March was a pivotal month for travel companies who have major operations in Europe and North America, as it became real that the two continents were shutting down, like China earlier. Now that the initial shock and immediate reaction and response are over, companies are starting to ask forward-looking questions: When will this be over? When will people start to travel again? How will they travel?
While travel executives need to have a mindset that consumers will constantly shift their behavior and mind as they adjust to different phases of their personal situation as well as the macro-level environment, it is crucial to keep track of shifting behaviors and attitudes as and when they are shaped, for both short-term and long-term recovery solutions.
In our third monthly travel tracker survey, which was fielded on April 8–13, when the entire country was under some level of lockdown, we added more travel intention questions to help address these questions (see the result of our January and February surveys in our U.S. Travel Tracker January and February 2020: Onset of COVID-19 Impact report).
In this report, we reveal findings on how COVID-19 is impacting travel at the moment and what American consumers are thinking about for their future travel when the outbreak is finally behind them.
What You'll Learn From This Report
- Highlights of March trips in the U.S., compared to January and February
- COVID-19 related changes for March travel
- Economic and travel sentiments in March and April 2020, including an outlook on when consumers will start travel
- Consumer perceptions on how travel preferences might change after the outbreak
- Trip incidence, destination type, in-destination activities, and trip planning for the U.S. population in January – March 2020
The U.S. sank into a hellish COVID-19 hole in March. On March 1, there were 30 reported COVID-19 cases. On March 31, the number was 186,101. The Centers for Disease Control and Prevention (CDC) issued a series of increasingly more expansive and restrictive travel advisories throughout March. And by the end of March, most U.S. states issued state-wide or partial stay-at-home orders.
Our March travel tracker survey found that 25% of Americans traveled in March, down from 41% in February. We believe this steep decrease actually painted a more positive picture than the reality. Most of March travel happened during the first half of the month, when travel restrictions were just starting to take effect. We expect to see a much bleaker number in April, when over 93% of the entire country is under lockdown.
With the outbreak showing no sign of reaching the apex and lives being deeply impacted, it’s hard to imagine what travel will be like on the other side of the pandemic, when uncertainty and fear are the dominant feelings today. But travel will be a much-needed and pent-up outlet and celebratory occasion when this is all over. Our survey signals some silver lining for the travel market. About a third of Americans in our survey indicated they would start to travel within three months after travel restrictions are lifted. However, the lingering fear about the virus and the new routines developed during the shelter-in-place will lead to changes in travel patterns, at least for the short term.
Highlights of March U.S. Travel
In early March, while concerns that COVID-19 would reach the U.S. were shooting up, for most Americans, life was more or less normal. On March 11, the U.S. government announced border closures for most European countries. On March 19, California became the first U.S state to issue a shelter-at-home order, extending some city-level mandate to the 40 million state residents. By the end of March, 93% of the entire U.S. population were required to stay at home, unless for essential trips
1. Steep Decline in Travel Incidence
Travel plummeted as a result. Only 25% of Americans surveyed in March traveled 50 miles or more away from home with at least one overnight stay, 16 percentage points lower than in February. And if we just look at the second half of the month, the number is likely to be under 10%.
Data on flights, hotel occupancies and road trips all point to the same conclusion. For instance, according to STR, U.S. hotel occupancy for the week of March 1 was still at 62%, but dropped to only 23% for the week of March 24. In our report, The Impact of COVID-19 on the Hotel Industry, we presented the global flights trajectory data from January, depicting a steep drop in number of flights after the U.S closed its borders to the EU countries on March 11.
Arrivalist uses mobile location data to track road trips. The company created a live dashboard to track how COVID-19 impacts the drive market. Its daily drive market index uses the average number of daily U.S. travelers who moved at least 50 miles from their home and spent a minimum of 2 hours on their journey in February 2020 as the base and calculates the relative daily traveler volume. The index indicates that the sharp decline in car travel also started after March 15.
2. Travel Planning Need Lessened
Under normal circumstances, travelers usually consult multiple sources in the trip planning stage. But travel in March was likely to be a last-minute decision or with a specific destination and purpose in mind. As a result, usage of most major planning resources was down. Online search and destination websites were the two areas that saw the largest decline in usage. Online search usage for U.S. travelers dropped from 54% in January to 45% in March and usage of destination websites was 16% in January and only 9% in March.
3. Fewer Trips That Included Flights
Percentages of trips that included flights dropped to 20% for all personal travel and 30% for all business travel in March. While travel restrictions and flight cancellations are the biggest factor for the number, fear of being in close contact with other travelers at the airport and on the flight also contributed to the decline. In the long-term, this might be one of the major challenges for flight travel to bounce back.
4. Number of Travelers Staying with Families/Friends Up Significantly
As COVID-19 hit major metropolitan areas, particularly New York, and colleges and businesses shut down, March travel was heightened by essential travels of getting away from the most affected areas and staying with families. Over a third of travel in March involved staying at a private residence, 12 percentage points higher than in February. By contrast, hotel stays dropped from 60% in February to 50% in March.
5. Small Town/Countryside Only Destination Type with Uptake
In line with the changing nature and purpose of travel, small towns and the countryside, which are remote and less densely populated, rose to be the most popular destinations in March. Travelling to all the other types of destinations were down.
6. Sharp Decrease of Leisure Travel Activities
There were significant declines in all leading leisure activities, with shopping, fine dining, museums and entertainment seeing the biggest drops. Taking a stroll is the safest and cheapest activity during the outbreak.
7. Travel Cancellation and Rearrangement Rising
With only 25% of the population traveling and a large portion of the travel involving escaping from the epicenter of the outbreak, we estimate that a majority of pre-booked and pre-planned March trips were cancelled or rearranged. According to our survey, 34% of Americans cancelled at least one pre-booked trip that they were supposed to take in March and another 17% rescheduled at least one pre-booked March trip to a later date. In addition, 28% of the survey respondents said they were planning to book and take a trip in March but decided to postpone booking and 29% said they cancelled at least one pre-booked upcoming trip in the next few months due to concerns about the outbreak.
Cancellation of previously booked March trips
- March saw a big jump in travel cancellation related to business events, indicating the difficult time of the event industry
Rescheduling of previously booked March trips
- Similar to trip cancellations, there was also a sharp rise of rescheduled event related trips in March
Postponement of March trip bookings
Cancellation of upcoming trips in March
8. Travel Deals Resulted from COVID-19 Losing Appeal
As the uncertainty around how long the pandemic will last increases, more people are holding off travel planning. In February, we saw a minor surge of travel bookings directly associated with the deeper discounts offered by travel companies, with 7.6% of survey respondents indicating they booked discounted travel that they’d otherwise not consider. We didn’t see this behavior trending up in March, when more trips were canceled and discounts got deeper. Instead, only 6.4% of respondents booked travel to take advantage of good deals.
Consumer Sentiment on the Economic Impact of COVID-1
When a large-scale crisis happens, the initial shock often throws people into deep dismay and panicky reaction. People make irrational decisions and predictions with wild swings. What makes the situation under COVID-19 even worse is the unprecedented reach and the speed with which the virus quickly swept the entire globe. The stock market in March was the most powerful indicator of this panicky phase. March was the worst month since October 2008 for both the Dow and the S&P 500 indices. According to Bespoke Investment Group, March was the S&P 500’s most volatile month in history.
This volatility is reflected in consumer predictions of the macro-level economy as well as their personal financial situation. When we fielded our February travel survey in mid-March, Americans were in the peak of the shock wave of COVID-19, even though the real damage had just begun to be felt. The positive outlook that was prevalent in February quickly collapsed into deep fear of a contraction in March.
However, after the initial reaction, people adjust to the new normal and they tend to believe the situation might not be as bad as initially feared. Stock markets have been generally up in April, even though the country was in deeper lockdown, more companies closed down, and more people lost their jobs. Our survey, which was fielded in early- to mid-April, reflected the same trend. While the number of people who felt pessimistic about the economic condition in the next 12 months was still higher compared to March, the increase is very slight.
Sentiment on the U.S. Economy in the Next 12 Months
In March, the number of Americans who believed the U.S. economy would fall into a recession increased to 65%, almost doubling from the number in February. In April, the total number who believed so remained the same, except that the number of those who believed the situation would be much worse went up 4 percentage points. And on the positive end, the number of people who estimated the economy would be slightly better went from 12% in March to 18% in April.
Sentiment on the Personal Financial Situation in the Next 12 Months
In general, people tend to be more optimistic about their individual financial situations than about the broad economy. In March, 43% of Americans expected their personal financial situations to be worse in the next 12 months, compared to 65% with an outlook for the entire economy to be lower over the same time frame. Again, the number stayed relatively intact in April. Even in a dire situation like this, there were still 22% of Americans expecting to be better off financially in the next 12 months.
Sentiment on Personal Travel Spending in the Next 12 Months
The outlook for travel spending was slightly less bleak than that for personal financial well-being. In March, 39% of Americans stated they would decrease travel spending. While this was a sharp increase from 16% in February, it was four percentage points higher than those who expected worse personal finances. The number increased to 44% in April.
Concerns and Impact of COVID-1
The biggest determining factor of how the future plays out is when and how this outbreak will end. While people might be still holding on to the hope that life will be back to normal once the pandemic is under control, the fear and impact of the outbreak itself is much more intense, real, and immediate.
From mid-March to mid-April, the number of Americans who were concerned about the outbreak jumped from 76% to 87%. Among the 87%, 63% said they were very concerned, compared to 38% who said so in March.
We also saw a sharp increase in the number of people who indicated their life was impacted by the pandemic. In April, nearly all of the survey respondents, 94%, said the coronavirus had impacted their daily life, with two-thirds of them indicating significant impact on their life.
Other than losing families or friends in the battle against the virus, the next most severe impact of the outbreak is losing a business or a job. Overall 22 millions of Americans have filed for unemployment claims since March. During
the week of April 4 alone, 12 million Americans, 8.2% of the workforce, filed for unemployment insurance claims, marking the highest level of the seasonally adjusted insured unemployment rate in the history of the series. The previous high was 7.0 percent in May of 1975.
Our April survey painted the same picture. While the total number of people who were working, including full-time, part-time and self-employed, didn’t see a big decline in the last month, 32% of surveyed respondents said their employment status was impacted by COVID-19. Among them, 30% were laid off, 40% were on furlough, and 15% took a salary cut.
When Will Consumers Resume Travel and What Will Change
For all companies that either directly or indirectly rely on travel for businesses, the burning questions are: Will people travel again? When will they start to travel? Will they travel the same way as prior to the pandemic? These are the questions that have already been widely discussed and analyzed by well-credited industry observers and experts. We believe that ultimately, the macro-level economic recovery and the individual-level adaptation phases to the post-COVID-19 reality are the two major defining factors for how these questions play out.
The trajectory of economic downturn and recovery aside, human psychology in dealing with stressful events will play an important role in what travel looks like after the pandemic. On the one hand, the traumatic fear and experience during the pandemic will make people drawn to activities and experiences that involve less exposure to crowds, more control of their surroundings and more assurances of cleanliness, at least in the short term, unless it becomes a new habit and norm because service companies scramble to match that demand. On the other hand, the mental and psychological drain caused by the mobility restraint might trigger a surge of impulsive travel.
Our survey results mostly echo the first theory. A majority of people want to wait until it’s safe to travel. And when they do travel, they want to stay in an apartment rental that they can wipe down, and don’t need to share with any strangers. They want to travel in their own car or a rented car instead of flying, and they want to avoid densely populated urban centers that used to be the scary epicenters of the pandemic. All these trauma-driven expectations provide tremendous value for travel companies to act on by offering services that can mitigate the lingering fear of COVID-19. On top of that, companies should also prepare themselves to inspire a new level of travel and service for people who desire to live differently after living through a once-in-a-lifetime disaster.
One Third of Americans Said They Would Start Travel Within Three Months After the Outbreak
The highest number comes from the group who said they would resume travel in 4–6 months after travel restrictions are lifted. They were eager to travel but will take cautious steps to make sure it’s safe and secure to travel.
Two Thirds of Americans Expected Their First Trip to Be a Road Trip
Many industry observers have rooted for the revival of the U.S. train and bus system for the post COVID-19 travel. Our survey has yet to see that trend. Only 5% of surveyed Americans expected their first trip after the outbreak to be by train or bus, likely because those are public, shared spaces. Rather, our survey indicates that the private controlled space offered by a car is most likely to be the first transportation method used by Americans who return to travel.
Over One Quarter of Americans Said They Would Change Their Travel Preference for at Least One Part of Travel Post COVID-19
Accommodation preference has the highest number of changes, at 37%. And 27% of people said they would favor different travel destinations.
To get a better sense of the differences between what people actually do in their selection of travel stays, transportation modes, and destination types, and what they prefer as a consequence of COVID-19 pandemic, we calculated the January and February actual personal trip averages in these three areas from our past travel tracker surveys (we didn’t add March data because we don’t think it’s representative of the normal trend) and ran them against the stated preferences. The detailed comparisons are shown below.
While 64% of all personal trips in January and February included branded hotel stays, only 50% of people who said they would prefer different accommodation type selected branded hotels. On the other hand, all the other accommodation types, including vacation rentals, bed-and-breakfast inns and all-inclusive resorts were gaining shares. It seems people associate branded chain hotel with bigger crowds and less control of cleanliness. While the number seems alarming, this might present great opportunities for global hotel brands to up their games on providing the cleanliness and contactless services that consumers want. After all, they are the ones with the best resources to do so.
We didn’t ask detailed transportation mode questions in our January and February surveys. Instead, we only asked if the trip involved at least one flight. So we don’t have direct comparisons between the actual and the expected for major transportation modes except for flights. As suspected, only 22% of respondents said they would prefer a flight, compared to 29% who took at least a flight in the January and February travel.
Who wouldn’t dream of laying on the beach to relax after being confined in one’s own living space for an extended time? Other than beaches, all destinations that either have a nature or entertainment appeal are up in preferences. The only loser is urban centers.