What will travel’s potential recovery mean for tourist retail?
Photo: @jopanuwatd via Twenty20

What will travel’s potential recovery mean for tourist retail?

Travel retailer Hudson announced plans to open six stores in the new Virgin Hotels Las Vegas as domestic air travel has recently been showing signs of making a comeback.

“There is such an immense feeling of honor being the first retailer selected to operate at the stunning new Virgin Hotels Las Vegas, and the timing could not be more perfect as we begin to witness the rebound of travel,” said Roger Fordyce, Hudson’s CEO, in a statement.

Air travel has started to recover significantly in recent weeks as vaccination rates climb and states roll back pandemic restrictions.

American Airlines said Monday bookings are nearly back to pre-pandemic levels. Delta said on Wednesday that it would start selling middle seats again on flights starting May 1, making it the last U.S. airline to end the policy restriction.

Expanded vaccine availability factored into Delta’s decision. CEO Ed Bastian said the company’s research shows that 64 percent of its pre-pandemic passenger base anticipate having at least one dose of the vaccine by May 1.

Mr. Bastian in a memo to employees said mask requirements, cleanliness protocols, eliminating change fees and other measures would remain in place. He wrote, “Don’t confuse these actions with a return to ‘normal.’”

Wednesday marked the 21st day that over one million people have been screened at airport checkpoints, according to the Transportation Security Administration. That’s still down 41 percent year over year amid continuing safety concerns.

The U.S. Centers for Disease Control and Prevention’s is recommending that even vaccinated Americans postpone all travel plans until more is known about how effective vaccines are against new COVID-19 variants and whether vaccinated individuals can spread the disease.

A new analysis of TSA screening data from The New York Times also finds large hub airports have just a fraction of the travelers they did at this time last year, while traffic at smaller airports in such places as Colorado, Montana and Florida’s Key West are running ahead of last year. The best traffic was seen as airports “close to outdoor vacation destinations, and those serving communities whose residents are more willing to travel amid a pandemic.”

BrainTrust

"I suspect that business travel may never come back to its pre-pandemic numbers. Conversely, leisure/vacation travel will come back with a vengeance. "

Bob Amster

Principal, Retail Technology Group


Discussion Questions

DISCUSSION QUESTIONS: Do you expect a fast or slow recovery for retailers relying on tourist traffic coming out of the pandemic? Which tourist hot spots are most likely to provide a boost to nearby retail? How strong is American’s appetite to travel?

Poll

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Neil Saunders
Famed Member
2 years ago

Travel is recovering, at least from a domestic perspective. Hotel bookings are up. Passenger numbers are up. And leisure destinations are seeing numbers rebound. Everything is pointing in the right direction, although it is still not quite back to where it was before the pandemic. That is good news for any retailer relying on travel for success. However it may take longer for international travel to come back which means a slower recovery for those destinations, such as the big cities, which are more reliant on foreign tourist spending.

Bob Amster
Trusted Member
2 years ago

The recovery in travel is spotty. Doublin is dead while CDG was busy. Air travel will come back for sure. With the recent continued use of virtual meetings and video conferences, I suspect that business travel may never come back to its pre-pandemic numbers. Conversely, leisure/vacation travel will come back with a vengeance. There is pent-up demand that won’t be satisfied with a “virtual” walk up the Spanish Steps. Vacation travel may come back quicker in the U.S. until we feel that other countries of interest are past the point of posing a travel risk.

Steve Montgomery
Steve Montgomery
Member
Reply to  Bob Amster
2 years ago

I agree. My informal research in talking with friends and associates in a wide number of types of baseness, there is a definite dividing line between their plans for travel. Many who spent their life on the road now say they don’t miss it and their companies don’t foresee it returning to it former level. On the other hand all all looking format to flying to see family, friends and to their favorite vacation spots.

Gene Detroyer
Noble Member
2 years ago

I can’t imagine that those retailers relying on tourists will do better than the those relying on the general public. Here in NYC life is coming back, but not in the tourist areas. Fifth Avenue, Herald Square, Hudson Yards, WTC, and Broadway remain ghostly.

I also suspect that much of the travel is not traditionally tourist travel while there remain restrictions on many tourist type venues. Even when the restrictions are lifted, I see a reluctance to participate in the traditional tourist focused destinations. Even Las Vegas, noted in the article, remains down between 40 percent and 50 percent.

Dick Seesel
Trusted Member
2 years ago

This is purely anecdotal, but my wife and I traveled last Friday from Milwaukee to Phoenix (it’s warmer there) and found packed airplanes and airports (especially at PHX, where social distancing is just a dream). We waited until two weeks after our second vaccination, but we saw plenty of travelers — younger parents with children during spring break — who were unlikely to have been vaccinated yet. Compliance with mask-wearing was surprisingly good, but restaurants were operating at full capacity everywhere we went. At least for now, Arizona’s COVID-19 cases per 100,000 population are quite low.

Again, this is not scientific, but it does signal an appetite to travel and otherwise experience “normal life.” (We did not visit any enclosed malls, but open-air lifestyle centers like Kierland Commons had plenty of traffic.) The sustainability of this kind of consumer behavior will depend on whether vaccinations can outrace the rising tide of new cases, but “COVID-19 fatigue” may be the deciding factor, no matter what.

Cathy Hotka
Trusted Member
2 years ago

One thing holding travel retailers back is the severe shortage of rental cars. Flights are relatively inexpensive, but rental agencies sold off much of their fleet to stay afloat, and rental car prices are sky-high. The rebound is going to take a while.

Bob Amster
Trusted Member
Reply to  Cathy Hotka
2 years ago

Uber anyone?

Cathy Hotka
Trusted Member
Reply to  Bob Amster
2 years ago

Available in some places, but not in others. Southwest Florida, not so much.

Georganne Bender
Noble Member
Reply to  Cathy Hotka
2 years ago

I looked into booking a trip last week, this week the airfare is almost doubled. Good thing we don’t need a rental car!

David Adelman
2 years ago

The tourism traffic will rebound with vigor once the threat of COVID-19 subsides. Before the pandemic invaded our shores, experiences, whether traveling abroad or simply kayaking down your local river, were the discretionary spend of choice. This was especially true for the important ever-growing Millennial market as they shifted from the material gluttony of their dreaded Baby Boomer elders to experiences. Society had a “wake-up call” since the onset of COVID-19 last year. The pandemic has hampered our freedoms, our innate need for human interaction, and our love for new experiences. I am confident that we will all unleash our inner explorer with a fury once it’s safe to come out of hiding!

Georganne Bender
Noble Member
2 years ago

What will travel’s potential recovery mean for tourist retail? EVERYTHING.

Airport, hotel and independent retailers in tourist areas depend on business travelers and vacationers. Walk-in traffic for them isn’t easy to come by. Virgin Hotels Las Vegas opened last week to crowds, and Vegas hotels are reporting they are busy again as tourists feel it’s safe to return. Fingers-crossed for all tourist retail – and consumers – that safe travel will continue to grow.

Venky Ramesh
2 years ago

The recovery for travel retail will be slow, taking at least another year or even two. The head of travel retail for a global alcoholic beverages company mentioned to me last month that his business was down 70 percent, even while Americans consumed more liquor during the same time. New York Governor Andrew Cuomo yesterday announced domestic travelers are no longer required to quarantine after entering NY from another U.S. state but continues to enforce mandatory quarantine for international travel. It is not clear whether that applies to people who are vaccinated but even vaccinated people can be carriers and transmitters of the virus. Only eight doses have been administered so far across the world for every 100 people. Due to that, international travel, which is a key driver for travel retail, will take a while to revive.

Richard J. George, Ph.D.
Active Member
2 years ago

Americans want to get out of the house. The question is where will they feel comfortable traveling. It appears as though Europe will still be off limits this summer, even with a digital health app. Domestically, as vaccinations increase, hospitalizations and deaths hopefully decrease, I expect a surge in U.S. travel. I see hotspots as being all those places Americans can visit that have an outdoor dimension, think beach resorts, national parks, etc. The roaring ’20s may be here!

Shep Hyken
Active Member
2 years ago

Get ready. We’re looking at the beginning of the Roaring Twenties! I’m seeing hotel and airfares moving up as more people begin traveling, both for personal and business reasons. The airports are getting busy. Stores and restaurants are re-opening. People want to get out, and the data proves it. The expectation is that pre-pandemic travel levels are going to happen in 2021 – unless we have a major spike in COVID-19 cases. And I’ll add that as people do resume some sense of normality, let’s hope everyone exercises good judgement and respect for others to help maintain safety as we “recover.”

Phil Rubin
Member
2 years ago

Leisure travel is without question going to recover before business travel, especially in the US. Between vaccinations, pent up demand, lots of money (including the job recovery) to juice the economy and today’s CDC announcement, there are literal and figurative tail winds for the first time in 13+ months. While it’s anecdotal, like Dick Sessel’s comment above, I’m traveling for the second time in two weeks. Busier airports, more expensive flights, tougher restaurant reservations and a big smile on my face walking through the airport, under a mask of course.