ECONOMIC AND TRAVEL OUTLOOK IN THE SHADOW OF COVID-19 Adam Sacks - - PowerPoint PPT Presentation

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ECONOMIC AND TRAVEL OUTLOOK IN THE SHADOW OF COVID-19 Adam Sacks - - PowerPoint PPT Presentation

May 21, 2023 326 likes •594 views

ECONOMIC AND TRAVEL OUTLOOK IN THE SHADOW OF COVID-19 Adam Sacks President Tourism Economics adam@tourismeconomics.com May 2020 Drivers of the outlook POLICY RESPONSE ECONOMY PANDEMIC TIMELINE Cases/deaths Confidence Lock downs Upside

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Adam Sacks President Tourism Economics adam@tourismeconomics.com May 2020

ECONOMIC AND TRAVEL OUTLOOK IN THE SHADOW OF COVID-19

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Drivers of the outlook

Upside Baseline Downside

PANDEMIC TIMELINE POLICY RESPONSE ECONOMY

Cases/deaths Testing Therapeutics Vaccine Lock downs Social distancing Capacity limits Border closures Confidence Income Supply Consumption

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Most of the world has been in lockdown in early Q2

20 40 60 80 100 Present Past China Italy Spain France Germany US (specific states) UK India Australia Japan Other

Global lockdowns

Source : Oxford Economics/Haver Analytics

% of global GDP

16% 65%

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Sharpest fall in GDP since WWII

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US recovery should accelerate into 2021 but will remain below par

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Massive job loss

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90% of unemployed expect to return to their jobs

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Travel in the US is beginning the long climb back

$19.8 $14.6 $6.2 $3.3 $2.9 $2.4 $2.3 $2.5 $2.9 $3.0 $0 $5 $10 $15 $20 $25 2/29 3/7 3/14 3/21 3/28 4/4 4/11 4/18 4/25 5/2 5/9 5/16

National weekly travel spending

$ billions

Source: Tourism Economics

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Europe is most exposed to seasonal peak impact

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But Europe has little long-haul exposure

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Expect a big initial bounce in GDP

  • 8
  • 6
  • 4
  • 2

2 4 6 2007 2009 2011 2013 2015 2017 2019 2021 Non-China EM q/q contribution China q/q contribution Advanced economies q/q contribution Global % quarter

World: GDP

Source : Oxford Economics/Haver Analytics

% quarter Forecast

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But the risks are heavily skewed to the downside

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Pent-up demand is real, but trips will adapt

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Domestic opportunity is massive if international travel halts

97,492 78,896 18,597 Outbound departures Inbound arrivals Trip Opportunity 20,000 40,000 60,000 80,000 100,000 120,000

Source: Tourism Economics

US Balance of Travel (2019, trips)

Thousands

19 million more US outbound trips than inbound 13 million more Canadian

  • utbound trips than inbound

35,313 22,230 13,083 Outbound departures Inbound arrivals Opportunity 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

Source: Tourism Economics

Canada Balance of Travel

Thousands

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This opportunity (and risk) varies significantly across Europe

89% 76% 84% 68% 46% 44% 81% 52% 60% 58% 72% 60% 80% 34% Germany Italy United Kingdom France Spain Turkey Russia Austria Switzerland Sweden Norway Denmark Finland Iceland 50 100 150 200 250 300 350 Inbound Domestic

Source: Oxford Economics, WTTC

US$ bn, 2019, domestic % share as label

Domestic & International Travel Spend by Destination

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Domestic to become a larger source of demand in Europe

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Domestic International

Source: Tourism Economics

mn guestnights

Europe: International and domestic hotel guestnights

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Destination performance will partly rely on source market mix

Vienna ​ ​ ​ ​ Dubrovnik ​ Prague ​ ​ ​ ​ ​ ​ ​ Paris ​ ​ Berlin ​ ​ ​ ​ ​ ​ ​ Hamburg ​ ​ ​ ​ ​ ​ ​ ​ ​ Dublin ​ ​ Florence Milan ​ ​ Rome ​ Venice ​ ​ ​ Amsterdam ​ ​ ​ ​ Warsaw Cracow Lisbon ​ ​ ​ ​ ​ Barcelona Madrid ​ Sevilla ​ ​ ​ ​ ​ Geneva Zurich ​ ​ Istanbul ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ London ​ ​ ​ ​ ​ ​

Copenhagen Helsinki Reykjavik Oslo Bergen Gothenburg Stockholm

0% 20% 40% 60% 80% 100% 0% 20% 40% 60%

Source: Tourism Economics

European city reliance on domestic and long-haul arrivals, 2019

Long-haul % share of foreign arrivals Domestic % share of total arrivals Less volatile More volatile

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Destination performance will partly rely on source market mix

Atlanta Boston Chicago Dallas Denver Detroit Oahu Houston Los Angeles Miami Minneapolis Nashville New Orleans New York Anaheim/Santa Ana Orlando Philadelphia Phoenix San Diego San Francisco St Louis Seattle Tampa Norfolk/Virginia Beach Washington, DC Montreal Toronto Vancouver

40% 50% 60% 70% 80% 90% 100% 55% 60% 65% 70% 75% 80% 85% 90%

Domestic Share Transient Share

Hotel room demand by customer type

Share of 2019 room nights sold

Most resilient mix Least resilient mix

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After previous recession, it took 7 quarters for demand to recover its prior peak, and 12 quarters for ADR in the US

Prior recession:

  • 9.8% decline from

peak

  • 7 quarters to recover

to prior peak Prior recession:

  • 10.7% decline from

peak

  • 12 quarters to recover

to prior peak

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Full recovery in hotel demand may take twice as long as prior recession

Demand recovers its prior peak by the end of 2023, approximately 14 quarters after trough.

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Recovery is tempered…but inevitable

Demand

Relative to 2019

  • 68%
  • 66%
  • 64%
  • 39%
  • 17%
  • 12%
  • 5%
  • 80%
  • 70%
  • 60%
  • 50%
  • 40%
  • 30%
  • 20%
  • 10%

0% 10%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2020 2021 2022

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Anatomy of a recovery

Return to “normal” levels of travel will be a multi-year effort (likely 2023)

Initial recovery

  • Leisure
  • Especially drive

Secondary recovery

  • Essential business
  • Small- and medium-size groups
  • Regional international (intra-Americas, intra-Europe)

Final recovery

  • Long-haul international
  • Large events
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Decisions must be informed by a recovery timeline and profile

Funding Safety protocol Market focus Staffing Messaging and positioning Channels Incentives Partnerships New events

Determine strategies to accelerate recovery

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Access to global travel forecasts and scenarios

  • We are extending a time-limed offer to access our forecasts for a paid 3-month period:

Includes access to our data and forecasts for Global Travel Service, 185 countries and Global City Travel, over 300 cities plus regularly updated COVID-19 analysis PLUS

  • A popular request is Custom Scenarios and Analysis – assess the impact of COVID-19

and expected recovery - when and in what form To receive further information, please contact: bhindley@oxfordeconomics.com

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