Don’t underestimate the level of pent up demand when travel restrictions are lifted.
Updated: May 6, 2020
By Fran Hohol, CBRE Travel and Leisure Group
Without a doubt, the tourism and hospitality industry has plunged the fastest and deepest during this health crisis. Our industry is based on the movement of people and putting everyone under a stay at home and work from home (if possible) mandate – has stopped all of us in our tracks.
The likelihood of taking a leisure trip over the next 6 to 8 months has declined significantly. People will not feel comfortable travelling until they feel safe to do so – even at deeply discounted prices. Discovering a vaccine and ensuring its distribution on a global scale will dispel people’s fears and put everyone fully back on the tourism circuit. In the interim, lifting travel restrictions one step at a time will likely see a recovery in the domestic market first.
During economic downturns (2001, 9/11, 2008 GFC), tourism is one of the first sectors to fall – as unemployment rises, money markets crash, fears abound, and people’s futures are uncertain. However, our sector is also one of the first to recover, as the industry responds with reduced travel pricing and new safety measures which in turn accelerates the recovery.
I remember well the worry that people had after the shock of 9/11, and how people were not going to ever fly again. However, the industry responded by putting in new security measures at airports, reducing prices and introducing on-line bookings and price transparency. People were able to shop online for travel deals with price transparency rather than relying on travel agents. Likewise, Airbnb evolved as a platform out of the 2008 Great Financial Crisis. All of these measures and new technologies helped to fuel past recoveries.
So don’t underestimate the level of pent up demand in the marketplace once the travel restrictions have been lifted. We will all be eager to eat out at a restaurant, visit our family and friends and explore beyond our neighbourhood daily walks with our pets. Let’s plan for a tick shaped recovery with leisure demand the first to bounce back, as lock downs are eased more gently than they were first imposed.