Travel Outlook For 2021

Travel Outlook

Pandemics have consequences.

Nearly 31 million Americans have tested positive for coronavirus since the pandemic began and despite plunging numbers from late January to mid-March of 2021 when cases bottomed out at 53k per day, a fourth surge has since materialized and as of this writing (April 8, 2021), new cases have risen to 66k per day 1.

Looking back, it is easy to surmise that 2020 was nothing less than a “dumpster fire” for the travel industry as tourism spending nationwide plummeted by more than 40% in all sections of the country. According to the U.S. Travel Association, the COVID pandemic has now cost the travel industry a total of $562 billion (and counting) 2. Every sector of the country has been impacted as has every category of travel and entertainment spending and every chain scale of hotel room demand 3.

In fact, the Luxury (-66%) and Upper Upscale (-61%) hotel chain scales sustained much sharper declines in demand than average among the hotel industry in 2020.

But hope is on the horizon.

As of April 8, 2021; nearly 110 million (42%) American citizens have begun the immunization process and nearly 64 million (25%) have been fully immunized. In the past 7 days, the average number of total daily immunizations has reached more than 3.17 million shots per day 4.

The increasing number of vaccinations combined with a comparatively smaller number of COVID cases appears to have fueled renewed interest in travel. That is, while intent to travel had been hovering between 25% to 40% for most of 2020, recent measurements show that intent to travel in the next 6 months has risen above 70% for the first time since the pandemic began. And intent to travel scores among households earning $75k and above (75%) is running significantly higher than it is among households earning less than $75k (66%) 5.

Furthermore, based upon ongoing regression analysis that measures the inverse relationship between travel intent and the number of new COVID cases over the course of the pandemic, it is believed that the average number of new COVID cases per day will need to dip below 10k per day to reach performance that returns to 80% of 2019 levels 6. And the good news is that according to the information derived from the IHME (Institute for Health Metrics and Evaluation) model created by the University of Washington in Seattle, the average daily number of new COVID cases is expected to drop from 68k per day in March 2021 to 57k in April, 19k in May and to below 10k in June 7.

Given the preponderance of evidence above, it is believed that June 2021 is likely to mark the first month of our journey toward the “next normal.”

This aligns with forecasts made by the U.S. Travel Association’s Travel Recovery Insights Dashboard. They predict that the first half of 2021 will see domestic person trips return to 76% of pre-pandemic levels with the second half of 2021 returning 87.5% of pre-pandemic levels during the same time of year. Their forecast indicates that it will take until the second half of 2022 to reach 99.9% of pre-pandemic levels 8.

Similarly, STR forecasts that after falling 35.7% in 2020, U.S. hotel room demand is expected to rebound by +18% in 2021 returning total demand to 75.8% of its pre-pandemic levels. Of course, total room demand includes business and leisure travel as well as domestic and international stays. STR’s forecasts indicate that it will take until 2023 to see total hotel room demand rebound to 2019 levels 9.

1 John Hopkins Coronavirus Resource Center
2 Travel Recovery Insights Dashboard, U.S. Travel Association
3 STR Room Demand, December EOY 2020
4 COVID Data Tracker, Centers for Disease Control and Prevention
5 H2R Market Research
6 H2R Market Research
7 Institute for Health Metrics and Evaluation, University of Washington
8 ”Domestic Travel Forecast, “Travel Recovery Insights Dashboard, U.S. Travel Association
9 ”US Hotel Forecast, “Travel Recovery Insights Dashboard, U.S. Travel Association