The New Normal in Travel

The travel industry has been one of the top sectors in the global economy. It has taken one of the largest hits from the Coronavirus Pandemic. Hotels, the airlines, cruise lines, attractions, bus companies, tour operators, restaurants, the performing arts, and other segments of the hospitality industry have been decimated by the onslaught of Covid-19. Domestically state tourism industries in Hawaii, California, New York, Florida, and Nevada have been particularly hard hit.

Many travel industry and hospitality industry firms, primarily small businesses, will not be able to withtstand the financial stress and challenges from the Coronavirus Pandemic. Those companies that are able to survive will In the long term likely fare well due to reduced competition and greater opportunity.

Travel will return gradually but there will be a new normal in the travel industry.

Other crises such as 9/11 and the Great Recession have shown that tourism is resilient and will ultimately rebound but certainly not with widespread rapid growth.

Cabin fever from stay in place mandates will certainly result in pent-up demand for domestic travel. Beach destinations and day tours to local sights and attractions will likely be the most popular trips during the first wave of post pandemic travel. Local and long distance road trips will increase as many travelers will want to avoid airline flights. Once safety and financial concerns are mitigated international travel will follow about 3-6 months later.

The new normal will reflect the adoption of social distancing with reduced seating on planes, busses, and in restaurants. Coronavirus testing will likely be required for air and cruise travel until there is a cure or vaccine.

Initially the cost of airline tickets will likely be less expensive but reduced capacity due to social distancing will force the airlines to incrementally raise rates. The number of flights and routes will be reduced in order to increase passenger load. Some of the larger domestic airlines may merge which will consolidate control of the market. Smaller carriers will either shut down or be acquired by the larger airlines.

Decreased demand in the hotel industry will result in lower average room rates. Hotels that are geared to city wide conventions will not fare well until large scale conventions and meetings are rescheduled and well attended. As a result video conferencing will continue to dramatically increase for the foreseeable future. Hotel casinos, shuttered during the Coronavirus crisis, will initially need to entice guests with lower room rates but gradually will rebound due to a propensity for domestic rather than international travel.

In the short term the cruise industry will be adversely affected by sharp declines in the number of passengers and some ships will need to be temporarily taken out of service. Smaller ships will fare better than the mega cruise ships.

Amtrak has reduced service and suspended certain routes but rail travel should pickup particularly in light of reduced interest in flying.

The motorcoach industry did not receive any subsidies from the Federal Government and many carriers long-term survival will be jeopardized.

With regard to tour operators fully packed motorcoaches will no longer be part of the landscape due to reduced capacity from social distancing measures. But the small group and FIT markets will increase.

The impact of the Coronvirus Pandemic has been devastating to the travel industry in the USA and throughout the world. But once our fears about finances and safety abate a new normal in travel will be ushered in and the small businesses and large companies that survive today’s challenges will be positioned for long term stability and growth.