The Covid-19 pandemic, and the industry’s response to it, isn’t just the story of the year. It’s the only story of the year.
BY ARNIE WEISSMANN
DECEMBER 21, 2020
TW illustration by Jenn Martins
For the travel industry, 2020 was widely predicted to be a year of growth. Maybe there were some concerns of a slowdown, and perhaps some used that phrase “cautious optimism,” but overall, it was to be an extension of a historic 10 years of uninterrupted economic “up.”
A year later: 92,000 fewer airline employees. Cruise lines voluntarily suspending operations from U.S. ports. Travel agencies processing more cancellations than bookings. And by year’s end, fewer countries willing to accept American travelers than forbid them to enter.
There was but one story in 2020, yet it was a story with a million tendrils. Covid-19 upended plans, dreams and lives; it shuttered businesses, postponed (or hastened) retirements and derailed new enterprises.
But, as in any crisis, creative (and opportunistic) ways to move forward materialized. Consumers weren’t able to summer in Italy, but, depending on their budget, they could rent an RV and tour national parks or lease a private villa in the Caribbean. Mexico hotels kept the lights on and the doors open.
A predicted travel agency apocalypse never materialized, though many agencies sold, merged or morphed from brick-and-mortar to home-based. And, although the crisis hasn’t ended yet, not one major tour operator, hotel chain, cruise line or wholesaler has gone bankrupt. (Airlines have not been as fortunate; among those that have stopped flying or declared bankruptcy are Latam, Avianca, Aeromexico, Norwegian, Virgin Australia and Flybe.)
And, a number of things that are considered “normal” in most years also occurred in 2020: American and Alaska Airlines re-upped their partnership, and JetBlue and American forged a new one. Delta and WestJet obtained approval for a joint venture. Southwest provided full content for travel management companies in the GDS (except for Sabre). Well-known executives left or were appointed. Businesses were acquired or sold.
But mostly: Not normal, not usual.
And least of all, for the cruise industry.
Perhaps the story of cruising in 2020 can best be summed up in a series of abbreviations: CDC, NSO, FCC, CSO.
Cruising and coronavirus became linked during an outbreak aboard the Diamond Princess in January. Before passengers were allowed to disembark in Yokohama on Feb. 19, it had more documented cases of Covid-19 than any country other than China, and at a time when little was understood about how the virus was transmitted, cruise ships were labeled “floating petri dishes,” a phrase easy to remember and hard to shake.
CLIA hoped to come up with a plan that would enable members to resume sailing safely in a relatively short time frame, but it didn’t help that ships still at sea, notably Holland America’s Zaandam and Rotterdam and Princess’ Grand Princess, had outbreaks. Soon after, even ships that had no cases were turned away by port after port.
On April 9, the CDC issued a No Sail Order (NSO), which was to ultimately extend to Oct. 31. It was replaced by a Conditional Sailing Order, or CSO, which effectively halted sailing out of U.S. ports until February 2021. Since it was issued, many lines have pushed back their resumption of sailing from U.S. ports ships until March, some until May.
Smaller ships were not covered by the NSO, but an attempt by Uncruise was thwarted by a false positive, and cruises on SeaDream, Paul Gauguin, Hurtigruten and Ponant had to return to port after infections were discovered. Large-ship sailing resumed in Europe during the summer; although some passengers tested positive on some of those journeys, protocols to isolate infected passengers kept the virus from spreading onboard. Cruises-to-nowhere resumed in Singapore this month, including a Royal Caribbean International sailing that was cut short by what turned out to be a false positive.
Long term, the cruise industry’s consumer-facing reputation may turn on its efforts to learn how to sail safely and the effectiveness of the 74 recommendations of the Healthy Sail Panel, a joint initiative of Royal Caribbean Group and Norwegian Cruise Line Holdings. Its trade-facing reputation has arguably been burnished by a generous double-commission policy offered by most lines: advisors who rebooked canceled cruises using future cruise credits (as opposed to issuing refunds) would keep their commission plus get it again when the passenger actually sailed.
For now, what had been a guessing game as to when the NSO would lift is now a guessing game as to when ships will launch test sailings and start the countdown to passenger cruises.
The year started out well for many travel agencies, coming off a strong 2019 with solid business on the books.
Then, March happened. On the 11th, the World Health Organization declared a global pandemic. On the 12th, President Trump issued a ban on European visitation. On the 13th, CLIA ships voluntarily stopped sailing out of U.S. ports. Corporations, concerned about the health of employees and the liabilities associated with allowing them to continue to travel, all but shut down business trips.
Overnight, agencies went from selling to canceling, refunding or rebooking, with advisors often working long hours to, in essence, give back money.
Many agencies grasped the seriousness of the situation immediately. Although there was still hope that things would get under control by midsummer, agencies began to lay off or furlough employees and renegotiate leases and contracts. As the crisis deepened, many gave up their brick-and-mortar presence and became home-based.
The Cares Act, passed by Congress in March, did include some provisions that were helpful for smaller agencies. The Payroll Protection Act, despite a bumpy rollout, eventually provided desperately needed aid. Suppliers provided future cruise credits and future travel credits, often with bonuses for clients who rebooked, and incentives for agents.
A generation of advisors who came to the profession during the golden age of travel agencies in the 1980s and ’90s were ready to retire, and either closed up shop, sold their agencies or merged with other agencies. Some who had resisted service fees for decades began adding them.
The prospect of further government aid seemed likely, given the need, but agreement between House and Senate didn’t materialized until the waning days of 2020.
A lasting impact of the crisis may be a rethinking of how commissions are paid. The concept of payment upon booking, rather than at the start or end of a trip, was advocated by Signature CEO Alex Sharpe and has picked up momentum from ASTA and other agency groups.
And, interestingly, fresh blood has come into the industry with newbie advisors seeing the downtime as a perfect moment to educate themselves and prepare for the return of travel. One agent, Michael Arnold, went from part-time to full-time in 2019 and is on track to finish this year with an astonishing $5 million in sales.
He’s the exception, to be sure, but common wisdom holds that when travel does resume, advisors will be in high demand as consumers turn to experts to unravel what are expected to be the complex protocols, regulations and rules involved in traveling safely.
The lack of a uniform approach to testing, quarantines and cross-border visitation took an enormous toll on tour operators in 2020.
Much as the words “unprecedented” and “you’re on mute” became pandemic catchphrases, so did the word “pivot,” and in 2020, tour operators were pivoting like dervishes. International operators created domestic itineraries. Those dependent on motorcoaches learned how to create small and private, individualized tours. Companies that previously catered to boomers learned how to appeal to millennials, Gen Xers and Gen Z, who showed much less reluctance to continue traveling.
The question of whether to travel at all became a point of contention. Even within the industry, travel shaming became an intramural activity, with those who felt it was irresponsible to travel and possibly spread the virus pitted against those who felt it was a question of individual choice and risk tolerance.
But more widespread was the feeling that the pause in travel was an opportunity to reevaluate how we travel and consider how we can travel more responsibly and sustainably. Since overtourism was no longer a concern, what could be done to ensure that it would not be a concern once travel resumes?
Also in the area of social responsibility, the industry became more conscious in 2020 of its need to address shortcomings in the areas of diversity, equity and inclusion for Black professionals and travelers. Following the killing of George Floyd and the subsequent increased awareness of the Black Lives Matter movement, existing and new industry organizations for Black travel professionals amplified long-simmering issues.
A Travel Weekly survey documented a wide gap between the perception of diversity and inclusion between Black and white professionals in several areas, including increased representation for Blacks, opportunities for Black professionals to advance and the lack of Black imagery in promotional material. An Adventure Travel Trade Association study and one conducted by MMGY in concert with the Black Travel Alliance showed the significant spending power of Black travelers, shining a light on an underserved market. As travel and hiring resume, many industry professionals, Black and white, see an opportunity and obligation for companies that vowed to “do better” in the areas of diversity and inclusion to, both internally and externally, turn words into action.
The airline industry was in a unique position because it’s regarded as essential by the government and received more than $50 billion in loans and grants, yet it must contend with a wary public, many of whom feel uncomfortable flying or even walking through airports. And many of the airlines’ most profitable customers — those who sit up front — have been grounded by the companies they work for.
Not that the industry hasn’t gone to great lengths to convince people it’s safe to fly. Partnerships with health organizations and brands associated with antiseptic cleanliness are widely touted. Journalists are given demonstrations of why airflow through hospital-grade HEPA filters make airplanes safer than ground facilities. New, socially distanced boarding procedures have been instituted. Food service is altered. Some carriers block middle seats to reduce passenger density. Studies are commissioned to drive home the point that flying is safe.
And yet …
The carriers are losing billions of dollars, and there have been massive layoffs and significant capacity cuts. Fares have been reduced, on average, by 25%.
With business traffic gone, airlines have shifted focus to leisure travel, with additional routes to the Sun Belt and Mountain West.
As the year draws to a close, airlines seem to be pinning their hopes on testing to reassure passengers that the person sitting across the aisle is not a threat. Initiatives to develop apps that will verify Covid-negative status, most prominently CommonPass, are picking up steam.
But one of the longest-lasting impacts of the pandemic may be that some of the most disliked practices of airlines, notably change fees, have become a thing of the past. The lines have eliminated them, in most instances “permanently.”
Airline losses are massive, but the major U.S. carriers have secured enough liquidity to survive beyond the pandemic. When profitability will return is anyone’s guess.
As the pandemic rolled across the globe, hotels closed in their wake, some of them permanently.
Densely populated urban areas were hit hardest, particularly ones dependent on group or convention business. Among the properties that have closed for good in New York alone are the Roosevelt Hotel, the Hilton Times Square and the Omni Berkshire Place.
Shifting quarantine requirements have made it especially difficult to attract visitors, notably in Hawaii, the Caribbean and New York but elsewhere, as well.
As with the aviation sector, cleanliness and its implication for safety has become a focus of many major hospitality brands, which, like airlines, have partnered with medical organizations and cleaning brands. Marriott uses electrostatic sprayers to disinfect guest areas, and other tactics, such as reduced capacity, housekeeping only on request, closing off rooms for a period after use, contactless check-in and simplified room service, have all moved front and center in marketing.
But despite branded protocols, it is nonbranded vacation rentals that have performed best during the pandemic. Many city dwellers fled to perceived havens in less-populated areas and hunkered down for long periods in what came to be viewed as homes away from home, places where they didn’t have to go through any shared, public areas.
Hotels in secondary or tertiary locations have fared better than in cities, with some even reporting close-to-normal occupancy, rates and revenue per available room.
A ripple effect of the impact on hotels has been felt by destination marketing organizations, whose funding frequently is tied to hotel revenues.
There appears to be one winner among hotel brands in 2020: Sonesta. Service Properties Trust, which has a 34% stake in Sonesta, moved 98 of its Marriott-flagged properties and 103 InterContinental-branded hotels to Sonesta, resulting in that brand’s property count growing by nearly 325%.
With encouraging news about vaccines in November and December, there is, for the first time, a sense of light at the end of the tunnel.
Visibility is still somewhat obscured by uncertainty about how quickly vaccines can be rolled out and how strong resistance may be among consumers to get vaccinated. But common wisdom holds that the travel industry will begin to pick up by the end of the second quarter or beginning of the third quarter of 2021 and that pent-up demand may even fuel a strong leisure travel recovery, with meetings, conventions and business travel lagging somewhat.
Only one thing is certain: Few people in the travel industry will be sorry to see the calendar page turn from 2020, a year like no other before and, one hopes, like none to come.
Jamie Biesiada, Jeri Clausing, Johanna Jainchill, Christina Jelski and Robert Silk contributed to this report.