It is almost impossible to quantify the devastation that COVID-19 has brought upon the world. Countless businesses have been disrupted, throwing future plans and strategies out the window. Without a doubt, the travel industry has been among the hardest hit affecting the livelihood of millions.
A current snapshot of the impact
Over the next two months, the travel industry is likely to see an 81% fall in revenue[1]. Airlines are reporting a reduction in system capacity and an extension of waived fees due to decreased demand. Anticipated short-term budget cuts have significantly increased for destination travel organizations, mainly in the 20-50% range[2]. Causal IQ’s internal data shows that hotel conversion volume has dropped 49-80% across our partners from February to March due to COVID-19 (though it’s worth noting that the largest drops also align with key COVID-19 updates and dates that media went dark).
Hotels
Due to the pandemic, hotels are experiencing substantial economic losses. It’s estimated that nearly 3.9 million jobs have either been eliminated or will be eliminated over the next few weeks. Some hotels will close their doors permanently. Some are serving as day workspaces, aka flex rooms.[3] Other hotels are stepping up and using their rooms to house medical professionals, essential workers, and homeless people. Despite the current situation, we are seeing signs of hope.
- 8.5M: Hotel room nights sold in the U.S. during the week ending March 28th
- 40.5%: The extended stay occupancy in the U.S.
- 81.8%: 2021 demand forecast, driving occupancy up 57.3%[4]
Airlines
On March 27th, President Trump signed a $2.2 trillion stimulus package into law aimed at getting the economy back on its feet. The airline industry is set to receive a $50 billion slice of the stimulus pie. In a recent survey of travelers, the International Air Transport Association found that 60% anticipate a return to air travel within one to two months of containment of the COVID-19 pandemic, though 40% indicate that they could wait six months or more[5]. As for ad spend, Skift reported airlines were all but absent from U.S. televisions as of March 11th.
- 75: Percentage of airport visits that have gone down
- 18 to 24: Age range of people who continue to travel despite the pandemic, with visits to the airport from this group actually above normal[6]
- 90: Percentage decrease of TSA screenings on March 31st, compared to 2019[7]
The key is communication
As a popular adage goes, “When times are good you should advertise. When times are bad you must advertise.[8]” It’s tempting for marketers to turn the dial down on advertising efforts during an economic downturn, but many millennials actually believe brands should step up their communication. Research from Berlin Cameron and market research firm Perksy reveals more than four in 10 millennials (43%) believe brands play an “important” role at this time and indicate a desire for them to step up their support. One in three (36%) say brands should even communicate more than usual[9]. Three areas in which brands can focus their communication strategy include:
- Credibility: the credibility of a brand has been shown to be higher for brands with higher marketing mix consistency over time and higher brand investments
- Consistency: deliver consistent interactions with clients to build loyalty and strengthen relationships
- Connection: create organic and inspirational content across key digital channels
There is a strong correlation between loss of market share and media pressure (share of voice – share of market). Reducing a brand’s share of voice (its proportion of ad spend within its category) often results in decline of its overall market share. When travelers begin booking again, you want to ensure they book/rebook with your brand, and not the competition. Research by Ebiquity shows us that advertisers who maintained or increased ad spend during economic downturns grew in sales and market share during the recession and beyond. Several studies also point to the many advantages of maintaining or even increasing ad budgets during turbulent times.
What the future holds
A Longwoods International tracking study found 84% of American travelers are changing their travel plans for the next six months because of coronavirus, up from 58% two weeks ago and 75% last week. But Americans are still planning trips. A survey from eMarketer shows as a result of the virus, 64% of adults are more likely to travel within the U.S. and 70% more likely to travel outside U.S. post-pandemic. This suggests most Americans still want to travel and indicates that there will be high demand when the pandemic is under control. “Many of our travel clients wonder if they should be advertising right now. While many of the major hotel chains are pulling advertising during this time, data supports that people are still planning for future travel, whether it’s for vacations or business travel in the second half of 2020 or beyond,” notes Causal IQ’s Vice President of Operations, Jennifer Laing.
Media & messaging strategy FTW
While market-share and media pressure play a role in your brands continued success, media strategy is also crucial. Consistent communication will be central to your brands continued success. But in times of crisis, what should the message to travelers be and how should travel brands present it? We recommend focusing on brand-oriented messaging to instill confidence among consumers. Develop creative that emphasizes brand values, cause marketing and other upper-funnel messages. “Life will return to normal, and it makes sense to maintain brand awareness and portray a positive unifying message, with potential or future travelers now. Based on hotel booking data, we don’t recommend focusing ad spend on lower funnel tactics at scale; instead delivering a message that your brand will be there when people are ready,” adds Laing.
Early indications of a cautious return-to-travel behavior are now evident in China and Australia. Travelers will be back, and they plan to make up for lost time. Don’t wait to engage with them. Take advantage of decreased competition for inventory and use it as an opportunity to send a message of solidarity.
[1] https://www.forbes.com/sites/niallmccarthy/2020/04/21/report-covid-19s-impact-on-the-us-travel-industry-expected-to-be-9-times-worse-than-911-infographic/#702bd3f65e44
[2] https://destinationsinternational.org/covid-19-industry-pulse-check
[3] https://www.usatoday.com/story/travel/hotels/2020/04/17/coronavirus-travel-how-hotels-like-marriott-hilton-filling-rooms/2990669001/
[4] https://str.com/data-insights-blog/covid-19-webinar-summary-5-key-points-us-canada-2-april
[5] https://www.iata.org/en/pressroom/pr/2020-04-21-01/
[6] https://enterprise.foursquare.com/intersections/article/how-different-demographics-are-responding-to-covid
[7] https://www.cnn.com/2020/04/01/business/airline-industry-outlook/index.html
[8] https://www.ocreativedesign.com/when-times-are-good-you-should-advertise-when-times-are-bad-you-must-advertise/
[9] https://www.mediapost.com/publications/article/349281/many-millennials-believe-brands-should-step-up-com.htm