Skift Recovery Index: Week of May 31

Overview

This second report of the Skift Recovery Index provides new data for May 31 to June 6. The total available dataset spans from December 29th, 2019 to June 6th, 2020 (weeks 1 to 23).

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 are currently working with Arrivalist, Criteo, Hotelbeds, OAG, RateGain, Shiji Group, SimilarWeb, SiteMinder, Sojern, and Transparent as data partners for the Skift Recovery Index. We continue to be open to add additional partners. Please get in touch at research@skift.com to discuss.


Skift Recovery Index (SRI) Continues Upward Journey

As of June 6th, the global Skift Recovery Index score stands at 41, 2 points higher than last week. It is only a modest continuation of recovery, with a mixed bag across different countries, which we will investigate further below.

Exhibit 1: Slow global recovery continues

At the regional level, all regions are continuing their upward trajectory. After a slight dip in recovery in Asia Pacific, North America is now tracking as the best region, especially due to the strong domestic performance of the U.S.

Exhibit 2: After some declines last week, upward trends resume

Travel vertical performance is also continuing to show improvement, although the strong growth in the drive vertical is flattening out. It is likely that this is correlated to the improving flight vertical.

Exhibit 3: Vertical performance also shows continued recovery

Tourism Importers and Exporters

Tourism is an important part of the global economy, and of many national economies. Some countries rely more on inbound arrivals, others have a stronger domestic travel base. Some countries are net exporters, meaning they receive more foreign travellers (and the money they spend) in their country, than their residents spend in foreign countries. In effect, tourism is primarily an export industry to these countries. Other countries see the reverse, where they are net importers of travel and spend more in foreign countries than they receive through inbound tourism.

Here we will take a look beyond the index to get a better understanding of the tourism economies in the countries included in the index, and to see if this has an impact on recovery. This will be an ongoing discussion over the coming weeks and months, and we are just laying the groundwork for this in this week’s report.

The inspiration behind this exercise comes from Bernstein analyst Richard Clarke, who in an April 28 research note looked at which countries would benefit if all outbound travel would instead be spent within country borders, basically converting all outbound travel spending into domestic travel spending, while adjusting all inbound receipts to zero.

We are using information from the United Nations World Travel Organization (UNWTO) and The World Bank, as well as some Skift Research estimates, to determine how much inbound, outbound, and domestic trips are taken/received by each country, and how this translates into spending.

‘New normal’ figures set inbound arrivals to zero, and convert all outbound expenditure to domestic expenditure.

Exhibit 4: Travel spending by country

When comparing total in-country spending (inbound + domestic) to total resident spending (outbound + domestic), we can see that Germany, UK, and Canada are the largest exporters of tourism spending as a share of their total spending. Thailand and Spain are the largest importers.

Exhibit 5: Spain and Thailand rely most on inbound tourism spending

When looking at this in actual dollar terms, we can establish how much spending each country stands to win or lose if all outbound travel was cancelled and converted to domestic travel. China stands to win the most in this ‘new normal’, while it is actually the U.S. which stands to lose more than Spain and Thailand in real dollar terms.

Exhibit 6: China stands to win most from recovery with continued border closures

This is, of course, an oversimplification as spending per outbound trip tends to be anywhere from twice to five times as much as for domestic travel. Domestic markets may also not be able to accommodate for the added demand from nationals unable to travel to foreign destinations. Most importantly, however, there is much talk about travel bubbles where select countries open up to each other. Full recovery of outbound travel will definitely go well beyond this summer, but it is unlikely that complete border closures will stay in effect for the countries we track in the index.

That said, it is interesting to see how the reliance on inbound and domestic travel for the 15 countries plays out as travel recovery starts. While it’s too early to say the reliance on inbound spending is negatively impacting recovery, the below exhibit, which ranks countries by SRI score shows that there are certainly a few countries, like Spain and Thailand, that heavily rely on inbound arrivals and are performing poorly in the index. The U.S. and Mexico, however, also rely on inbound arrivals, but are performing strongly. These country variances are likely attributable to the coronavirus spread and lockdown regulations at this point, rather than inbound/outbound ratios.

We will look to build out the index further with a focus on breaking out outbound, inbound and domestic splits further, so that we can provide a stronger view of each aspect of the recovery. As we do that, and as countries continue to open up, we will revisit these points.

Exhibit 7: Country performance is a mixed bag at present


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 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.

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.