Luxury Travelers Are Ready to Get Back on the Road in 2021 — a Potential Comeback Driven By Vaccines and Pent-Up Demand

More optimists than pessimists in Strategic Vision’s 2021 Pulse of the Industry Survey, which measured the post-pandemic travel outlook of both luxury travelers and travel advisors. Trending this year: Europe, safaris, domestic trips. Cruises and staycations? Not so much. 

A new study of consumers and professional travel advisors shows a net positive outlook for the luxury travel industry in 2021. Slightly more consumers feel optimistic about their leisure travel plans for this year than pessimistic, and luxury travel advisors see their business returning, albeit slowly, in 2021.

The affluent consumers in the survey, conducted by Strategic Vision, a consultancy specializing in the luxury travel and lifestyle industries, are intently focused on how they can get back on the road, as well as when and where. And they have retained their interest in travel, with 70% of them reported having taken a trip since lockdowns began in March of last year. “Affluent travelers have been constrained by the pandemic, and they’re intent on fulfilling their travel dreams as soon as they’re able,” said Peter J. Bates, President and Founder of Strategic Vision. “Our research shows this pent-up demand is generating keen interest in safaris, European vacations, and far-flung destinations — if not in the immediate term, then in the near future. At the same time, luxury travelers are being careful and following the science on vaccines, testing, and therapeutics.”

The Pulse of the Industry Survey is conducted annually by Strategic Vision and includes executives from the top travel management firms in the United States, which plan and book leisure, business, meetings, and incentive travel for some of the world’s largest companies and wealthiest individuals. For the first time, the 2021 survey also included luxury travel consumers, who are active clients of ten of the leading travel management firms. Taken as a whole, the responses comprise a comprehensive behavioral portrait of the American luxury traveler right now, as well as a view of the industry as it enters a precarious phase of recovery.

Both surveys were conducted in mid-November and early December 2020. Both Pfizer and Moderna announced the initial success of their vaccine trials while the survey was in the field, so the findings do not fully reflect the impact of the vaccines’ approval and distribution.

Among the key findings of this year’s study: 

MORE BULLS THAN BEARS AMONG LUXURY TRAVELERS 

Slightly less than half of consumers surveyed (48%) said they feel somewhat or very positive about their leisure travel outlook in 2021, while 44% said they feel somewhat or very negative. Those with an optimistic outlook feel that sentiment more intensely than the pessimists: 14% identified as “very positive” and indicated they would definitely be traveling in 2021, whereas only 4% said they felt “very negative” and don’t plan to travel at all.

Further, a slight majority of travelers (53%) said that they had already booked a trip for 2021, with another 41% saying they’re likely to do so. More of these 2021 travelers are planning trips for the second half of the year than the first. Two-thirds of respondents signaled their intention to book a trip for 2022 or beyond.

“While the results were closely divided, we were pleasantly surprised to see that more consumers felt positive momentum going into 2021. And this was before any vaccines were approved or administered,” said Bates. “It bodes well for a year of recovery that will start slowly but pick up steam in the second half.”

Indeed, a majority of the travel advisors surveyed said their clients expect to be traveling in 2021 (96% anticipating domestic trips, 63% international). Many of these forward bookings are likely to be placeholder reservations, made in the hope that travel will resume, not a guarantee the trip will happen. But of those travelers who have booked a trip in 2021, 65% are cautiously optimistic that the trip will actually take place, versus 25% who are not as confident.

PORTRAIT OF THE LUXURY TRAVELER 

The Pulse of the Industry Survey was distributed to top clients of 10 luxury travel advisory firms. Participation was limited to customers who had booked at least one trip with an advisor in 2019. (See below for a list of participating firms.) The respondents represent a slice of the luxury travel market that is older and wealthier and travels more frequently than the average travel consumer.

The pandemic did not completely squelch their passion for travel. In fact, an eye-opening 70% of respondents said they had traveled since lockdowns began last March — 52% for pleasure, 10% for urgent personal reasons, and 9% for business. Those who traveled tended to stick to the nearby and familiar, with 31% taking a domestic trip that didn’t require a flight (vs. 30% who took a domestic trip with a flight), 21% visiting friends and family, and 18% staying in a vacation home that they own.

Respondents were also cognizant of the risks of traveling now, both to themselves and to others. When asked how their overall attitudes about leisure travel had changed, the bulk said they were “more cautious,” more conscientious about mask-wearing and cleanliness, and more selective about where they visit and stay.

“Travel is a way of life for the affluent, and they found a way to keep doing it during the pandemic,” said Bates. “They took driving trips, visited their families, and spent time in second homes. Some even took domestic flights. For people with the means and the desire, life during the pandemic was less than a complete lockdown.”    

2021 TRENDS: WHERE TO NEXT?

Turning to future plans, 58% of travelers said their 2021 trips are do-overs of trips they had to cancel last year. Just under half said they were planning trips that included flights (domestic and international). When asked what destination they were most likely to visit in 2021, the responses leaned heavily toward North American and European destinations. Florida and Italy were the most common answers, followed by Europe, Mexico, Colorado, Hawaii, France, California, the United Kingdom, Greece, the Caribbean, and Japan (which had been forecast in last year’s Pulse Survey as the top “trending” destination of 2020).

Domestic destinations are poised to continue their strong showing — 50% of consumers surveyed said they had planned, or were likely to plan, a domestic trip in 2021 that includes a flight. Indeed, an October report by McKinsey & Company predicted that in most markets, domestic tourism would return to pre-crisis levels at least a year earlier than outbound travel. Many destination marketers, including NYC & Company and San Francisco Travel have already pivoted their advertising efforts toward local and driving-distance audiences. “Destination marketing organizations, as well as hotels and airlines, should be redoubling their outreach to domestic visitors,” said Bates. “Luxury travelers are already making their 2021 plans — so the time to start marketing is now.”

That said, more than half of the travel advisors surveyed (53%) said they are currently assisting clients with long-haul trips, including Africa, Asia, and South America. “We predict that long-pent-up wanderlust among luxury travelers is making farther-flung locales seem even more appealing than before,” said Bates. “Our research shows a striking amount of interest in African safaris for later this year and beyond. That reflects a desire for unique travel experiences in remote, wide-open locales, where it’s easier to maintain social distancing and limit exposure to the virus.”

As the pandemic disrupted normal travel behaviors in 2020, many alternative methods emerged. Advisors said that they’re currently seeing interest in driving and road trips (41%); “staycations,” defined as less than 100 miles from home (41%); exploring domestic destinations (39%); private aviation (39%); and villas and other residential-style accommodations at a hotel or resort. The advisors felt that most of those trends would continue through 2021, but not all would have staying power in the longer term. Which behaviors would continue beyond 2021? The most popular responses were yacht rentals (43%); private aviation (39%), residential-style hotel accommodations at hotels (39%); and vacation rentals such as villas and Airbnb (35%). 

Consumers themselves said that they’re willing to continue trying different styles of travel in 2021, such as renting a private home or villa (58%), traveling with a “pod” of friends or family (58%), private aviation (50%), and visiting a place for a period of more than two weeks (45%).

“Who won 2020? Anyone in the business of creating ‘private’ vacation experiences,” said Bates. “Staycations and road trips may have been popular this year, but they don’t have staying power. I think the future will see exponential growth in villa rentals, yacht charters, and hotels creating villas and other residential units. Many luxury travelers were exposed to those experiences during the pandemic — and now they’re hooked.”

One positive trend for the corporate travel industry: 42% of advisors reported renewed interest in smaller, regional meetings and conferences. A further 15% said they are seeing an uptick in team-building, training, and similar events. “The need for human connection is stronger than ever,” says Heather McCrory, Chief Executive Officer, North & Central America, Accor. “That is a bright spot as we see growing demand for smaller, regional meetings and events, as well as “hybrid” AV solutions to support all delegates, regardless of location, and more intimate, bespoke experiences to bring groups together safely and effectively.”

TRAVEL ADVISORS IN A TIGHT SPOT

Unsurprisingly, the coronavirus and the subsequent travel restrictions have been dire for the travel advisors who participated in the survey. Almost all (94%) said their 2020 revenues were down over the previous year, with the vast majority reporting decreases of 70% or worse. More than three-quarters (76%) of advisors said they had reduced the hours and/or pay of their employees, while 55% resorted to layoffs and/or furloughs.

On the flip side, 41% reported increasing their number of independent contractor (IC) advisors, which suggests that full-time employees were replaced by (or converted to) freelancers. “As a host agency we only have ICs, and the demand is growing,” said Vanessa McGovern, Co-Founder and Chief Sales Officer, Gifted Travel Network. “We are seeing inquiries every day from ‘desk agents’ and former employees from brick-and-mortars expressing interest in hosting with us.” With one in three advisors saying that maintaining staffing levels is their biggest challenge in 2021, the appeal of non-salaried IC’s will continue to grow, and the trend of shifting to an IC workforce is destined to continue. “The pandemic has made clear that the host agency model  — where an agency can expand or reduce the number of IC’s on its team as demand fluctuates — provides the flexibility that travel management firms need to succeed,” said Bates. “For better or worse, this is the way the industry is going.” 

Stimulus funds helped the travel advisory industry survive the pandemic. Despite their many restrictions, more than 82% of firms in the survey took advantage of PPP funds or other programs last year, and 78% said they would do so again. (Congress approved a PPP extension and other stimulus measures in late December, after the survey was completed; it is not yet clear when the funds will begin being disbursed.) “I’m concerned about maintaining staff if travel does not improve quickly enough and if significant government funding is not available,” said Liz Sutton, President, Alabama World Travel. I’m hopeful government funding will carry us through next year, because I believe travel will begin to pick up by the second half of 2021, and we need a way to retain our trained travel team despite low revenues.”

The respondents largely see 2021 as a recovery year, with 76% expecting to increase their revenues over 2020. But most don’t expect a full recovery until 2022 or later. Only 12% said they estimate revenues returning to 2019 levels this year, compared with 51% in 2022 and 35% in 2023 or beyond. “International travel will take longer to recover, so there will be fewer high-margin, ‘big-ticket’ trips this year,” said  Bates. “In addition, travel has become more complex, so advisors will spend more time managing a booking — which also impacts profitability.”

The prolonged recovery — plus the shift to flexible schedules and working from home — is likely to slow the pace of hiring. By 37% to 25%, more advisors said their 2021 headcounts would remain below pre-pandemic levels than match the previous number. “We’d like to recruit displaced talent and build a more experienced team vs. taking on advisors who are new to  the industry,” said Julia Pirrung, Founder and CEO, Jetset World Travel.

ADVISORS PROVE THEIR VALUE

One thing is for certain: In a year marked by cancellations and reschedulings, confusing regulations and innumerable questions, travel advisors showed their clients how valuable they can be. Advisors are sources of advice and inspiration as well as makers (and un-makers) of travel plans. More travelers in the survey said they are satisfied with the information they’re getting from their travel advisors (64%) than from airlines (59%), hotels (45%), or other suppliers. And 32% of respondents said they’re now more likely to use a travel advisor as a result of the pandemic (67% said their attitude hasn’t changed). “The constant changes in rules and restrictions is worrisome and frustrating,” said one client. “This reality makes using a travel professional more important than ever.”

But many travel advisors spent 2020 booking, rebooking, and ultimately cancelling trips — which, for many, meant no commissions. “I can’t tell you how many advisors told me about the countless hours they spent rescheduling trips, figuring out quarantine rules, and pleading for refunds. But if the trip ultimately didn’t happen, they didn’t receive their commission,” said Bates. “More work for less pay is not going to cut it in the future. The consulting model, where clients pay travel advisors a set retainer, is only going to become a greater necessity.” 

WHAT IT WILL TAKE TO RESTORE CONFIDENCE 

The survey asked both consumers and travel advisors about what developments would spur them to book more travel in 2021. Their responses suggest that both groups are guided by science and swayed less by “hygiene theater” and financial incentives. It also suggested that vaccine distribution is critical to the industry’s revival.

Availability of a safe and effective vaccine was the top answer selected by both advisors (96%) and consumers (83%). The overwhelming response to this development — now a reality, but still largely abstract while the survey was in the field — suggests that the travel industry may want to consider a vaccine requirement as a condition for welcoming guests. “Imagine a world where you had to prove you’d been vaccinated before boarding a cruise ship or a commercial flight,” said Bates. “That might dampen the numbers while the vaccine is being distributed, but it will inspire enormous confidence. And it isn’t that far-fetched: after all, travelers are already used to getting inoculated for diseases like yellow fever and typhoid in order to visit certain countries.”

Other highly rated factors included accurate, rapid-result testing for COVID-19 at airports, hotels, etc. (selected by 71% of advisors and 42% of travelers): safe and effective treatments (61% and 49%); removal of quarantine requirements at the destination (61% and 44%); and a sustained decrease in COVID-19 infection rates at the destination (39% and 47%).

Asked the most important factors in deciding whether to take a commercial flight, consumers largely rejected some airline procedures that some medical experts have dismissed as being more for show than effective at combating coronavirus. Distribution of disinfecting wipes to each passenger is a factor for only 6.5% of travelers; 10% chose contactless check-in and boarding; 16% thought temperature screening before boarding worth considering. By contrast, the most important factors were the ability to fly without a connection (60%), a requirement that all passengers and crew wear masks (53%), a flexible cancellation policy (52%), and the airline’s cleaning and safety protocols (46%).

The responses were similar for hotels. Among the factors would-be guests consider the most important: cleaning and safety protocols (67%), mask requirements (57%), flexible cancellation policies (50%), and air filtration and ventilation systems (46%). Less important: contactless check-in (0%), temperature screenings (19%), and requirements that guests get tested for COVID-19 before checking in (24%).

Another non-factor: financial incentives. Very few consumers in the survey said that “great deals,” low airfares, or reduced hotel rates would spur them to book. Similarly, only 2% of travel advisors said discounts or other incentives would move the needle for their clients, and only 6% thought an improvement in clients’ financial situation would make a difference. 

“Discounting is a fool’s game in the luxury travel business,” said Bates. “The wealthy are too cautious to be swayed by a lower airfare or a discounted hotel room. They value their health and well-being more than their bank balance. That said, they do love a perceived ‘deal’ with added value such as an extra night or complimentary breakfast.” 

CRUISE HAS A LONG ROAD AHEAD 

As the setting for several early outbreaks of COVID-19, cruise ships won’t see full passenger loads for quite some time, according to the Pulse Survey results. More than four out of five travelers (81%) said they’re unwilling to book a cruise in 2021 absent a vaccine or treatment breakthrough, while more than one in five (21%) said they’d cruised in the past but don’t see themselves doing it again. On the bright side, 14% said they’d already booked cruises for 2021 — although those may be placeholder reservations that the cruise lines are likely to reschedule. Asked for comments, respondents signaled more acceptance for small-ship cruises and river cruises.

Travel advisors are not expecting cruise business to come back in the immediate future, with only 10% thinking it would recover this year. Nearly half (45%) said a recovery would happen in 2022, 35% predicted 2023 or beyond. “The media has been a bit unfair to the cruise lines, which receive more scrutiny because, unlike hotels, they are required by law to report illnesses. Regardless, the industry will need to convince both passengers and regulators that it can prevent and control outbreaks onboard,” said Bates. “In my mind, the only way they’ll get back to normal is by requiring every passenger and crew member to be vaccinated.”

“The industry’s rehabilitation is complicated by its multilateral nature,” he continued. “A cruise ship visits several ports on an itinerary, so it’s dependent on rules and regulations issued by many different health authorities. We need international protocols in place before cruising can really start back up again — such as a ‘safe harbor’ law so that a ship can’t get turned away from port if there’s a case reported on board.” 

About the Pulse of the Industry Survey:

The Pulse of the Industry Survey was sent in November and December 2020 to CEOs, presidents, and other senior executives of the leading luxury travel management firms and meetings & incentive buyers in the U.S. These firms, members of Strategic Vision’s research panel, arrange travel for luxury leisure clients, corporate executives, and high-end meetings and incentive groups. The survey garnered a response from 51 industry influencers.

Over the same period, a separate survey was distributed to clients of 10 top travel management firms. Clients had to be active travelers (defined as having booked a trip with the firm in 2019). This survey garnered a response from 428 travelers, whose answers were compiled to calculate aggregate results. The participating firms were: Avenue Two Travel, Central Travel, Departure Lounge, Frosch, Jetset World Travel, Ovation Travel Group, Preferred Travel of Naples, Strong Travel, TravelStore, and Valerie Wilson Travel.

If you wish to learn more, click here to access the full deck containing the findings:  Pulse of the Industry Survey Results