Global Travel’s Path Remains Uncertain, Despite Pent Up Consumer Demand

Almost a year and a half into a global pandemic and forecasts for the travel segment are hard to make as recovery remains uneven.

In some places, infection levels are falling in the face of widespread vaccination, while in other places, infection rates continue to skyrocket as the delta variant and other more infectious forms of COVID-19 spread rapidly.

It is a situation serious enough that last week the United Nations offered a fairly pessimistic prediction set for the fate of global travel, forecasting the global travel market will lose between $1.7 trillion and $2.4 trillion in 2021. While Flywire’s Colin Smyth said he readily concedes that numerous points of concern make long-term forecasting a challenge, some recent consumer indicators have bolstered his outlook.

Like most who follow this battered industry group, he said he sees consumers that are eager to get back out again after more than a year at home and who also have saved up the money to do it. That’s good news insofar as it strongly indicates that on the consumer side, travel’s recovery is more a question of when than if.

“What we heard from consumers is that they are very optimistic about travel with regards to the way in which they’re traveling and the way in which they’re going to budget their travels,” Smyth said.

But as travel comes back, he said, it seems poised to make some changes in terms of how consumers plan to do it — and what baseline expectations they carry into the experience that providers must be prepared to meet.

Mastering The Refund Process

The frenetic rush for refunds last year in the travel industry was a traumatic experience for all parties. Consumers frustratedly waited for hours on hold trying to get their money back. Airlines, hotels and travel bookers frantically tried to refund millions of dollars’ worth of bookings to consumers worldwide over the course of weeks. It was undeniably a horrible experience all around, but an educational one, at least for travel industry players.

“I think travel companies have learned a lot from the last year,” Smyth said. “I believe if you look at how much better they’ve become with regards to the refund experience, understanding that the consumer needs the control in the situation and making sure that there’s more flexibility in those offerings because the world is changing rapidly every day.”

But the bigger takeaway in fixing the refunds experience is the broad understanding that the payment experience for travel needed to be upgraded for greater simplicity within the industry. That entails payments processes built to enable easy refund or changes to dates if needed in addition to payments at the point of booking, he said. Travel providers have increasingly come to appreciate that those things really matter to consumers, and those that want to come back quickly need to embrace that reality.

Making sure consumers have an easy and seamless payment experience end to end is a “really big part” of any comeback story in travel, he said.

What’s Next

Although the data Flywire sees shows that travel will return worldwide as the pandemic pulls back, it also indicates the recovery may look a bit different from our memory of the segment pre-pandemic, Smyth said. People may tend toward making fewer but longer trips throughout the year, and they are looking for higher security levels in their travel bookings.

We are also likely to see a rise in options around payment, with choices like buy now, pay later (BNPL) appearing among travel operators as they try to lure back more customers with a wider array of flexible payment options.

“I think that it allows the travel operator to expand their potential client base because if you couldn’t afford to go on the trip, now you may be able to,” Smyth said, noting the rise in BNPL payment offerings seems to go hand in hand with the rise of group and family travel the firm is seeing in the industry at present, and will be “an area to track” going forward.

People haven’t seen each other in person for a long period of time, Smyth said. Data indicates that despite all the unknown and hard-to-calculate variables out there, the desire to see loved ones in person and to travel with them remains unabated.

Things won’t return to exactly where they were, and where they will go is hard to forecast, but in some form or other, he said, the industry will get back on the road again.