In 2019, travel was the sixth largest industry in terms of ad spending in the US, according to eMarketer. While pre-COVID reports suggested that the industry would grow even bigger in 2020, rising 19.3%, it’s no surprise that the coronavirus pandemic took a drastic toll on the industry at large. In fact, the travel industry cut its ad spending by approximately 90% from the previous year during the first two weeks of March 2020 alone, as the pandemic spread worldwide.
However, as the new normal sets in and Americans look to the future amid continued safety measures, research suggests that recovery in the travel industry is going in the right direction. Travel brands are becoming aware of US consumers' desire to travel and video ad spend is picking up significantly. New reports from SpotX indicate that travel advertisers are now spending 244% more on over-the-top (OTT) and connected TV (CTV) platforms since the week of April 2nd-April 8th, when stay-at-home measures went into full effect. But the nature of travel in the US has changed its course, as the post-pandemic travel landscape focuses more on local opportunities than international excursions and cruises.
Local Tourism Gains Traction
Americans wish to travel is continually increasing. According to Deloitte, as of mid-May, almost one-third of US consumers were planning to stay in a hotel during the summer months. As the year has progressed, PWC research suggests that 90% of consumers expect to travel again in the next 12 months, as restrictions start to ease.
Rather than travelling internationally, consumers are readjusting their plans, focusing on domestic travel destinations to limit health and safety concerns. As a result, local tourism boards have spent significantly more on video advertising to reach these audiences. In fact, local tourism boards and national parks have increased OTT ad spend as compared to the first week of April, as the impact of the pandemic on our economy was taking hold.
Certain audience segments are particularly interested in getting back to travel. Millennials, for example, can offer the industry a lifeline during recovery as Deloitte notes that travel plans are stronger among 18-24 year olds, a group that is also actively searching for travel deals. Although millennial consumers are increasingly difficult to reach, they tend to be heavy streamers of ad-supported CTV and OTT content, and as such, travel advertisers spending dollars on OTT and CTV inventory have an opportunity to engage millennial audiences interested in vacationing.
Driving vs. Flying
While airlines have seen a 35% increase in flight operations between May and July 2020 and airlines are capitalizing on the renewed interest in travel amongst US consumers, destinations that are accessible by train or car are rising in popularity with travelers due to coronavirus concerns. A recent study from Longwoods International found that 82% of travelers polled had changed their travel plans for the next six months, and of those, nearly a quarter (22%) had switched to driving from flying. It’s evident that with COVID, outdoor travel has become a getaway. In fact, top ad domains in 2019 for the travel sector consisted of Hotels, Airlines, Resorts, and Transportation. Whereas, in 2020, the top ad domains are focused on local and outdoor travel, such as RVing.
This is in line with ad spend, as new reports from SpotX indicate that automotive ad spend on OTT and CTV platforms has increased 436% since the week of April 2nd-April 8th, while rental car companies and train service providers have also increased ad spend during the same time period. Similarly, auto sales have bounced back as the travel landscape adjusts, with some brands seeing their sales increase over 2019's numbers. At the same time, orders for motor vehicles and parts jumped 86.2%, with overall transportation equipment orders up 20.2%, as of August 2020.
While ad spend is still down 51% as compared to pre-pandemic levels, recovery in the travel industry is moving in the right direction overall. It’s evident that consumer interest in traveling is on the rise and travel brands and agencies are following suit by investing their ad dollars to reach these coveted audiences.