Travel can be as simple as getting from Point A to Point B or as profound as having the adventure of a lifetime. It has long been one of the world’s largest economic segments. But in 2020, global travel demand plummeted in the face of COVID-19. Now the industry’s future is in flux. Leaders have critical decisions to make in wildly uncharted territory. There’s no looking backward. Only forward.
Travel as we know it is not coming back. But it can become better than ever.
As travel companies look to post-pandemic recovery, there is so much uncertainty. No one knows how quickly and effectively the virus will be contained. Or when consumer confidence will be restored. Or how pent-up demand will play out. Travel as we know it may not be coming back, but a new era is just beginning.
The question for every travel leader is this: How are you responding to this new reality? It goes without saying that you must execute the day-to-day business. You must manage costs with precision, price products well, and invest in the right assets at the right time. These are qualifying actions for survival.
However, there are winning actions that go beyond these non-negotiables. These are next-level moves that travel companies can make to respond fully to the crisis and prepare for any eventuality. We believe these moves are the difference between passively riding out the virus and actively seizing first mover advantage in the new travel landscape. These actions are grounded in several key areas:
Few travel companies can pursue all of these areas with equal vigor and urgency in light of today’s cash, resource and capacity constraints. Getting momentum—and outcomes—means setting clear priorities. In fact, the pace and sequence of these actions depends on how leaders expect the future to unfold. Without the proverbial crystal ball, this is a daunting proposition. It can feel like pure guesswork.
To help travel industry executives navigate this tremendous uncertainty, we developed four future travel scenarios. These scenarios are based on our analysis of Accenture proprietary and publicly available data. They are not absolute, but they do reflect potential outcomes and impacts from key external factors that influence global travel demand:
Vaccine availability and virus containment
Governmental and societal response
Consumer sentiment and behaviors
Global economic climate
Travel companies will need to do different things – set different priority actions – in each of these scenarios. Now the decision is yours: Which travel future will you start planning for today?
Travel companies must act to take full advantage of a burst in pent-up demand, which largely returns to 2019 levels by 2022.
Along with the world, travel companies learn to coexist with the virus through discipline and containment, and travel makes a tentative return.
Amid permanent volatility, travel companies must shrink and refocus on remaining areas of demand to survive. Some companies fail.
The uncontrolled virus upends the industry, and travel companies must radically rethink their business models. Many fail.
Remarkable recovery. Global airline passenger volumes recover to 2019 levels by 2022.
Collective coexistence. Global airline passenger volumes nearly recover to 2019 levels by 2023. But they are still almost 20% below 2019 levels, requiring significant capacity reduction across the travel industry.
Market mayhem. The industry does continue to grow over the coming years, but slowly, and passenger volumes are still only about half of 2019 levels in 2023.
Darkest days. Global airline passenger volumes remain at only about one-fifth of 2019 levels.
Remarkable recovery. By 2022, hotels are back to 2019 occupancy and profitability levels.
Collective coexistence. Thanks to a more achievable breakeven point than airlines and steadily improving demand, the hotel industry returns to modest profit by 2021. However, it takes several more years to reach steady profitability. Cost reductions are necessary in the meantime.
Market mayhem and darkest days. Even with some regional travel continuing, the loss of most business travel hits the hotel sector hard across both scenarios. The industry as a whole sees several years of large losses, and the pain is unevenly distributed. Leisure-centric hotels continue to perform well. However, business-centric, convention-oriented, and international gateway city hotels face severe challenges.