What a wash of bookings would do to the travel industry this year.
There is a lot of enthusiasm in the travel market at the moment — and perhaps, rightly so.
Many operators have reported a record surge of booking enquiries following Boris Johnson’s national address on Monday the 22nd of February, in which he outlined the “reopening plan” for the UK economy.
Interestingly events as well have garnered optimism that they might be able to go ahead this summer/fall. On the BBC this morning the Pride Parade, Birmingham announced they were planning to go ahead in September.
In the stock market, here in the UK and also in the US, travel stocks are up +20%, as part of the cyclical “reopening trade”, which is also negatively affecting lots of Work-From-Home (WFH) stocks, much as it did in October 2020 when vaccine efficacies were announced. Zoom is down ~13% since Tuesday the 13th of Feb.
This is excellent evidence of the “pent up demand” we’ve all heard so much about for the last year. The “roaring 2020s” is undoubtedly gearing up, and I highly doubt anyone will be staying at home going forward — if they can help it.
However, there is a nagging doubt I have based on what has happened over the past year and some of the risks that still exist TODAY let alone tomorrow.
The South African Variant, et all:
It is still unclear if the vaccines protect against this variant, but some studies have suggested as little as 10% efficacy from the Oxford-Astrazeneca jab. Importing this variant through international travel could see the UK returning to lockdowns in the autumn, much as it did in 2020 with the Kent variant.
If anything, it seems the UK should look to implement a New Zealand style policy of properly sealing the boarders once we’ve eradicated the virus so that UK residents can be guaranteed to go about their lives until next year. I say this because by then we should have an updated vaccine that will protect against not only the other current variants, but also the widely predicted mutations to take place by winter (the known, unknown). This strategy is similar to the Flu vaccines that get updated based on the dominant strain that upcoming season.
As the PM said, this is the last lockdown, but perhaps he’ll be happy to walk those comments back come Q3.
Now, what happens if we get a new variant or import some of the existing variants to which people have little to no protection against? I think the answer is obvious, but I specifically want to highlight what will happen to travel.
My assumption is that if anyone is booking now, they are booking refundable, but even if they aren’t under a shutdown scenario most travel products are refunded anyway.
The impact on the travel industry would be worse than if they didn’t make the bookings at all!
This is due to all the costs to process bookings, just to see them all “wash” (cancel). This is the cost of staff, transaction fees, operating costs for last-minute cancellations and any “prebought” inventory which can be common practice with operators for very popular routes and destinations.
Unfortunately, it seems it is a risk that the travel industry will have to take as the only alternative is to stay dormant for another year and take bookings in January.
My guidance to travellers would be to book refundable, and book something in the UK so that you still have a chance to be able to go on your holiday as international travel would be the first thing to be cancelled (as we’ve seen time and again).
It’s not wrong for people to get excited at the very realistic prospect of “getting back to normal”, but if you manage your expectations and take precautions you stand a chance of not being massively disappointed if it all falls to bits.
Having said that, my fingers really are crossed that we can soon start to all enjoy the things we’ve missed out on over the last year.
