The global pandemic has left no industry unscathed, but the travel business has the unfortunate distinction of being the sector that was slammed first and hardest, Colin Smyth, head of travel at payments platform Flywire, told Karen Webster in a recent conversation.
“They took [that] punch in the stomach first, and they’ve had to rebuild, thinking about the ways they can survive until the industry opens back up again,” Smyth said.
Consumers who are worried about their health are unlikely to rush back to their former travel habits overnight or all at once, he noted. Different parts of the industry will come back faster than others, and some could be on hold until scientists develop a vaccine.
But Smyth said that travel industry players are, by and large, confident that the business will eventually come back – with gusto. After all, the desire to see new things, visit new places and explore the world might be on hold for a while, but it still exists in consumers’ psyches.
And he said he believes that a digitized and upgraded payment ecosystem will also hold a new position of prominence as travel executives embrace the necessity of building more efficient architecture.
“If you're a CFO at a travel business or a tech company or a manufacturing company, you've never cared more about liquidity, and locating and managing cash,” Smyth said. “I think the payments business and industry in general has never been more important to travel than it is becoming now.”
That’s because the travel industry is setting out on a journey toward recovery that Smyth said he believes will ultimately be successful, but will include big bumps in the road.
An Uneven Recovery Rate
Smyth said he expects the bounceback to vary greatly across different subsections of the industry.
He foresees the fastest recovery in luxury and adventure travel – big-expenditure trips favored by the very affluent. Such upscale travelers are more likely to eschew large, crowded hotels in densely populated cities in favor of lower-density options.
“What would have been Christmas in Paris for family vacations on the upper end has now become Christmas vacations in a chateau in the South of France or on a luxury safari,” Smyth noted.
He said such luxury trips should revive more quickly because affluent travelers are less likely to have seen their finances dented by the current economic downturn. Similarly, adventure travel appeals to younger consumers who have fewer health concerns related to COVID-19 (which tends to impact older people most severely).
Smyth said he expects that such consumers will want – and will pay for – a greater sense of control of their trip, and will thus favor more secluded environments. He also expects that domestic travel will have the advantage over foreign trips.
Additionally, Smyth predicted that consumers will seek out vacation spots within driving distance of their homes, perhaps 100 or 200 miles away. They’ll also favor outdoor, open-air locations where social distancing is relatively easy, such as the beach, national parks or the Grand Canyon.
At the other end of the recovery spectrum will be destinations that appeal to middle- and upper-middle-class families that have been harder-hit by the economic downturn.
“I think when you look at places like Disney World, for example, that's the market that gets hit the hardest,” Smyth noted. “Those are the first trips that get pulled from the budget. I think people are rethinking the family trip.”
He added that COVID-19’s public health restrictions will also dampen enthusiasm for such locations.
“It comes down to whether [tourists] will slip on a wearable and let Disney track their health while they're on vacation,” Smyth said.
Many will find that to be an unappealing way to take an expensive family vacation, so Smyth said he doesn’t expect that market segment to see a major recovery until scientists widely disseminate a future vaccine.
Preparing For a Recovery
However, Smyth said he believes that market players are beginning to think differently about a recovery, and are thinking less about when it will happen and more about how to be ready when it does.
Travel executives spent much of the pandemic’s early days looking for a crystal ball to tell them when things might get back to normal. But for all of the energy expended trying to predict the future, not much came of it because the pandemic is very much ongoing and involves many unknowns, Smyth said.
So, players are “trying to focus more right now on making the business healthy and operationally efficient – because they all firmly believe that when it does come back, it will come back quite strong because there is so much pent-up demand,” he noted.
Meeting that demand will include such things as upgrading companies’ digital infrastructure – both in general and specifically around payments. The ecosystem has already seen about a decade’s worth of innovation in less than three months, but Smyth said players are doubling down on “the digitization of travel and travel payments.”
He said they’re doing so because customers demand such technology – and perhaps more importantly, because companies trying to ride out the storm must wring out every piece of operational efficiency possible in their businesses.
In many ways, digitization looks like just the ticket the travel industry needs for getting back on its feet once consumers return, which Smyth said he thinks will happen sooner or later.
“I believe in the human spirit, [and] I believe that people want to travel,” he said. “I believe the experience is going to be different, but once travel opens up and the vaccine occurs or people have confidence that they can [safely travel], I do think people will come back – bigger than many of the projections indicate.”