Travel in 2021: What the trends indicate about recovery
The travel industry has been one of the most visibly hit during the COVID-19 pandemic with very few venturing far from home. It is likely to be one of the last industries to recover with travel behaviors and trends looking very different from before. When travel does return, consumer travel, and specifically domestic travel, is expected to lead the way.
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.”
Domestic travel showing glimmer of recovery
Fifty-four percent of U.S. consumers have travel plans for 2021,8 with consumers most interested in traveling to be with family, followed closely by a desire to enjoy a new experience or destination. Many travelers are choosing domestic, nature-based travel over international city tourism because of concerns about the authenticity of travel experiences and the ability to visit popular sites.9
Short-term domestic travel bookings and volume are growing, though the comparison is harder to predict for dates further out as travelers are likely not booking as far in advance of their intended travel dates.10 Between December 2020 and March 2021, there has been an increase in the number of hotel and booking app users at 80 percent of 2019 levels, and airline users at 55 percent.11
Similarly, March 25 data from the Transportation Security Administration shows passengers at 56 percent of 2019 (during the same time period) – a four percent increase from the prior week.12 And flight reservations from family leisure trips are up more than 100 percent since January.13 All possible hints at early signs of recovery.
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.
Business travel slower to recover than leisure
Business travel will recover more slowly than consumer travel, as companies reflect on the extent to which virtual events can remain so. Experts predict that in-person sales and client meetings will drive the return to business travel, and that regional travel in personal vehicles will come back first. The sectors that may bounce back fastest include manufacturing, pharmaceuticals, and construction. Trade shows and industry conferences have the biggest hill to climb, along with travel in the healthcare, education, and professional services categories.22
A surprising trend is increased travel by workers who became remote due to the pandemic. Some are using their newfound flexibility to work from their dream locations long-term, or live where the risk of catching COVID-19 is lower. Airbnb data show this trend through an increase in bookings longer than four weeks.23
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.
1. Border re-openings are the most critical factor in driving recovery of cross-border travel
2. Millennial and Gen Z travelers will lead the recovery
3. Business travel will return slower than leisure
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.
Last updated: April 2021
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1 Morning Consult, March 2021 consumer survey, https://morningconsult.com/2021/03/24/pent-up-demand-travel-restaurants-cruise-pandemic/
2 CDC COVID Data Tracker, March 16, 2021
3 Visa Business and Economic Insights, March 2021
4 Travel Pulse, “Gen Z and Millennials Are Key to Travel Industry’s Recovery,” July 4, 2020, https://www.travelpulse.com/news/features/gen-z-and-millennials-are-key-to-travel-industrys-recovery.html
5 Skift, “Megatrends Defining Travel in 2020,” December 2019, https://skift.com/megatrends-2020/
6 AAA, “Car rentals are way up, AAA says,” April 2, 2021, https://cnycentral.com/news/local/car-rentals-are-way-up-aaa-says
7 Travel Daily News, March 9, 2021, https://www.traveldailynews.com/post/airbnb-stock-up-by-23-in-2021-trading-at-more-than-two-times-its-ipo-price
8 Airbnb, “Report: 2021 Will Be the Year of Meaningful Travel,” January 28, 2021, https://news.airbnb.com/2021-travel/
9 Visa “Cross Border Travel Consumer Mindsets” survey, November 10, 2020
10 VisaNet data, 2021
11 App Annie data, March 25, 2021
12 Transportation Security Administration (TSA) passenger data, March 25, 2021
13 Adara, Travel Trends Tracker, March 2021, https://adara.com/traveler-trends-tracker/
14 World Nomads, “COVID-19 Travel Alert: Which Countries Have Open Borders?” https://www.worldnomads.com/travel-safety/worldwide/worldwide-travel-alerts#relax
15 Visa Q4 2020 earnings call transcript, October 28, 2020, https://s1.q4cdn.com/050606653/files/docfinancials/2020/q4/CORRECTED-TRANSCRIPT-Visa,-Inc.(V-US),-Q4-2020-Earnings-Call,-28-October-2020-5_00-PM-ET.pdf
16 VisaNet data, Week ending November 6, 2020
17 VisaNet data, Week ending January 1, 2021
18 VisaNet data, Airline Purchases, 2021
19 Eurocontrol.int, Daily Traffic Variation – States, March 2021, https://www.eurocontrol.int/Economics/DailyTrafficVariation-States.html
20 European Commission, “Travel during the coronavirus pandemic,” June 2020, https://ec.europa.eu/info/live-work-travel-eu/coronavirus-response/travel-during-coronavirus-pandemic_en#restrictions-on-travel-from-third-countries-to-the-eu
21 CNBC, “Biden administration eyes mid-May to begin relaxing Covid travel restrictions, sources say,” March 18, 2021, https://www.cnbc.com/2021/03/18/biden-eyes-mid-may-to-begin-relaxing-covid-travel-restrictions-sources-say-.html
22 McKinsey & Company, “For corporate travel, a long recovery ahead,” August 13, 2020, https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/for-corporate-travel-a-long-recovery-ahead
23 Airbnb, “Report: 2021 Will Be the Year of Meaningful Travel,” January 28, 2021, https://news.airbnb.com/2021-travel/