Skift Recovery Index: Week of May 24

Overview

This first report of the Skift Recovery Index provides data and insights from travel data spanning from December 29th, 2019 to May 30th, 2020 (weeks 1 to 22).

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.


Where do we stand?

The coronavirus crisis has obliterated most international travel, and severely cut or completely stalled domestic travel demand. By now we know the industry has been deeply impacted, but we are also hearing encouraging news about careful reopenings, growing flight capacity, and slowly increasing accommodation bookings. However, travel leaders cannot react to these green shoots without better data. How strong is the recovery, exactly? And how is it unfolding across the globe?

We are launching the Skift Recovery Index to help travel businesses, associations, and destination management organizations better understand how the recovery is shaping up. The index tracks the recovery in 15 countries, through more than 25 indicators focusing on the air, lodging, and drive verticals, while also taking into account macroeconomic conditions and traveler sentiment.

The global Skift Recovery Index currently stands at 39 points relative to a baseline reading of 100, indicating that our industry’s output has fallen by just over 60% due to the crisis. This represents a nascent recovery of 11 points from the absolute low of 28 in the week of April 5th.

We are currently working with Arrivalist, Criteo, Hotelbeds, OAG, RateGain, Shiji Group, SimilarWeb, SiteMinder, Sojern, and Transparent as data partners for the Skift Recovery Index. Together we are stronger, and that is also true for data insights. By combining and weighting data covering various aspects of travel performance, we are able to build more robust estimates of where the industry stands. More information about our data partners can be found at the end of this report.

In this first report we will take an overview of the broader trends for the past five months, looking back to how the crisis unfolded, and where we stand today. We will update the index every week, and subsequent reports will provide deeper analysis into specific verticals and countries as we continue to track the recovery.

All future reports will be available to our Skift Research subscribers. All data — for deeper investigation — will also be available to our subscribers. You can find out more about becoming a subscriber here.

We also welcome more data partners to join this effort. Please get in touch if you feel you can add data to further strengthen the Index.

Recovery is starting in earnest, but it is slow

The Skift Recovery Index tracks the travel industry performance in 15 countries across the globe: Australia, Brazil, Canada, China, France, Germany, India, Italy, Mexico, Singapore, Spain, Thailand, the U.S., United Arab Emirates, and the United Kingdom. These 15 countries account for just over half of global inbound tourism receipts according to 2018 data by The World Bank, and 61% of outbound tourism expenditure. The countries accounted for 66% of global 2019 GDP.

The Index is built to represent the industry’s overall performance relative to the same time last year. An index score of 50 means the industry is performing half as well as it did last year; a score of 120 would indicate an improvement of 20% over the prior year.

The aggregate performance of the countries, weighted by GDP, shows that the low point is now about two months behind us, with the lowest score of 28 recorded in the first week of April. Since then, there has been a slight weekly uptick in performance.

As of the week of May 24, the Skift Recovery Index score stands at 39 points, which indicates that the global travel industry is running at about a third of the performance that it experienced at the same time last year.

Exhibit 1: The global recovery score is slowly increasing

The country view of the Index clearly shows how the coronavirus pandemic played out across the world. China was the first country to register the negative impact of the coronavirus on its travel industry, swiftly followed by other Asian countries highly reliant on Chinese tourists. Today, China is one of the strongest performers, as is already widely reported by the travel industry and media. Even so, the numbers are still way below last year’s.

After Asia, Europe started to feel the full effects of the pandemic, with Italy particularly hard hit. European countries are now showing some of the lowest scores as they are just starting to come out of their lockdowns. Many European countries are also highly reliant on foreign visitors, with a smaller domestic tourist base. This might slow recovery, something we will investigate further in the coming weeks.

Exhibit 2: Regional index scores closely follow the pandemic spread

The U.S. was one of the last countries to start showing a decline in its index score, and as it has a stronger domestic market than many others, it is showing quicker signs of recovery than other countries. However, with a messy patchwork of reopening policies throughout the country and many areas still showing high levels of new coronavirus cases, the long-term recovery might be slow.

Australia is a slight anomaly here, as its performance in the first weeks of 2020 was impacted by the recent wildfires that thwarted the country. Since then, however, the country has joined a similar trajectory as all other countries tracked.

Exhibit 3: China has been slightly outperforming other countries

Drive market shows rebound

For the travel verticals, drive data shows that car journeys and car rental bookings are showing a strong upward trend, while lodging and flights continue to show a much slower recovery. As many country borders were closed mid-March, flights saw a short uptick due to repatriations before nose diving and remaining largely stagnant now for two months. Lodging has shown a more gradual decline than air, but has also been in hibernation since mid-March.

A breakdown by vertical also shows how the wider economy — in the form of the macroeconomic indicators — has not seen the same decline as travel verticals. This makes sense. We are all aware that the travel industry has been in the eye of this storm, and is one of the hardest hit industries. While consumer and business spending have declined significantly, and unemployment rose rapidly (e.g. to 14% in the U.S.), stock markets are bouncing back, and many parts of the economy continue to function at near normal rates.

Exhibit 4: Travel is hard hit, but car journeys are rebounding

Are U.S. residents ready to travel again?

Our Recovery Index also analyzes country performance from a tourism source market vs. a tourism destination market perspective. This is important as some countries are net importers of tourism, relying heavily on inbound tourists, while other countries are net exporters, sending more tourists abroad than they receive. The current border closures mean that net exporters of tourism theoretically have a bigger stock of potential travellers to tap into for domestic trips, potentially speeding up recovery.

Given that many border closures are still in place, most travel is currently domestic, which results in a strong overlap between destination and origin performance. As borders are reopened, the destination/origin split will allow us to track the recovery of the inbound/outbound travel market.

Already, the destination/origin split provides some interesting insights. Taking macroeconomic indicators out of the equation, we compare destination performance indicators (how are travel businesses performing in each country) with traveler sentiment indicators (how interested in travel are residents of each country). China and the U.S. stand out for their relatively strong destination scores, but U.S. residents show a higher interest in traveling than Chinese residents, although even in the U.S. traveler sentiment levels are still only at a third of what they were at the same time last year.

Exhibit 5: U.S. residents show relatively strong interest in traveling

The careful interest of U.S. residents to travel again is further highlighted by search and booking behavior for flights and hotels.

Searches for flights and hotel stays by U.S. residents have been at a higher level than the global average. That said, bookings have dropped more than searches, and while having registered an increase in the past two months, they are still at only 28% of 2019 levels for hotels, and 35% for flights. In both cases, this score is almost double the global average, highlighting the greater interest in travel from U.S. residents, and possibly the more relaxed approach to lockdown.

We will use subsequent reports to keep track of how this progresses, and how this compares to other countries.

Exhibit 6: U.S. searches and bookings have outperformed global average


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.

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.

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.

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.

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.

RateGain helps travel and hospitality companies with cognitive revenue management, smart e-distribution, and brand engagement. RateGain supports over 125,000 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.

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.

We would welcome more partners who want to join this effort. Please get in touch to talk about a possible collaboration.