator that hotel performance is strengthening in relation to vacation rentals is that for the first time since the start of the pandemic in March, hotel stays went up significantly in the Skift Research Travel Tracker. Of all the personal travel taken in October, 56% had hotel stays, a sharp increase from the 48% in September. This is only four percentage points lower than January and February, prior to the pandemic. The share of vacation rentals continued to drop, down from 11% in September to 9% in October.

Exhibit 9: Hotel stays see bump in performance according to U.S. survey

We should note, however, that in terms of occupancy rates vacation rentals are still outperforming hotels. In the U.S. for example, vacation rentals broke a major barrier in October, moving above 2019 levels in terms of occupancy. Hotels are still at only about 70% of last year’s levels. A main reason for this is that vacation rentals, in normal time, are much more seasonal than hotels. Many vacation rentals are only operating during the summer months, when demand for family rentals is highest. Hotels, in contrast, operate all year round. With normal demand out of the window, vacation rentals continue to be in higher demand than last year, even outside the normal high season.

Exhibit 10: Vacation rental occupancy remains high beyond summer season


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.

Arrivalist uses mobile location datasets to provide actionable insights on consumer behavior, competitive share, media effectiveness, and market trends, and has been tracking driving behavior of U.S. residents, which we have included in the 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.

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.

SiteMinder works with over 35,000 hotels as their guest acquisition platform to generate in excess of 100 million reservations worth over US$35 billion in revenue for hotels each year. SiteMinder provides hotel booking data for the Skift Recovery Index, pulled from its World Hotel Index.

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