COVID-19 THE IMPACT OF - ON CORE TRAVEL SECTORS AT A GLANCE - Global ...
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THE IMPACT OF COVID-19 ON CORE TRAVEL SECTORS AT A GLANCE
REPORT
OVERVIEW
Several reports provide insights into the effect of
the coronavirus on the tourism industry, advice on
pricing, marketing and so on. This study attempts to
explain by providing a single narrative across the
millions of available voices and different snippets
of data.
We follow the timeline for the virus of COVID-19,
which has spread as a basis for discussions centered
on some of the countries most affected so far, beginning
with China where the virus was born and then heading
to Europe, which is the epicenter of this global
pandemic at the time of the writings.
So there is a discussion on the situation in the United
States, which is monitoring Asia and Europe, but which
is starting to show a significant rise in reports and
deaths, and we examine what sector performance in
WORLD TOURISM FORUM INSTUTITE
Asia and Europe may tell us about what the nation
is going to achieve.
We are as uncertain as anyone about the future,
but see signs that this might be a long way to recovery.
However, we do believe that the industry will
recover.
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AIRLINES
Airlines are on the frontlines of media attention and you
can quickly see why. Borders and travel restrictions have
impacted the industry. Whole airlines and airports shut
down operations before the situation improves and
experts expect the need for some financial assistance
from virtually all airlines to cope with this crisis.
If governments wonʼt intervene, CAPA predicts
that most airlines will bankrupt by the
end of May.
On 28 January, the first decline occurred as airlines
started to cut flights to China. The capacity of flights from
China to the rest of the world was that by 80 per cent
according to ForwardKeys. However, from 11 March
a second and deeper wave occurred, when the
United States declared its border closure for
EU nationals.
WORLD TOURISM FORUM INSTUTITE
In comparison with 2019, IATA predicts a loss in
passenger income of $252 billion, down 44% over
the year. The forecast assumes that limitations on
the border remain ongoing for up to three
months and a slow economic recovery
will follow.Global Flights Per Day - 7 - Day Moving Average
190.000
170.000
No. of flights
150.000
130.000
110.000 Mar 11
Jan 28
First flights to U.S. announces
90.000 China canelled border closure
for EU nationals
70.000
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25PLAN YOUR VACA- TION
ONLINE
TRAVEL AGENCIES
As with airlines, travel agents and online travel agents
often feel pressure, as the travelers stop and try to cancel
booked trips.
In the first quarter of 2020 Chinese Trip.com, owner of
Ctrip, Skyscanner and Qunar travel brands, expects
revenues to fall by up to 50%. It was attributed to a
slowing of growth in late 2019, as outbound demand
from China, which was already extremely strong for
several years, started to slow.
Both Expedia Group and Booking Holdings, the two
largest online travel agencies outside China, have
withdrawn their guidance in 2020 because their stocks
have fallen in the face of the coronavirus uncertainty.
CEO Glenn Fogel revealed in a letter of 23 March for
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Booking Holdings that he and other executive team
Members have neglected their pay, detailing further
steps to minimize expenses, particularly in their marketing
spending. He wrote: “This is not the first major disruption
to travel we have endured as a business, but the impact
of COVID-19 is more than all the previous disruptions
... combined.”Cuts in marketing spending on reservations may also flow through Google. Booking Holdings is known to be one of the biggest marketing customers of Google and we estimate that the search engine spends up to $3 billion on this. World Touris Forum Institute reports that the travel industry will spend up to $16 billion on Google around the world and the effect of drying up advertisement revenues for Google has already been seen. For hotels running metasearch engines the cost per click (CPC) has decreased significantly. During the span of three days between 12 March and 15 March, CPCs on meta search engines decreased by %40 and auctioning for leading selections fell prices by %75, according to Koddi results. WORLD TOURISM FORUM INSTUTITE
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WORLD TOURISM FORUM INSTUTITEHOTEL
INDUSTRY
The situation for hotels differs slightly, since the impact
of the hotels on the location, price segment and form of
accommodation is different. Moreover, although some
of the hotels need to be entirely closed, some are
reserved for stranded travelers and workers, converted
into homeless shelters, doubled as quarantine centers
or are provided for use by healthcare staff.
This does not mean that the hotel industry has less impact
than the airlines on the coronavirus crisis; far from that.
The data that are now beginning to appear show
significant declines, particularly in the worst affected
countries and cities, in occupancy and room rate nearly
everywhere. Whereas, cancelations are through the roof.
Every sector, from the small hotelier to major global
chain operators, is hit by the crisis. Stocks and big hotel
chains are in the firing line having crashed. In a video
message recently for staff and shareholders, Marriott
President and CEO Arne Sorenson said: “Covid-19 is
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having a more severe and sudden economical
impact on our business than 9/11 and the 2009
financial crisis combined. The worst quarter we
had in those earlier crises saw a roughly 25%
decline in hotel revenues on average across the
globe. ... In most markets our businesses are
already running 75% below normal levels.” The
corporation has been forced to furlough 10,000 employees
along with other chains such as HyattShare Price Growth of Largest Hotel Chains
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
-70%
2- Jan 9- Jan 16- Jan 23- Jan 30- Jan 6- Feb 13- Feb 20- Feb 27- Feb 5- Mar 12- Mar 19- Mar 26- Mar
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Taken along with revenues per room available (RevPAR), globalized
occupancies have plummeted. Skift Research data by the revenue
management company Atomize indicates a significant decrease in
occupancy since the beginning of March. Atomize Atomize covers a
worldwide range but its product line is predominantly Europeans,
which partially explains the rather late drop-off, however, as
Alexander Edström, CEO of Atomize, explained during a recent
webinar in a further explanation, several hotel rooms have been
pre-paid without a cancelation clause.Realized Occupancy for Atomize Portfolio
January - March 2020
90%
80%
70%
Occupancy Rate
60%
50%
40%
30%
20%
10%
0%
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Revenue per available room saw similar declines according to STR.
Regional data indicate that in Asia-Pacific in February the effect is
mainly felt. The effect on RevPAR results in major European cities is
shown below. Europe and North America are currently in the center
of the effect. STR said that the RevPAR results in the USA and
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Canada decreased by about %70 for the week ended March 21,
which indicates that these regions now have maximum pandemic
pressure.RevPAR Change in Major European Cities
28 Day up to March 22
Copenhagen
Amsterdam
Stockholm
Barcelona
Brussels
Istanbul
London
Madrid
Prague
Athens
Vienna
Dublin
Zurich
Rome
Berlin
Paris
0%
-25%
-32%
-41%
-50% -47% -46%
-44%
-52% -50% -49% -48% -48%
-56% -55%
-60% -59%
-75% -68%
-80%
-100%
According to data from 38,000 software properties
obtained by HotelRunner, forward reservation values have
hit, and reservations made during the week starting on
16 March compared to the year 2019 would be down. It is no
surprise, because no one knows when it's safe
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to go out. March has been a write-off of both present and
prospective bookings for Christmas holiday reservations.
Whether lost profits at the moment can be recovered after
limitations are lifted is unclear.Confirmed Gross Booking Value Change
YoY % Change
May-20
Aug-20
Nov-20
Dec-20
Mar-20
Sep-20
Oct-20
Apr-20
Jun-20
Jul-20
-0%
-14%
-25% -15%
-29%
-50%
-63% -49%
-75%
-75%
-81%
-84% -84%
-100% -91%
WORLD TOURISM FORUM INSTUTITESources:
CAPA - Centre for Aviation
IATA
Koddi - Advertising Technology for Travel
STR
WORLD TOURISM FORUM INSTUTITEApril 10, 2020
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