While the world yearns for a return to pre-COVID reality, travelers across the globe eagerly await the green light to embark on long-postponed travel. While international and business travel wavers in a state of limbo due to varied vaccination rates and emerging COVID variants, many are turning to domestic travel for the winter months to quell their yearning for leisure travel.
According to STR, travel spending is beginning to inch back to pre-COVID numbers, with hotel occupancy nearly at pre-pandemic numbers this summer, reaching 70% in July, just 3% less than 2019. However, a significant fraction of Americans will be limiting their travel to more local destinations over the next six months, with 59% saying they prefer to vacation domestically. As further evidence, nearly one in five countries have returned to at least 90% of pre-pandemic levels for domestic flight activity. Domestic flight bookings in the U.S. were above pre-pandemic levels in May; however, as Europe takes more measures to strengthen its climate commitment, train travel is beginning to replace domestic flights. Therefore, the percentage of domestic travel in countries with strong train infrastructure may remain high irrespective of the method of travel. This surge is only expected to continue, as many hotels report they are also starting to get more bookings for business travel for the fall.
In this climate, travel and hospitality companies can and must harness and grow a loyal customer base. Companies can provide savvier offerings as they continue to adapt to consumers’ evolving priorities and expectations, as well as a new remote workforce:
Capitalizing on localism: Many communities rallied behind their local and small businesses during the pandemic to help them stay afloat, a movement that will only continue post-pandemic thanks to the strengthened loyalty these businesses have fostered. Shifting attention to local attractions and small companies can’t completely compensate for missed foot traffic, but it can make an impact. For instance, in Canada, Mastercard’s recently launched Preferred program offers rebates to cardholders who spend at partner merchants, including small businesses. A recent Mastercard report found that in the U.S., small beach towns along the East Coast [that are supported heavily by small businesses], as well as similar areas like Pigeon Forge, Tenn., Sedona, Ariz., Lake Tahoe, and Yellowstone, have seen more visitors since the pandemic. The program has seen a seven-fold increase in cardholders’ spending at small merchants, and 29% of cardholders have made a repeat purchase two months out. Road-tripping to smaller towns and frequenting local businesses and hotels significantly supports local economies and helps them thrive.
Flexible offerings: Travel flexibility became crucial during COVID-19. With people stuck at home, travel loyalty programs exercised creativity and flexibility to keep members engaged. Recently, several major U.S. airlines unveiled new flexible change and cancellation policies for existing and new bookings to encourage travelers to continue booking with them even if they are hesitant due to future uncertainty. Many others have eliminated change fees and other add-on costs. The move to more flexible, travel-friendly policies is long overdue, and many travel professionals warn that a return to the status quo would be unwise.
The change is not limited to transportation services, either. Many hotel brands such as IHG Hotels & Resorts, Hilton, and Hyatt Hotels Corp. offered flexible cancellation policies amid the COVID outbreak, and now, a year plus later, they are maintaining these policies to encourage reservations. Hilton has even made its policy indefinite, allowing travelers a 24-hour no-fee cancellation, an offering it instituted last September as a temporary relief measure.
A new Vrbo survey found that 75% of travelers say they’re more likely to book a vacation rental property with a flexible cancellation policy. Another recent survey found 96 percent of respondents indicated willingness to travel coupled with widespread demand for more flexibility in policies as travel resumes. The same report also found 76% of respondents ranked flexible policies as their highest travel priority.
These policies will remain especially relevant as we see new variants affect travel restrictions. Over the Thanksgiving holiday, we saw many have travel plans interrupted by the unexpected new Omicron variant. Unfortunately, as COVID remains a fixture of everyday life, flexible travel policies will determine how and where travelers around the world book their trips. Now and in the future, travelers will continue to opt for brands and experiences that allow them free cancellation and flexible offerings.
Rewarding beyond the competition: As travelers race to book flights and make up for lost time, travel brands will have to go head-to-head to reel in more customers. Brands will offer unique and novel offerings to incentivize travelers, such as perks for new members, discounted pricing, or status-matching. For example, when travel came to a sudden halt last year, many travel credit cards began offering temporary non-travel benefits such as new point redemption options and new bonus-earning categories.
Many companies are offering generous benefits to lure travelers looking for trips both now and in the future. For example, in the Caribbean, Bonaire teamed up with over 50 island businesses to give travelers 10% off on all aspects of their trip, including accommodations, restaurants, shops, excursions, and much more through November 2021. The landscape remains highly competitive throughout the following year, and with hesitant travelers seeking out the most accommodating trips, these perks will stay paramount to success. This even includes gift cards for other brands, such as Uber, Airbnb, Doordash, and others, that travelers can cash in during their trips.
Vaccine acceptance rates and the spread of the virus remain the top factors affecting people's decision to travel. As the future remains uncertain, businesses must find ways to accommodate travelers' evolved expectations and requirements. Ultimately, catering to a more traveler-friendly model will be a hallmark of industry success in the future. Offering novel benefits and flexibility, and generating exceptional customer loyalty, will determine those that flourish in the post-COVID era.