R&R Speaker Interview with David Goodger, Managing Director, Europe & Middle East Tourism Economics
As a new economic landscape emerges, which areas of the travel industry will be most affected?
All areas of the travel industry will be affected by this major disruption, but in different ways. Very large falls in all travel activity are already evident for 2020 and it will take a number of years to regain 2019 levels of activity. However, within the total, there will be some shift to more short-haul travel including to domestic destinations. This will be driven in the first instance by an earlier lifting of travel restrictions for trips within a country and between trusted neighbours, but will also be affected by economic and sentiment effects. The deep recession in 2020 will affect incomes and spending into subsequent years and travellers will be looking for some lower-cost and closer-to-home alternative destinations. Safety concerns will also compound these effects as more familiar, local destinations will be trusted.
Domestic travel is expected to fall by less than international travel in 2020 as a whole with some recovery beginning earlier in the second half of the year. 2019 levels of activity should be regained by 2022, whereas for international travel, recovery to 2019 levels is not expected until 2022. Long-haul travel will take longer to recover within total international travel.
Also, within the total, leisure travel is likely to return ahead of business demand. Virtual meetings will replace some element of in-person meeting activity into the long-run, but there will still be a place for travel. Large events, including business events, will also take longer to return due to the lead time for organisation and the need for assurances that events can go ahead. Attendance at business events is likely to be lower than in the past, at least in the first instance as travel budgets will likely remain more limited than in the past.
What has your research shown in relation to consumer confidence and the reopening of the travel industry?
General consumer confidence has seemingly been quick to return in general once strict lockdown measures have been lifted across many destinations. Significant pent-up demand has been realised once businesses have been able to re-open to consumers, with sharp pick-up evident in higher frequency indicators of sales and mobility. Bookings data also point to some pent-up demand for tourism as consumers appear keen to travel again. However, an immediate return to previous travel patterns is not likely. A large proportion of travellers seemingly remain cautious and there is a large degree of substitution occurring from international to domestic travel.
Will the focus on local that has developed throughout the pandemic and looks set to kick start the restarting of the sector remain?
Previous downturns and crisis events have resulted in some movement towards more local travel in the same way as the current trend. This was evident in data following the Global Financial Crisis, as well as after the SARS outbreak, and the series of terrorist attacks in 2015 and 2016. Reduced incomes and the shift to perceived safer destinations drove these movements. However, in each of these cases, there was a return to prevailing trend of reducing local share of travel after one or two years.
The substitution effect will be larger in 2020 and 2021 and will persist for subsequent years to some extent. There is a chance that this effect will linger accelerating some of the emerging trends of people opting for less longer-haul and air travel with an eye on more sustainable travel.
Which one measure/policy would have the most significant impact on the recovery of the European tourism industry?
Discovery and distribution of a vaccine would drive the biggest change for all destinations worldwide and allow significant recovery. Looking just within Europe, more co-ordinated action across the EU or Schengen area in an approach to combatting the spread of the virus, including in terms of opening borders and test and trace activity would involve less action than establishing new travel bubbles elsewhere. This would also mean that the region would operate more in line with a domestic market and allow a more rapid recovery.
What is your hope for the travel industry in a post COVID-19 world?
A safe return to normal travel is obviously the overriding goal, but it is also clear that, while travel volumes will return in time, travel activity will be changed. It is to be hoped that destinations and businesses use the time to prioritise which elements of travel activity are to be encouraged in recovery. This should address any major concerns relating to over-tourism and sustainable activity. This may include fewer, but higher spending, trips being taken or some emphasis on new destinations and activities to better distribute the positive aspects of tourism activity across a wider geographic area, and more evenly throughout the year.
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David will deliver the Travel Economics Keynote: Rebuilding After the Crisis? during R&R on Tuesday 20 October at 9:15.
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