Fincredible MacroTalk December 15: Travel Demand
Management commentary on travel demand from $MAR $HLT $WH $MTN $ABNB $DESP $EXPE $BKNG $AAL $DAL $UAL $CPA $TRVG
Contrary to company forecasts at the start of this year, the travel sector is still well below its pre-pandemic level. Mass vaccinations in the developed world, the easing of travel restrictions, and pent-up demand gave some companies hope they would come back to 2019 levels by the end of this year, but that hasn’t been the case.
If we look at the passenger data from the TSA, it's clear that airline travel is still below 2019 levels.
In this post, we’ve gathered quotes from company earnings calls to get a better perspective on the current challenges the travel sector is facing and how demand is shaping up for 2022.
Hotels and Resorts
Leisure travel has been leading the way in the rebound of the travel industry, while corporate travel is still lagging. Marriott, Vail Resorts and Wyndham are all positive on leisure travel in the coming years for a multitude of reasons. On the corporate travel side, Hilton has seen significant momentum in the past few months, but demand is still roughly 25% below pre-pandemic peaks.
“One other comment I'll make is that we've seen actually since 2010, we've seen leisure trips grow faster than business trips. And I think with the reality that there's still some pent-up demand as well as increased savings rates. And frankly, more flexibility in travel that we absolutely believe that leisure can continue to grow going into '22.”
Kathleen Kelly Oberg, CFO
“The U.S. Travel Association has long estimated that Americans forgo 800 million unused vacation days per year. We expect that unused vacation days will fall in the months and the years ahead, fueling incremental demand for both our brands domestically and internationally, while providing more long weekend getaways to our affordable economy and mid-scale brands.”
Geoffrey A. Ballotti, CEO
“We are encouraged by the indicators of demand heading into the 2021-2022 North American ski season with strong leisure travel demand indicators. Our strong pass sales provide visibility into the robust demand for guests to visit our resorts in the year ahead, lodging bookings at our U.S. resorts for the upcoming season are trending ahead of pre-COVID-19 levels for the 2019-2020 season, while lodging bookings at Whistler Blackcomb are lagging 2019-2020 bookings, which we anticipate is due to the impact of travel restrictions on international visitors to the resorts.”
Michael Barkin - CFO
“Business travel continued to gain momentum, with midweek occupancy and rates improving meaningfully versus the second quarter. In the quarter, business transient room nights were roughly 75% of prior peak levels.
Studies show that nearly 70% of U.S. businesses are back on the road, up 28 points from the end of the second quarter. With roughly 80% of our typical corporate mix coming from small- and medium-sized businesses and with the lagging recovery of larger corporate travel, we've taken the opportunity to continue our work from before COVID to further increase our focus on this segment of demand.”
Christopher J. Nassetta, CEO
Online Booking Companies
Companies like Airbnb and Expedia are optimistic about the leisure travel trends they’re seeing. There appears to be significant interest from consumers to travel more frequently and to more places relative to pre-pandemic years. The big factors holding back demand are travel restrictions related to COVID-19 and vaccinations.
“People are traveling everywhere, literally everywhere. During the pandemic, over 100,000 cities have had at least 1 booking on Airbnb. And that includes 6,000 towns and cities that received their first booking ever on Airbnb.”
Brian Chesky, CEO
“We saw strong recovery across most of our markets, mainly driven by increased demand for domestic travel. International tourism is just starting to pick up as many countries resume opening their borders to fully vaccinated tourists.”
Damian Scokin, CEO
“COVID recovery, of course, remains somewhat bumpy and is unpredictable to say the least, but we are feeling good. And at every turn, we are seeing demonstrated that when people can travel, they will travel for business or pleasure and everything in between. And we are looking forward to seeing the rest of our business return.”
Peter Maxwell Kern, CEO
“On a more positive note, since the U.S. announced in late September plans to ease travel restrictions in November for international travels to have vaccinated, we've seen a significant improvement in room nights booked by Europeans that travel to the U.S. as well as the reverse. Also, we're pleased to see more gross bookings on the books for the Christmas, New Year period than we saw at this time in 2019 in the U.S. and Western Europe.”
David I. Goulden, CFO
“On October 15, I believe it was that date that President Biden announced the reopening of the borders for international travelers come to the United States. Within 1 week of that announcement, we saw a 44% spike in nights booked for stays, crossing borders coming into the United States on Airbnb for stays November 9 and later, which is when the borders would open. So what we are seeing kind of across the board is evidence of pent-up demand.”
Brian Chesky, CEO
In Developed Europe, qualified referrals continue to be approximately at 80% of 2019 levels and referral revenue around 70%. With the rising number of new cases in most European countries, we do not expect a further improvement for the remainder of this quarter.
In our segment Americas, qualified referrals further improved from 58% in the third quarter to around 70% of 2019 levels, while referral revenue improved from 51% to around 60%. In particular, in Latin America and in the U.S., travel demand picked up further coming out of the third quarter.”
Matthias Tillmann - CFO
Airlines have particularly felt the absence of corporate travel. Without corporate travel, reaching pre-pandemic levels is an uphill task. Unfortunately, while corporate clients appear to want to return to normal, there’s no clear timeline for a full return.
“In November and December, we are absolutely seeing bookings coming in at a greater rate than what we saw in 2019. A lot of that has a pent-up demand effect. As we get into next year, with every passing week, we see our bookings step up more and more across TransAtlantic. And so we're really encouraged by that. But the big variable will be when corporates start returning back to office and start traveling again for business, which we anticipate being more in the Q1 time frame than in the Q4 time frame”
Vasu Raja, Chief Revenue Officer
“We hear regularly from our corporate customers that they're ready to get back to travel, see their clients face-to-face to renew business relationships and develop new ones. That sentiment is coming through loud and clear in our most recent corporate surveys. More than 90% of our respondents mentioned that they expect travel volumes in the December quarter to either be the same or outpace September quarter. Nearly 60% of our accounts are telling us that they've already reopened their offices with an additional 10% expected to open their offices before year-end.”
Edward Richardson, CEO
“We remain optimistic that our Latin and Atlantic client will gradually go to 2019 levels and above by summer 2022, and business traffic will accelerate early next year. We currently expect capacity for 2022 to be up approximately 5% versus 2019. Our plans consider our expectations of mapper demand, supply and pricing and focus our growth in the international markets where we expect capacity to be up about 10% versus 2019. As a result, we expect domestic capacity for 2022 to be approximately flat. We remain agile to new plans for ground as needed or even ground unneeded wide-body jets if conditions warrant.”
Andrew P. Nocella, Chief Commercial Officer
“What we're seeing is that people want to fly and travel like they did before the pandemic. And in a way, it's been surprising to the degree that this is going on. But we are not seeing the fear of traveling that we expected maybe a 1 year ago or 9 months ago, and I think it's just regular demand. It's just people going about their business, going about their lives and just getting out and traveling as much as they can afford or they want to or so I will not call it pent-up demand right now.”
Pedro Heilbron, CEO
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