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Travel Experience

Travel industry recovery: Business or leisure?

April 21, 2021

RESEARCH REPORT

In brief

  • In a post-pandemic market, travel companies need to create and capture demand for leisure travel. We have identified 6 key ways for them to do this.
  • In the short-term the travel industry will be characterized by a new kind of travel customer whose expectations and preferences will drive demand.
  • The travel market’s recovery is largely dependent on the speed of the global vaccine rollout and it will return, primarily, as a leisure market.
  • Travel companies need to reposition themselves for the post-pandemic market by activating a new strategy based on leisure travel.

The whole travel industry is grappling with the ongoing impact of the COVID-19 pandemic. Travel priorities have changed radically for both leisure and business customers—with dramatic consequences for airlines and hospitality businesses.

An end to the pandemic may be on the horizon. But will the travel industry ever look the same again?

Many believe the Summer of 2021 will be a strong boost to recovery. However, business travel—the staple of the global travel industry—is likely to recover much more slowly. To survive the next few years, airlines and hoteliers must adapt quickly to capture the opportunities in this new industry landscape.

The imperatives? To refocus the strategy around leisure travel.

New post-pandemic travel trends

The pandemic fundamentally changed the priorities, values and behavior of travelers—whether by necessity or choice. Unsurprisingly, the emphasis is now on traveling as safely and healthily as possible. But consumers are also much more aware of the environmental and societal impact of their travel choices, building on a trend that predates the pandemic. There are four key areas of change:

Integrated personal wellness

Health and wellbeing are now priorities for travelers. Every business now has to be a wellness business.

Living for local

The pandemic has refocused people’s attention on their local communities. Domestic travel will be a priority for leisure travelers in the short term.

Doing real good

Travelers in the post-COVID era are looking for sustainable experiences that blend their own need for wellness with that of the planet.

Reinventing connection

Whilst people have been connecting virtually throughout the pandemic, there’s no substitute for seeing loved ones face to face.

New travel market challenges

What do the next twelve months hold for airlines and hospitality businesses? So much depends on the speed of the global COVID-19 vaccine rollout. Amazing progress is being made in some countries, while others are lagging.

In addition, the profile of demand has changed fundamentally—and in some ways permanently—as companies around the world realize much of their business can be done remotely. The need to travel and stay overnight for a face-to-face meeting will likely be much lower. So the travel market is now, in effect, a leisure market. And that’s a structurally smaller market than airlines and hotel companies have been used to operating in.

This structural shift changes how those companies need to go about attracting, converting and retaining customers. It also means they need to think creatively about what to do with underutilized assets.

The travel business is now a leisure business…and a smaller business.

A new playbook for the leisure travel market

So, how should airlines and hotels reposition themselves for the post-pandemic market? First and foremost, they must refocus on creating and capturing demand for leisure travel.

This creates six new areas of focus for travel companies:

Inspiring customers

Airlines and hotels must inspire potential customers and trigger a desire to travel by being active on social media and travel inspiration channels.

A “Glocal” marketing strategy

A global marketing strategy is an essential part of brand awareness, but for leisure travel, it needs to be complemented with local flexibility.

Rethinking loyalty

Points-based loyalty programs focused on frequent business travel need to be rebalanced around the functional and emotional side of loyalty.

Scalable media and content models

To capture new business, companies need a continuous personalized connection with travelers, across all channels and throughout the marketing funnel.

Data-driven decisions

Data unlocks the leisure opportunity by uncovering local needs, guiding the value proposition, increasing efficiency, and prioritizing investments.

Delivering seamless experiences

Ultimately, the experience must match up to the promise. Get it right and there are huge opportunities to increase brand affinity and loyalty.

Activating the leisure strategy

Here are some key steps travel companies can take to activate a new strategy focused on leisure travelers, both right now and over the medium term:

VIEW THE INFOGRAPHIC

A new chapter for post-pandemic travel

There’s no doubt the travel industry is going through a seismic shift. Revenues from traditional business models built around business travel have disappeared overnight. Those revenues will not return immediately. Indeed, they may never recover to pre-pandemic levels. The leisure travel industry is the travel industry for the time being.

That’s why it’s essential that airlines and travel companies take action now. The risk of delay is high. But the opportunities for those that can adapt quickly are huge. This is the time to refocus on leisure, not business, and find new growth in the post-pandemic travel industry.

RELATED: U.S. millennials plan to spend more on luxury travel in 2021, new research from Tripadvisor reveals.

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