What 2021 brings is still anybody’s guess, but with a new year comes new opportunities for the industry to tell a different story. Here are the five travel predictions for this year from Travel Market Report.
1. Bookings will have a rebound For so many, 2020 was very much a roller coaster. Those first couple of months, prior to COVID-19’s arrival in North America, were shaping up to be a record year. Then, after COVID-19 really took hold, advisors spent a number of weeks frantically getting clients home, cancelling bookings, and then chasing refunds or travel credits.
Since that time, though there definitely have been some wins, bookings have largely stalled for advisors, but 2021 could be a different story. There’s a large pent-up demand being discussed – both in and out of the industry – for experiences and the average savings rate of Americans has actually grown over the past few months to double when compared to 2019, according to Reuters.
One of our favorite voices outside the industry, Joshua Brown, a financial advisor who is a frequent CNBC guest and hosts the podcast The Compound Show, mentioned on one of the latest episodes how bullish he is on the travel industry in 2021 and how he’s already booking travel for this year (two trips!).
It may take a few months, but I believe that sentiment is going to spread to the traveling population who know just how valuable those experiences are (a recent study found that frequent travelers are happier than those who don’t travel at all). Savings will be put to good use across the different segments of travel. People will want to get something on the calendar for something to look forward to, even if some may not feel comfortable traveling right away.
2. The travel industry will become a ‘we’ Just like every other industry operating in the global economy, the travel industry is filled with competition that drives innovation and creativity among suppliers and advisors alike. But 2020 caused something to happen that I believe will have a lasting impact. Just as the industry was backed into a corner, a level of collaboration occurred as many started to rely on others to help them get through.
This year, we saw a partnership between Norwegian Cruise Line and Royal Caribbean on their Healthy Sail Panel, which helped build a set of protocols that they hope will help guarantee a safe return for guests and crew members.
We also saw major suppliers do what they could to help out their advisor partners, recognizing that having a strong and financially healthy salesforce is vital to their eventual return. Those suppliers who have reached out to their partners will be the ones who are able to add bookings quicker post-pandemic.
3. Loyal guests will drive the start of cruising’s comeback Cruising was, perhaps, the most hard-hit segment in the entire industry. Consumer media coverage of those early days of the COVID-19 pandemic, as passengers and crew were stranded onboard ships, left a stain on the industry.
It’s still very much up in the air when cruising will return to North America—just this week, Carnival announced that it would extend its voluntary suspension through at least March 2021, an announcement that was followed with a Holland America statement that it would do the same through April.
However, the cruise industry’s ability to deliver such a unique experience to people across various segments—whether its luxury sailings, mega ship cruises, or river sailings in Europe—will push bookings, even as uncertainty remains as to when exactly cruise ships will return to sailing.
CLIA’s 2021 State of the Cruise Industry found just that—according to their research, which took opinions from 4,000 international vacationers spanning eight countries in December, 74% of cruisers are likely to cruise again in the next few years and two out of every three cruisers expect to be back on a ship within a year.
That loyal market will help kick off cruising’s restart. While the task for cruise lines to get those first-time cruisers has become more difficult, there’s more bright and creative minds in the industry than ever and a slate of new products rolling out over the next few years should make that task a bit more achievable.
4. New travel segments will take the lead The COVID-19 pandemic, for the tremendous harm that it has done, accelerated so much change throughout the global economy across industries, change that was starting to take hold before being lit on fire through 2020. Just take a look at how the world shifted to a new digital landscape (Zoom became a verb in 2020!).
That transformation, even with borders closed and a lot of travel shut down, includes changes in how people will want to travel in the future and, as the industry rebuilds itself, we’re going to see new segments become leaders. In particular, we will see people crossing off bucket list destinations and prioritizing a healthy lifestyle.
Expedition cruising, which was just starting to gain momentum pre-pandemic, could explode. More and more cruise lines are rolling out expedition offerings and advisors, surveyed in TMR’s 2020 Expedition Cruise Outlook, sponsored by Seabourn, said they expect there to be at least a 10% to 25% increase in their sales for expedition cruises in 2021, and 18% expect to increase their sales by more than 26% during that same period.
Wellness travel could follow that same trajectory as COVID-19 put health and safety into the forefront of people’s minds. More than 70% of advisors, speaking to TMR during Travel Market Report's 2020 Outlook on Wellness, sponsored by Cunard, said they expect their annual sales volume for wellness travel to likely increase in 2021 with 18% of advisors expecting an increase of over 25% year-over-year for 2021.
5. Passenger volumes will start to really return in Q3 2021 If you look at a chart of TSA daily passenger volume, the beginning of 2020 saw volumes typically exceeding 2019 levels until the mid-March, when volume went from 1.78 million on March 12 to 454,516 on March 22 to a low of 87,534 on April 14. Since then, we’ve seen passenger volume start to recover, reaching a pandemic high of 1.32 million on Jan. 3, 2021, but still remain regularly down 50% from a year prior. While we won’t reach 2019 levels in 2021, we’re sure to see that rebound trend continue.
While bookings will start to return first, actual travel will begin to pick up in the latter half of the year. That will happen as people begin to feel more comfortable traveling with regulations in place and as vaccinations in North America continue to increase through the spring and summer and the threat of spreading and catching COVID-19 begins to slowly, but surely, fade.
There’s going to be more pain in 2021, but the year will very much mark the start of a new story for the industry. One of recovery instead of the one of tragedy that was told in 2020.
Source: Travel Market Report - Daniel McCarthy