How Coronavirus Has Affected the Travel Industry

How Coronavirus Has Affected the Travel Industry

While springtime is typically known for its beautiful weather and vacation hotspots, this year has been dominated by the impact of coronavirus. As many families put their holiday plans on hold, the key industries that make up tourism are suffering as a result.

With thousands of cancelled flights leading to empty hotel rooms, the airline and hospitality industries are struggling to stay afloat as the virus leaves no region untouched. Although the economic impact of coronavirus has been profound, the travel industry has managed to make a charitable community effort.

Whether it’s flying frontline health care workers or inviting vulnerable groups into vacant hotel rooms, the travel industry is taking a unique approach during these tough times. Despite the financial burdens, there still remains a light at the end of the tunnel for many tourism industries.

Although the travel industry has been hit hard by global quarantine, there is a lesson to be learned through their coping methods and community management

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COVID-19 Has Grounded the Airline Industry

Since the beginning of coronavirus, few industries have fallen as far and as fast as the airline industry. Airports around the world have experienced substantial drops in demand, as hundreds of countries implemented travel bans to stop the spread of the coronavirus.

Subsequently, thousands of flights have been grounded as airlines grapple with the damaging financial effects of the pandemic. That has put pilots, crew members, and airport employees in difficult positions.

In fact, according to The Financial Times, more than 60% of the world’s commercial aircrafts have been grounded as governments quarantine their populations and close borders. One of the largest carriers, Delta Airlines, has reported a loss of $60 million a day while 600 aircraft are parked on the tarmac as 80% of April’s scheduled flights were cancelled.

However, Delta is one of the more fortunate companies as smaller airlines are at a far greater financial risk.

In early March, 40-year old British airline Flybe had to cease operations. According to CNN, the company’s financial challenges were compounded by the outbreak of coronavirus, leaving them no choice but to close up shop.

This narrative will be shared by many more airlines as The International Air Transport Authority warned airlines stand to lose $113 billion in sales due to the impact of coronavirus. Airlines have looked to cut costs wherever possible, many starting with employee salaries.

A well known asian airline, Cathay Pacific, asked 27,000 employees to take up to three weeks of unpaid leave. The company is pursuing drastic measures to cut all nonessential spending, including the cancelation of approximately 30% of all their flights, 90% of which were to mainland China. 

Although the decline in scheduled flights has presented massive financial burdens, airports are now charged with the task of finding a place to park the excess planes. According to Business Insider, many airports are left with no choice but to close runaways in an effort to store the grounded airliners. 

Airline Brands That Are Stepping Up

Despite the harsh circumstances, several airlines have leaped on the opportunity to help out the community and fight the global pandemic. With thousands of abandoned commercial jets, the airline industry found no shortage of ways to deliver help to those who need it most. 

Familiar airline brands, including Hawaiian Airlines and JetBlue, are offering free flights for essential medical personnel to support travel associated with COVID-19 response efforts. Both airlines are also clearing out what used to be cargo space in order to transport necessary medical supplies to suffering communities across the world.

Other airlines, such as Delta and VistaJet, transported government employees, stranded college students, and military officials to assist nationwide repatriation efforts. Delta has made a special impact by donating 200,000 pounds of food to hospitals, community food banks, and other organizations around the world.

JSX, a semi-private jetliner, made headlines when the company flew home 106 U.S. citizens, all over the age of 65. The airline also made efforts to enforce social distancing by limiting each flight to 20 passengers on its 30-seat planes.

Other airlines, such as United, have also been enforcing social distancing on their flights. However, since airlines are deemed essential and, thus, are exempt from the distancing rules that apply to events and gatherings, many flights have been filled to near capacity.

Hotel Industry Halted by Global Quarantine 

Unfortunately, the airline industry wasn’t alone in the financial downturn. Hotels across the globe face dire financial troubles as occupancy rates plummet to a shocking 22% in early April. That has impacted thousands of jobs.

According to the American Hotel and Lodging Association, 45% of all hotel employee jobs have been terminated or will be in the coming weeks. This disappointing news comes as no surprise as COVID-19 is costing the industry approximately $1.4 billion in lost revenue every week as resorts, hotels, and motels remain mostly empty. 

While tourism is experiencing a significant decline across the world, those that stand to lose the most are not only hotels, but small island nations whose GDP is dependent on tourism. Countries including the Maldives, British Virgin Islands, and Aruba all depend economically on overseas tourists. Unfortunately, as airports and hotels remain vacant these are the countries that will likely face the most severe economic devastation.

Other businesses impacted by coronavirus include luxury hotels and resorts, which are grappling with the sudden cease in operations. Some of America’s largest hotel companies, including Hilton, Hyatt, InterContinental Hotels Group, Marriott, MGM, Universal, and the Walt Disney Company have approached the government for financial relief. 

Although the hotel industry is experiencing record lows, it hasn’t stopped several companies from sharing their unused spaces and resources with those that need it. 

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Hotels That Are Showing Hospitality

Despite the devastating impact of coronavirus, many companies are taking the opportunity to help out vulnerable communities. The Four Seasons Hotel has stepped up in New York City, offering free or low-charge rooms for both caregivers and non-COVID patients.

It was one of the first hotels to begin providing free stays to healthcare workers responding to the pandemic.

Other well known hotels are making efforts to feed and house healthcare workers during the pandemic. For example, hotels in Las Vegas donated thousands of pounds of food as well as monetary donations to local food banks and charities helping people in need. The Beverly Hills Hotel also provided hundreds of free meals to first responders and medical personnel.

As the virus ravages communities around the world, few are more vulnerable than the homeless. A few hotels, mainly on the West Coast, opened their doors to the growing homeless population to fight the viral spread among shelters. The Jupiter Hotel in Portland, Oregon, has transformed their empty rooms into temporary lodging for the homeless.

California Governor Gavin Newsom announced that the state would be providing 7,000 hotel rooms exclusively for the homeless. Newsom said that the state was aiming for at least 15,000 rooms as part of their new plan called Project Roomkey, which is focused on protecting significant homeless populations around the world.

In Europe, many hotels have transformed into make-shift hospitals in order to ease the burden on local clinics. Several luxury hotels, including the Illusions Hotels in Spain, are offering rooms to coronavirus patients. Many German hotels have converted empty rooms into provisional stations and cellars into storage for useful medical material.

As the number of infected skyrocket, the hotel industry’s charitable efforts of housing, feeding and donating will likely make a massive impact on containing the spread of COVID-19.

The Impact of Coronavirus on Short-Term Rentals

The national lockdown has left virtually no industry untouched. Among the afflicted are short-term property owners, such as Airbnb, who are left with rentals that mostly sit empty.

In tourism-heavy cities, including Paris, Amsterdam, and Barcelona, the sudden tank in travel has left streets empty and monuments abandoned. Without the usual tourist traffic, the rental market has imploded and many Airbnb managers have tried to sell the homes that they rented out.

Although it’s still too early to identify the direct impact of coronavirus on the real estate market, according to McGill University professor David Wachsmuth, an expert in short-term platforms, it’s not the end of the world for people who are renting out spare bedrooms on Airbnb to boost their primary income. However, for homeowners who purchased condos with the intent of continually renting them out year-round, this is a disaster.

To make matters worse, Airbnb has waived cancellation fees for reservations booked before mid-March that were supposed to take place between then and mid-April. If you’re an unlucky customer this is great news, but for Airbnb owners this is yet another loss in revenue.

With little indication as to when accommodations will be able to reopen, much less when tourism will return, the short-term rental industry is stuck skating on thin ice.

The Takeaway 

Even though an immediate rush back to traveling is unlikely, don’t throw away your flip-flops and sunglasses. While the long term effects are not yet clear, analysts expect a slow and steady comeback for both airline and hospitality industries once the virus is contained.

In the short term, government aid will play a large role in protecting the airline and hotel industry from financial collapse. Until then, companies are advised to cut costs and expect a U-shaped recovery as the economy experiences a gradual recession followed by a gradual recovery, possibly over the course of two years. 

The impact of the coronavirus on the long term is still a bit fuzzy, as it is not yet evident the amount of damage that has been done to the travel industry’s demand. What is clear is that travel is a discretionary choice, which may prompt some travels to have lingering doubts about getting on a crowded aircraft or staying in a public place. Ultimately, it will be up to hotel and airline companies to dissipate any persisting fears that consumers may have following the containment of COVID-19 through clever campaigns and a careful control of social media management.

Marketing Specialist

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