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Travel and Hospitality

May 7, 2021

When can we expect things like travel and hospitality to return? Catch our newest TrendsTalk episode with ITR President Alan Beaulieu to learn more about our expectations for this industry.

 

 

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Transcript by Rev


Hi, everyone. I'm Alan Beaulieu from ITR Economics, and welcome to another issue of TrendsTalk. We have a subject that's on a lot of people's minds that we're going to talk about for a few minutes today, and that's travel. When is hospitality coming back? When is the travel industry coming back? When's business travel going to come back? Those are great questions, don't you think?

Well, let's talk about business travel first. First off, understand that that is annual data, so data for 2020 is not available yet. It takes a while for them to come up with the data, that's fine. But we can talk in general terms, because there are leading indicators and there are things that point us to future expectations. But know this, that at the end of 2019, the amount of money being spent on business travel was down a lot from the previous peak, which was four years earlier, all right? That's a 48 month decline of 12.1%, it's certainly the longest on record. And the data begins back in 1999. So, we have a fair amount of history there so it's not just for comments.

So, businesses were spending less on travel for years before COVID. COVID just kind of accelerated it and brought along a fresh load of pain. Now when I look at the leading indicators, I can find reasons to be encouraged. When I look at the leading indicators, I would expect, that in 2021 we will see business travel begin to rebound on a rate of change basis, see some dollars moving up. Now it's all anecdotal, but we do a lot of traveling here at ITR. We get a lot of requests from clients to go visit them onsite, board meetings, sometimes it's for trade associations. There's a lot more travel interests going on. I just got a request today which would make the shift one in one week out there in September, all onsite.

I mean, things are opening up. So business travel is improving and uniquely a part of that as we go forward. As far as the travel industry itself goes, when I look at travel or accommodations services revenue, that's quarterly data that is through 2020. We don't have the first quarter of 2021 yet. That got hammered, obviously. I mean the 1212 rate of change agenda 20 was minus 44.4. So we're at 55.6% below a year ago levels, talk about pain. It was the lowest in years. Now, here's the good news, the 312 is rising and the 312 has upward pass the 1212. So on ITR when the 312 reaches a low that's thumbs up that's checking point number one. But an upward pass is the 1212, that's checking point number two. I did a little digging, a little what ifs. And we're going to see that 312 rate change at 1212 rate change real soon. And that's going to be checking point number three.

And we're going to see that the travel combination services revenue is going to go up as we go through 21, and that we will end 21 with the three month moving total above 2020. We're going to see that that continues in 22. When will we be back to pre COVID levels? It'll take a while. We should see a pretty nice rise, but don't expect to be back where you were say at the end of 2019, that can't we get in a 21. But do plan on being busier. You plan on needing more staff, you plan on having more bookings coming your way. Also, anecdotally, as I hear in the industry, people booking for events in the first quarter of 21 at the usual hotels are hearing, "No, sorry we're full. We cannot take your group." So book ahead, plan ahead. Things are looking up. Vaccines are working well.

The United States cases are in decline, deaths are in decline, the world is going up. The world is maybe reaching an apex that is above the previous defects as far as cases go. But United States, we are definitely on the decline. And that means that we're going to get out again. Probably you saw that there was new airline coming frees for vacationers. They're counting on the fact, that everyday Americans who are going to want to travel starting this summer, with flights from secondary cities to secondary cities at less than a hundred dollars. It's going to be a country that is on the move as we go forward. Be part of that if you can, plan on it if that's where you live and then what you do, if that's what you need, Business travel, leisure travel, money to be made, it's all coming your way. We made it. You made it. And now things are just going to get better through time.

Thank you for joining us for TrendsTalk today. I'm Alan Beaulieu, this is ITR Economics.

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Since 1948, we have provided business leaders with economic information, insight, analysis, and strategy. ITR Economics is the oldest privately held, continuously operating economic research and consulting firm in the US. With a knowledge base that spans six decades, we have an uncommon understanding of long-term economic trends as well as best practices ahead of changing market conditions. Our reputation is built on accurate, independent, and objective analysis.