Delta variant, EU restrictions cast pall over travel sector

10

The travel industry, which earlier this year had begun to rebound from the impact of COVID 19, is under renewed pressure because of the Delta variant

Business travel in particular is taking a hit as companies, many of which have slashed corporate travel budgets, postpone out-of-town meetings in favor of virtual ones. New European Union restrictions on unvaccinated travelers from the U.S. are also expected to cut into airline, hotel and other hospitality company profits, while Europeans still cannot travel freely to the U.S.

Underscoring those challenges, the Centers for Disease Control and Prevention this recommended that unvaccinated Americans stay home over the Labor Day weekend

The U.S. Travel Association, a group representing the travel industry, said its members cannot afford another major setback.  

“In 2020 alone, the pandemic resulted in a $500 billion loss in travel spending that cost the U.S. $1.1 trillion in economic output. Great strides have been made to combat the virus and restore the U.S. economy, and we cannot afford to backslide,” said Tori Emerson Barnes, U.S. Travel's vice president of public affairs and policy, in a statement on Wednesday. 

Nearly 70% of business travelers are taking fewer trips than planned amid rising rates of COVID-19, according to a new survey from Morning Consult and the American Hotel and Lodging Association, an industry trade group. That includes 52% of business travelers who say they're likely to cancel existing travel plans without rescheduling.  

In a normal year, business travel accounts for 53% of the hotel industry's revenue, according to the AHLA. With leisure travel rates expected to wane after Labor Day and business travel still depressed, industry veterans are concerned. 

“After Labor Day, we are very concerned about what travel is going to look like for the final quarter of the year. For most people, there are lots of cancellations happening right now. The survey work shows the intent for people to not travel as much as we had anticipated,” AHLA chief executive Chip Rogers told CBS MoneyWatch. 


TSA reports lowest air travel numbers since M…

02:05

For now, hotels and other employers are reluctant to lay off workers a second time even if demand is shrinking, with many businesses struggling to fill job vacancies. 

Craig Reid, CEO of Auberge Resorts, a group of 20 luxury hotels and resorts across the U.S. and other countries, said that while demand from leisure travelers remains strong, most business-related bookings are being cancelled. By contrast, reservations from parties traveling for social events like weddings are still on. 

“We've seen very few cancellations from people traveling for leisure,” Reid told CBS MoneyWatch. 

Airlines are also seeing the effects of the latest coronavirus wave. American Airlines Chief Revenue Officer Vasu Raja recently told Wall Street analysts that he expects “a very choppy recovery.” 

“Passenger demand and revenue in July was better than we had estimated. However, the recent uptick in COVID cases and related headlines created some softness in bookings with a corresponding increase in cancellations. Currently, August revenue is trending below our previous internal forecast,” he said in an August 25 earnings call with analysts. 

It's not all doom and gloom, though, particularly among dedicated travelers. Vaccinated individuals can still travel to EU countries so long as they're willing to navigate a patchwork of rules and regulations. To visit Italy, for instance, foreign visitors must present a negative COVID-19 test and vaccine card as well as complete a digital health form. 


Tourism returns to Italy

02:14

“Overall, we've seen a massive pent-up demand on the parts of consumers,” said Melissa Biggs Bradley, founder and CEO of Indagare, a boutique travel agency. 

That suggests consumers are starting to accept that new complexities associated with foreign travel are here for the foreseeable future.

“The EU changes have reinforced how complex travel is now, and I think people understand if they want to travel internationally, there is paperwork they have to fill out in advance,” Bradley said. “People have held out for this idea that we'll get vaccinated and the world will be exactly like it used to be. Everyone in the travel industry realizes this is a long-term thing and everything is a lot more complicated and will remain more complicated.”

On the flip side, travel within the U.S. is strong, according to Bradley. Domestic travel among her clients has increased tenfold compared to 2019.

“When Europe opened up, it didn't cannibalize the domestic. It was additive,” she said. “That's a sign to me that people have been staying at home and saving their vacation dollars and dreams and want to exercise them again within their comfort level.”

View original post