The pandemic made 2020 the year of sitting still. As the vast majority of Americans were confined to their houses for long stretches, few industries suffered as much as travel, with flights, hotels, and holidays canceled.
Last year, travel spending in the U.S. plummeted 42% to just $679 billion, according to a study by Tourism Economics. International and business travel were hit particularly hard, with spending on the former falling 76% and the latter 70%.
But with millions of Americans now vaccinated, the future looks brighter for both travelers and the industry as a whole. Penta spoke to
operating partner for Larchmont, N.Y.-based based boutique travel agency Elli Travel Group, about what to expect for the industry as the pandemic slowly fades.
PENTA: How did you feel when the pandemic hit?
Juan Fernandez: It has been a surreal experience. The first couple of months we experienced overwhelming pressure as we navigated through the ever-changing landscape and ensured that all trips were refunded. Then frustration set in, as states, countries, and cities implemented different restrictions. On a personal basis, the biggest frustration was not being able to see family in Puerto Rico. After 10 long months, we were thankful to land on the island and celebrate Christmas with my parents.
What does the travel downturn mean for smaller travel providers like yourself?
The downside of the pandemic was that our income was down 64% when compared with 2019. The upside was that our clients have become more loyal than ever before. Smaller boutique agencies have never had the heavy fixed costs of larger agencies, who are saddled with numerous in-house employees responsible for booking air and hotel travel for leisure and corporate clients. Our cost structure has always been low, but we still were able to reduce our costs by renegotiating contracts.
What will the pandemic mean for the travel industry as a whole looking forward?
I believe that the 2020 pandemic shock is the complete opposite of the slowdown we saw during the economic crisis of 2009–10. That period took several years to recoup lost ground. This time, the devastating slowdown will be met with a surge in demand for luxury travel.
During lockdown, people have stayed at home and spent less money on eating out, entertainment, or travel. Do many clients now have more disposable income than ever?
Research from private-equity firms shows that credit-card charges in 2020 were down 14%. Meanwhile, high-end luxury clients have seen their investments increase in value as stock markets surged to all-time highs. The traveler’s balance sheet is in the best shape ever.
Are people eager to get on the road, then?
Our avid travelers are calling their current planning “revenge travel.” These clients are sending us an 18-month travel plan and have already booked their trips for 2021. Currently our summer bookings are on par to 2019 numbers. The big difference, though, is that 80% of travel is domestic, compared with our typical summer where domestic travel would have been 25%. European bookings are still down 85% when compared with 2019.
What destinations are people looking to go to?
In the short term, we will see muted demand for city destinations. Places like New York or London will have a harder time in the next couple of years. But destinations that concentrate on the outdoors will recover very quickly—we have seen this already, as spring travel for domestic beach destinations like Florida and South Carolina is extremely strong, and the best luxury hotels are close to full capacity. For summer, Hawaii is the place for families and honeymooners. Demand has doubled when compared with the summer of 2019. Yellowstone and Jackson Hole is another popular destination.
Do you foresee more vacations taken by car?
Drivable vacations will be in high demand again in 2021. The federal testing guidelines make it incredibly risky to travel overseas, so we believe families who typically go to Europe will explore domestic destinations. For example, we foresee New Yorkers continuing the trend of driving to luxury destinations in Cape Cod, Rhode Island, and New England.
How will the act of travel itself—from checking into airplanes to hotels— look different in 2021?
This is going to be a complex issue that will evolve slowly. Each country, city, state will have various ways to implement policies. It’s impossible to put all travelers into one category when it comes to testing, passports, or policies that hamper privacy and freedom. In the U.S., there are differing attitudes when it comes to new protocols. In general, everyone welcomes new sanitary programs and the heightened cleanings the airline industry has implemented. But many of our luxury clients would definitely like to see the Plexiglass disappear. As one client who checked into a luxury hotel in Miami said, “I felt like I was going into a bodega.”
What technologies are being employed by the industry to keep people safe?
Recently, on a visit to the Cliff House in Maine, management highlighted the sensors in the lobby measuring their guests temperatures upon check in. On a recent visit to the Ocean House in Rhode Island, they highlighted the new HEPA air filters located in each of their rooms. Larger hotel brands have also invested in new technologies for disinfecting rooms with foggers prior to arrival of guests.
What impact is the vaccine having on travel?
Since Feb. 1 it has been extremely busy. We have clients calling and saying, “I have the vaccine! Where can I go tomorrow?” and within days they are flying to Mexico or the Caribbean. We are already seeing the positive impact that vaccines have on travel. It might be a tad early to know if [vaccine] passports will be a thing of the future, but we are already seeing investments into this type of infrastructure.
What type of person is calling you to book holidays?
The bulk of our calls have been from parents who are exhausted from working, homeschooling, and the absence of family activities like sports. These families have been booking domestic beach destinations like Florida and South Carolina. Couples without kids and with work flexibility have been extending their typical vacations and working remotely. For example, we had a couple at Belmond Cap Juluca in Anguilla who were originally scheduled for a seven-night stay but finally departed after 15 days.
Given the pandemic’s toll on health, both physical and mental, are you seeing an increased interest in wellness travel?
The need for wellness travel has certainly increased, but local guidelines are hampering some of the services that clients crave. For insistence, most spas have had to limit class sizes or cancel certain experiences due to local health guidelines. As these are lifted, we believe we will see a marked increase of travel to spa and fitness hotels. In the meantime, clients are in search of wonderful hiking and biking spots.
Finally, what will “luxury” travel mean in a post-pandemic world?
For some it will mean being able to have the privacy that will help protect their families from Covid; but others are craving the exact opposite. They want the freedom to enjoy and explore human connections that only travel can bring.
This interview has been edited for length and clarity.