Five Trends in the Travel Industry in 2021

Posted by Harry Miller on December 16th, 2020

At the end of 2019, the tourism industry was booming: hotels were built, restaurants were opened, airlines were purchasing new aircraft. Travel has become the new cultural code for millennials that have elevated their value to a pedestal. There were even cases when in Paris and Amsterdam, the attendance of some objects was limited . No one could have guessed that the travel industry would soon be in crisis.

Costa Rica, Greece, Morocco, Portugal and Thailand, whose economies are geared towards foreign travelers, have suffered losses of over 3% of GDP, according to the recently released IMF External Tourism Report for 2020 . Global revenue of the tourism industry in 2020 year will be about 447.4 billion dollars , which is 34.7% less than in the previous year.

Nevertheless, today we can talk about an overall recovery of the air travel market by 70% (compared to October 2019). Now the demand for flights within Russia has recovered almost completely, and for international flights - by only 20%. The reason for such a rapid resuscitation of the domestic market was the restrictions for citizens on flights abroad.

What trends will determine the development of the industry in 2021?

1. Domestic tourism as an alternative to international

In the context of the coronavirus, residents of almost all countries have no choice but to pay attention to domestic destinations. Many states have taken measures to increase security and stimulate local tourism. An interesting practice was introduced in Great Britain - zoning of internal routes according to the degree of danger. 

According to our data, Russia is in second place in the world in terms of the recovery of domestic tourism: last October, it sank by 17% compared to the same period in 2019. Against the background of a dramatic fall in international directions, this looks like an achievement. This year, the Russians went to explore Karelia, the Urals, Ingushetia, Chukotka and reached Magadan - the number of tourists rested there increased by 35%. In Buryatia and Altai, according to ATOR , in July and August the tourist flow increased by 5-10% compared with last year's values, and the hotels of the Black Sea resorts were almost full. To support the trend, the government extended the tourist cashback program until January 10, 2021, changing the conditions: the amount of compensation reaches 20,000 rubles, the minimum tour has been reduced from four to two nights. However, all this still applies only to those tourists who paid for the trip with a Mir card.

China has achieved the greatest success in increasing domestic flows. It is the only country in the world that has seen an increase in domestic air travel since the arrival of the coronavirus. The deferred demand turned into sales and took the form of a V-shaped curve: the locals are still ready and willing to travel. According to ForwardKeys , the number of bookings in August reached 98% of the 2019 level. Comprehensive measures from major tour operators, airlines and government helped.

For example, many Chinese airlines have introduced discounts. Cheap ticket prices helped Spring carry more than 2 million passengers in September, up 48% from a year ago. Number of outbound flights at the international airport of Phoenix has grown by 12% in August. Travel to Sanya resort in the South China Sea has become popular thanks to the new duty-free policy. In addition, 400 parks and museums have made admission free in China to stimulate tourism. All registrations take place online to comply with hygiene requirements and control the flow of visitors. 

At the beginning of October in the Celestial Empire during the celebration of the "Golden Week" the level of tourism reached 79% of last year. Domestic travel was made by 62 million people. The Beijing Strawberry Music Festival attracted a huge audience, which was not embarrassed by security measures - limiting the number of performances, authenticating visitors, monitoring the health code, measuring the temperature at the entrance, etc. These events, according to preliminary data , did not affect the statistics of coronavirus diseases in China.

2. Decreased shopping depth due to instability in the area of ​​flights 

If earlier tours were bought a month before departure, and regular air tickets - ten days, now travelers do it at the very last moment, fearing cancellation of flights or non-refund of money for hotel reservation. Most of the sellers of package tours still ask for a full advance payment two weeks before departure, but some companies have already responded to the needs of buyers and reduced the time to several days.

Reducing shopping depth does not completely eliminate risks, but it does give tourists a better chance of not closing the country or hotel three days before departure. The situation is still unstable, which is confirmed by recent events, for example, the restriction on New Year celebrations in Moscow, which diminished the hopes of tour operators to earn money during the period of the traditional surge in sales. This has once again strengthened vacationers in the opinion that now you cannot completely rely even on domestic tourism and buy tickets in advance. Most likely, this will lead to an increase in demand for short tours of one to three days within their region.

3. Decrease in the number of direct flights

Constant changes in departure rules, opening and closing of borders, passing tests at international airports, which, of course, raise questions from tourists, are complicated by government restrictions on visiting different countries.  

For example, mutual air communication has not been restored between Russia and Croatia. Previously, the airline could deliver tourists to their destination on a direct flight or, using an interline agreement with partners abroad, through transit zones. Now experienced travelers choose flights through different countries themselves and plan connecting, but those who have never vacationed abroad will postpone the trip until better times.

An additional argument is the fear of the risk of infection in airplanes (especially if the route is complex), although research suggests otherwise. For example, the International Air Transport Association (IATA) confirms the low probability of catching COVID-19 in flight . Since the beginning of 2020, 44 cases have been reported that are believed to be related to travel. During this time, about 1.2 billion passengers traveled by aircraft.

4. Business pleasure concept

There are now many employees of companies among tourists who work remotely and can travel without waiting for a vacation. The remote mode allows you to fulfill your duties and at the same time undergo treatment in a sanatorium or relax in the Maldives. Now the list of popular requirements for the hotel's service includes additional conditions : stable Internet, accessible sockets, adjustable tables and ergonomic chairs, quiet and comfortable rooms. 

The Hotel Office format is popular all over the world. For example, Marriott Providence Downtown has created Day Use packages with 50% discounts for those who work remotely. Many hotels have put up offers for long tours up to two months with discounts, offering to work with a laptop on the islands or in the mountains. Long-term residency packages sometimes even include tutoring and virtual learning assistance for children, pool gazebo jobs for adults, and more.

5. Fast transition of the tourism industry to digital

The trend for remote employment has also affected the employees of the tourism industry. During this year, many in Russia, in an effort to optimize costs, have transferred consultations and sales online, which meets the current needs of the audience. Today there is a global change in consumer behavior with a reorientation to online. The 2020 EU e-commerce report highlights that shoppers in the 25-54 age group were most likely to buy tours online (57%). At the same time, the analysis for European countries showed a different level of development of online services: in Britain, digitalization of tourism is more than 90%, in Romania - less than 30%.

Avoiding offline sales allows you to comply with state-prescribed epidemiological precautions, such as avoiding live queues. It is logical that the rules of social distancing should also be observed when buying tickets at air ticket offices. Previously, the travel business was gradually adapting to the online environment, but now the transition to digital is a necessary and necessary measure to survive.

The pandemic will certainly have a lasting impact on the travel and travel industries. In-house development and service matching new shopper patterns will drive recovery. China has shown a great example of an integrated approach: tour promotions have been personalized to various target audiences, the government supported airlines, festivals, tour and travel agency in India . Thanks to technologies such as the health code system, which uses popular smartphone apps and QR codes, the country has managed to achieve an impressive volume of domestic travel and keep the industry afloat. In general, tourists around the world have become more careful when choosing routes and assessing risks, their demands for recreation and hygiene have increased. However, the need for travel has not diminished. The task of market participants is to show flexibility, without waiting for the end of the pandemic, to adapt to new conditions, because the deferred demand for the usual overseas recreation may not be realized soon.