Travel in 2021: What the trends indicate about recovery

Where, when and how consumers are traveling is changing

For leisure travelers, the instinct to see friends and family, or explore the world, has not been diminished by the pandemic. Sixty-three percent of U.S. adults say they are excited about the opportunity to take a vacation once the pandemic is under control and the economy has fully opened, though only 29 percent say they currently feel comfortable flying.¹

Vaccine rollouts and availability may be a critical factor in travelers’ comfort levels. U.S. consumers age 65 and older currently represent more than 50 percent of fully vaccinated individuals.² As vaccinations reach younger consumers, pent-up travel demand will likely take hold.³ Millennial and Gen Z travelers are expected to lead the leisure travel recovery after demonstrating a greater willingness than older generations to travel during the pandemic.⁴ They are significantly more likely to book and pay for travel via smartphone⁵ – an important trend for travel industry participants to note.

How people are traveling is changing too, as rentals for cars and private properties surge. According to the American Automobile Association (AAA), AAA.com car rentals were up more than 200 percent in March 2021 compared to March 2020, when travel restrictions were first put into place.⁶ Airbnb also reported bookings had recovered to 70 percent of pre-pandemic levels by the end of January 2021.⁷

“What we have seen is people booking a staycation within 200 miles of home, reserving an Airbnb or Vrbo,” said Ryan Felipe, Head of North America Cross-Border Business for Visa. “We continue to see this in the mobility data during the pandemic.”

International travel recovery dependent on re-opening of borders

Significant obstacles in traveling across borders remain the single most important factor driving the slow recovery of cross-border travel. As of December, of the 217 countries worldwide that reported data, 118 countries or 54 percent still had completely or partially closed their borders to foreign visitors. Of the remaining 99 countries, the majority were mandating COVID-19 tests with quarantines.¹⁴

While international travel will be slow to return, there has been significant demand when borders have re-opened to travel to markets where COVID-19 is under control. In September and October,¹⁵ travel from the U.S. to Mexico saw a 40-point recovery, growing over 20 percent in constant dollars.¹⁶ U.S.-based travel to Puerto Rico (a U.S. territory) and Colombia also improved at the end of last year.¹⁷ This trend has continued with spring break bookings from the U.S. to Puerto Rico.¹⁸

Conversely, in Europe there have been little to no signs of improvement.¹⁹ The number of COVID-19 cases has been rising and in combination with a slow rollout of vaccinations, many countries are back under lockdown. The focus is to open up internal markets within the European Union and the U.K. and then depending on reciprocity agreements, more countries will be included.²⁰

Sources from the Biden administration indicate that the president is looking at mid-May to re-open U.S. borders. This would mean an ease on restrictions to Canada and Mexico and on inbound travel from Brazil, Europe and the U.K.,²¹ which could help spur additional movement. “From an international travel perspective, this gives travel providers a timeline to get prepared for what we hope will be a strong recovery during the summer,” said Felipe.

How the payments industry can support the reimagining of travel

So, what do all these trends mean for the payments industry? New offerings for financial industry partners will be needed, as well as greater mobilization for merchants in the travel, retail, and broader leisure industry to ensure consumers get the experiences they now want.

With the growth of ecommerce in the last year and contactless payments becoming more mainstream, travelers continue to seek digital-first experiences throughout their journeys – from planning and booking to paying for dining and shopping while on the road. Enhanced fraud controls and alerts for card-not-present transactions can help to decrease fraudulent transactions and help consumers feel better informed as they look to experience physically distanced travels. This provides an opportunity for financial service providers and businesses to drive increased engagement with their customers via trigger-based offers and messaging to drive loyalty.

Whether people are sticking to day trips within their state, or optimistically planning big trips for when restrictions ease, their travel, and how they pay while they travel, have changed significantly from pre-pandemic times. For the travel industry, there is some encouragement in that people have demonstrated the desire to travel, and those in the payments industry will need to adapt to the new, digital-first trends that have emerged as a result of the global travel hiatus.

Forward Looking Statements

This content contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are identified by words such as “believes,” “estimates,” “expects,” “intends,” “may,” “projects,” “could,” “should,” “will,” “continue” and other similar expressions. All statements other than statements of historical fact could be forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond our control and are difficult to predict.