Effect of the pandemic on the travel industry

2nd December 2020

Multiple industries have been affected by the speed and severity of the COVID-19 pandemic, one hit the hardest
is the travel industry. The average traveller journey will normally start with a travel agent, be it corporate or an
agent providing personal and leisure services. The next will involve travel to the airport, services within the airport
such as airport lounges, retail outlets, the airline, and finally hotels and other services at the traveller’s
destination. The number of people who are involved in seamlessly getting a person from A to B can involve many
more than you can imagine. COVID-19 has accelerated the mitigation of shopping behaviour from standalone
high street outlets to online platforms and providers further impacting travel providers and suppliers.

ABTA (The Association of British Travel Agents) estimates that job losses and jobs at risk could be as high as 35,000
and when supply chains (airline and hotel food suppliers and other service partners) are also taken into
consideration this could reach 90,000 1. It appears that not one major airline carrier will escape unscathed due to
the effect of the pandemic. The situation within the UK aviation industry was precarious prior to the onset of
COVID-19, as airlines such as FlyBe and Thomas Cook ceased operations in the preceding months.

Full service flag carriers, or as they are more commonly known, legacy carriers such as British Airways rely heavily
on first and business class premium seat sales, with seating class arrangements reflecting demand. For British
Airways, premium, first and business class seat sales were down 92.7 % in May 2020 compared to May 2019 2.
The costs involved to reconfigure the seating arrangement of a single aircraft (for example a typical aeroplane
used for a transatlantic flight, such as a Boeing 777) to satisfy demand can approach hundreds of thousands of
US Dollars. This cost is both a mixture of having a plane on the ground for an extended period and the person hours involved in such a complex operation. A typical business class seat takes up the same space as three economy class seats, that proposition is no longer viable and in fact many carriers are stripping out passenger seats to allow space for cargo.  Airlines such British Airways suggest that the level of demand for air travel in 2019 is not expected to return until 2023/2024.

The hotel business has been hit equally as hard within New York City there has been an 85% drop in business
from this time last year, the number of people employed in the sector was 55,000 as of 22nd March 2020, and this
has now fallen to 10,000 with New York City’s hotels accommodating 13,000 homeless people in lieu of business
travellers and holidaymakers 3.

The effects of social distancing has caused many hotels to introduce “one way” systems within their properties.
One example of procedures put in place has been to restrict the number of guests allowed in lifts, where more
than one lift may be available to access guest floors, they must ensure that all guests are travelling in the same
direction and not mixing. This can be quite complex to achieve given that architects did not design hotels with
this in mind.  The method in the supply of food and beverage has also changed dramatically, for example buffet
style breakfast offerings are replaced with packaged portions of cereal etc. and single use plastic cutlery and
tableware. This in itself is testing hotel’s Corporate and Social Responsibility policies and their commitments to
sustainability and the environment.

The travel restrictions including compulsory quarantine imposed by many countries have forced leisure travellers
to rethink how and where they spend their holidays. Many holiday let owners within the UK are now seeing the
end of the differential between high and low seasons, making the need for dynamic pricing obsolete. In turn, this
demand is also creating an increase in footfall on UK shops and restaurants in some areas such as the south coast
of England where closing for the winter was once the norm.