Covid-19: Current & Future Impact on Leisure Travel (Early April Outlook)

Current State of Travel

• Leisure travelers can expect to pay $205 for domestic round trip airfare, down -33% compared to the same time last year. International travelers will fare just as well, with round trip fares averaging $680, down -27% compared to 2019 levels. 

• Despite an unclear timeline for recovery, 30% of American travelers still plan to take a trip this summer, though flexibility in changing or cancelling the trips they book has become increasingly important. 

Expectations for the Future of Travel

• Flexibility has never been so important for travelers, and airlines have already adapted to remove change fees and make cancellations as low risk for travelers as possible. As the globe recovers from Covid-19, uncertainty is likely to remain and airlines will need to keep flexible options for travelers to encourage them to continue planning trips with a safety net in case plans change. 

• Even before the spread of Covid-19, airfare prices for domestic and international travel were falling each year. With additional uncertainty from travelers and lower demand for travel during this period of time, prices are likely to remain low beyond the Covid-19 recovery period to encourage and enable travelers to get back in the skies as soon as it’s safe.

Current State of Travel

Airfare Pricing

During a typical year, prices for domestic and international travel would be rising week to week, as demand picked up for the end of spring and summer vacation travel. However, with the continued spread of Covid-19 and fast action from airlines to drop prices on remaining routes, prices are lower than ever. 

Today, leisure travelers can expect to pay $205 for a round trip domestic airfare ticket, -33% compared to last year, and down -37% compared to 2018. Deals abound for international flights, too, with a round trip international ticket averaging $680 this week, -27% compared to last year, and -30% compared to 2018. 

Prices have seen some recovery since the beginning of April, but remain significantly lower than earlier 2020 levels, and historical prices during the spring and early summer. 

Traveler Sentiment

Though travel has been interrupted significantly by Covid-19, travelers are still thinking about where and when they will travel next. As we move through these uncertain times, travelers' plans and needs continue to evolve. 

When it comes to planning their next trip, Americans remain hopeful that they can begin to plan, book and take trips as soon as this summer. With more than 30% of travelers hoping to travel again in July or August. 

For many travelers, flexibility has become a critical factor in their decision to travel, with more than 50% of travelers claiming the ability to cancel their trip or change dates after booking with a minimum penalty will be most important the next time they book travel. 

As we look towards recovery, what will travel look like post Covid-19?

It’s difficult to predict what exactly recovery from Covid-19 will look like for the travel industry, but there are some trends that we can expect to continue through the recovery and beyond. 

Flexibility

Flexibility has never been so important for travelers, and airlines have already adapted to remove change fees and make cancellations as low risk for travelers as possible. As the globe recovers from Covid-19, uncertainty is likely to remain and airlines will need to keep flexible options for travelers to encourage them to continue planning trips with a safety net in case plans change. 

Lower airfare, for now

Even before Covid-19 impacted demand for global travel, annual airfare prices for domestic and international travel were falling each year.  High levels of competition between airlines, the continued entry of lower cost carriers reducing prices in the market through their “no frills” fares and favorable jet fuel prices have driven prices down annually for years. As the world recovers from Covid-19, it’s unclear how demand for both leisure and business travel could change as a result of the virus and longer term uncertainty about safety. In addition to the market forces like competition and lower costs continuing to drive down prices, airlines in the post Covid-19 age will need to ensure that price is not a barrier for customers who do feel confident traveling. As a result, prices for airfare will likely remain low throughout this year as travelers and the industry work towards a new “normal.”

More, Last Minute Stays

The accommodations industry has felt the impact of Covid-19 as much as the airline industry, with lower demand for accommodations as Americans and global travelers stay home, and changing customer behaviors.  With many hotels shifting bookings to be refundable and little incentive to book hotels in advance given occupancy is guaranteed to be low, customers are shifting to book hotel stays same-day instead of a few days or weeks in advance. Between January and Mid April, the percentage of travelers booking a hotel stay the same day as check in has nearly tripled, increasing from 25% of all bookings to 60%. As the industry works towards recovery, it’s likely that customers will continue to be interested in refundable rates and more last minute bookings. 

Sources

The data utilized for this study comes from Hopper's real-time "shadow traffic" containing the results of consumer airfare searches. Hopper collects, from several Global Distribution System partners, 25 to 30 billion airfare price quotes every day from searches happening all across the web. The prices reflected in this analysis are Hopper’s “good deal price” which represents what a typical leisure traveler should expect to pay, measured using a “tenth percentile.” Survey results are from a Hopper sponsored survey of Americans who have traveled in the last 6 months, fielded the week of April 8th, 2020.