Six months of carnage and counting: Travel industry struggles to rebound from COVID-19
Marriott CEO Arne Sorenson described the sudden loss of hotel guests as “breathtaking in its decline.” Southwest Airlines CEO Gary Kelly said the plunge in ticket bookings had a “9/11-like feel.” Royal Caribbean Cruises CEO Richard Fain called the shutdown of his industry a “weird, unworldly” time.
Travel industry leaders spared no superlative in March when describing the instant devastation from the unfolding coronavirus crisis.
Yet six months after the World Health Organization declared a pandemic, the toll from COVID-19 turned out to be even worse for the industry in most cases, the projected timeline for a travel rebound and recovery extended again and again as case counts remain high, travel restrictions abound and business travel shows few signs of life.
U.S. airlines that had been confident $25 billion in government payroll aid would be the bridge they needed to keep workers employed until travel rebounded are less than a month from laying off tens of thousands of employees. That’s on top of thousands who have voluntarily left or taken leave.
Although air travel has picked up – the Transportation Security Administration screened a pandemic-record 968,673 passengers on Labor Day – U.S. carriers are still losing money every day. Kelly said in August that Southwest needs to double business from current levels just to break even.
Many hotels and resorts, from the Marriott Wardman in Washington, which opened during the the Spanish flu pandemic in 1918, to the historic Arizona Biltmore in Phoenix, have not reopened.
Hotels that have reopened struggle to fill rooms, even as quarantine-weary travelers embark on road trips. Nearly two out of three hotels are at or below 50% occupancy, according to a study Aug. 31 by the American Hotel Lodging Association, and four out of 10 hotel workers remain unemployed.
Cruise lines, an early victim of coronavirus damage as passengers became sick in droves on some ships, have basically been out of business for six months. The last departure from a major U.S. port was on March 13. The next: Nov. 1 at the earliest.
“The impact of this pandemic – and the subsequent suspension of cruise operations – has been devastating to economies throughout the world,” Kelly Craighead, CEO of the industry trade group Cruise Lines International Association, told USA TODAY.
The devastation includes nearly half a million members of the “wider cruise community,” employees, ancillary employees and small businesses in the USA that depend on cruising, she said.
Major tourist attractions, including Disneyland in California, Broadway shows in New York City and marquee shows in Las Vegas, are all still shuttered.
The U.S. economy is projected to lose $155 billion in 2020 – or $425 million per day – because foreign visitors are kept at home by the pandemic and international travel bans, according to the U.S. Travel Association, a trade group.
The industry as a whole is going to come back slowly during the fall, Travel Association President and CEO Roger Dow predicted in an interview with USA TODAY. He said people will drive to their destinations or take shorter flights, building on trends from summer.
That won’t be enough to save some businesses: “The main thing we’re very concerned about is 83% of travel businesses are small businesses, and a bunch are just going to flat disappear,” Dow said. “They can’t hang on much longer.”
Making matters worse, he said, “Congress kicked the ball down the road – again – on the latest relief package (by failing to pass a deal Thursday), and Congress has to act now. If they don’t, these folks are going to go under, and we’re not going to get the millions of jobs back or restore the economy.”
Summer – traditionally the most lucrative time of year for hotels – was not enough to get many establishments to the break-even point.
Chip Rogers, president and CEO of the American Hotel Lodging Association, painted a similarly grim picture: “The next six months are going to be brutal. There’s no question about it.”
Leisure travel has been about as good as the industry could expect. If the business traveler returns in 2021, Rogers said, most hoteliers would call that a measure of success. But “as good as can be expected” won’t be good enough to save some hotels – such as the Hilton in Times Square – from closing their doors for good.
Rogers said that if business travel doesn’t return in 2021, there’s “no way the industry can survive on leisure travel alone.”
The worst-case scenario for the travel industry would be a major resurgence of COVID-19: Another shutdown would be a “disaster,” Dow said. The best case would be the arrival of a vaccine and medications to treat COVID-19 – the sooner, the better.
Dow was the most optimistic of the experts USA TODAY spoke to: He predicted demand would rebound to pre-pandemic levels in one or two years instead of three.
“I think it’s very hard to predict sunshine when you’re in the middle of a hurricane. I think once this thing lifts because of pent-up demand, safety measures in place, I think it’s going to come back much more quickly,” he said. “I expect to see 2021 mldr; as 70% of what 2019 was and 2022 to be the year we’re back.”
•10: The number of passengers on an average U.S. flight on April 1, compared with 104 on Jan. 1 as the holiday season drew to a close. The number rose as high as 70 in late June but fell to 58 by late August.
•55,487: The number of weekly U.S. flights in the week beginning April 19, compared with nearly 183,000 a year earlier. The number of flights has more than doubled from that pandemic low point, to 112,991 weekly flights in late August. That is still down 40%from a year ago. Airlines slashed early fall flights in response to a summer spike in COVID-19 cases in multiple states, though some carriers have since added back flights for October.
•70%: The projected decline in airline passenger traffic for 2020, more than five times the decline seen in the first six months after 9/11.
•21,914: The number of consumer complaints filed with the U.S. Department of Transportation in May, the bulk of them about airline refund issues. The same figure a year ago: 1,296.
What’s next? Tens of thousands of layoffs in October, when payroll support for airlines expires. Workers are looking to Congress for a last-minute deal. That may not happen unless a compromise is found between the “skinny” GOP bill rejected by the Senate last week and the House Democrats’ package, which is similar in size to the original $2 trillion Coronavirus Aid, Relief and Economic Security Act signed in March. If the layoffs proceed, anticipate heavy flight cuts and an uncertain holiday travel season unless travel demand picks up.
•1,057: The number of U.S. hotels still closed, according to STR, a group that provides market data on hotels. Over the past six months, the number of net hotels closed have formed a bell curve: 978 in March; 4,662 in April; 3,823 in May; 2,230 in June; and 1,447 in July. Most of the closures are full-service hotels that rely on groups and meetings, according to Jan Freitag, STR’s senior vice president of lodging insights for North America.
•18,000: The number of workers casino giant MGM Resorts laid off in Las Vegas and other cities in August.
•$1.7 billion: How much U.S. hotel workers lose in earnings each week while laid off or furloughed.
•60+: The percentage of rooms filled in South Dakota, Montana, Idaho and Wyoming in July. The states lead the country in hotel occupancy thanks to travelers’ appetites for outdoor vacations in wide-open spaces
•What’s next? Thousands of hotels may have to close or may not be able to hire back staff, given low occupancy rates. Marriott’s headquarters layoffs indicate the hospitality industry faces a crisis from the top down. Watch for short-term rental companies such as Airbnb and Vrbo to try to keep the buzz going about local and longer-term stays.
•0: The number of cruise passengers who have sailed from the USA since mid-March. That count will stay the same at least through Oct. 31. Pre-pandemic, 550,000 passengers would sail on a typical day worldwide in 2019, Bari Golin-Blaugrund, senior director of strategic communications for the Cruise Lines International Association, told USA TODAY.
•8.75 million: The number of customers who will have missed out on their cruises by Oct. 31. This estimate is based on CLIA’s estimate that more than 14 million passengers sailed from the USA in 2019.
•334,000: The number of lost cruise-related jobs, including 163,700 direct and ancillary American jobs, that will have been lost by the end of September from mid-March.
•2,500: Jobs lost worldwide each day cruises don’t operate.
•$19 billion: Approximately how much was lost from the time cruising stopped in mid-March in the USA through the end of August. By the end of October, that number can be expected to swell to about $26 billion.
•$110 million: How much the U.S. economy loses each day the cruise industry remains on pause, according to CLIA.
•What’s next? U.S. cruises could resume as soon as Nov. 1, but the restart date has been pushed back multiple times, and some lines, including Princess Cruises, voluntarily extended their suspensions beyond that date. Booking numbers for 2021 remain strong, major cruise companies, including Carnival, Royal Caribbean and Norwegian, revealed on earnings calls.
•78 days: How long Las Vegas casinos were closed. They shuttered March 18 and gradually started reopening June 4. Some hotels remain closed, though at least one big property – Park MGM on the Strip – expects to open in October. Air traffic is rebounding: The number of travelers at McCarran International Airport surpassed 1 million in June and topped 1.6 million in July, but those numbers are still a fraction of the 2019 passenger volume for the gambling and entertainment hot spot. More people are driving there: Highway traffic reached 90% of summer 2019 numbers, according to the regional Convention and Visitors Authority.
•4 months: The duration of Walt Disney World’s closure. The Orlando theme park closed March 15 and didn’t welcome guests again until July 11, missing vacation periods, including spring break and early summer. Tourists haven’t rushed the gates since the reopening, and Disney World responded by cutting September hours. Although hotel occupancy in Orlando has ticked up slightly, it remains among the lowest in the country. In California, Disneyland’s reopening date remains up in the air because of coronavirus restrictions, though park officials said they’re ready whenever the state gives the green light.
•125: The number of days New York City’s Empire State Building observation deck was closed. The attraction reopened July 20. New York tourism is among the hardest hit by the pandemic because the city was an early coronavirus hot spot, and officials set strict reopening guidelines. Gov. Andrew Cuomo announced that restaurants can resume indoor dining at 25% capacity beginning Sept. 30.
•19 Smithsonian institutions: The Smithsonian closed all of its attractions in or near Washington during the pandemic, including the National Air and Space Museum and National Museum of African American History and Culture. At the time of publication, only three had reopened: The National Zoo, Smithsonian Gardens and the Steven F. Udvar-Hazy Center near Washington Dulles International Airport. Four more are scheduled to open Friday: The National Museum of African American History and Culture, the National Portrait Gallery, the Smithsonian American Art Museum, along with the Renwick Gallery of the Smithsonian American Art Museum. White House tours resumed Saturday. In July, Washington hotels filled 23.6% of their rooms, though that was more than double April’s dismal occupancy of 10.8%.
•What’s next? Tourists have flocked to remote destinations where they can more easily social distance. Although the leisure travel season is predicted to last longer this year as people make good use of more flexible work-from-home arrangements, the latest hotel and airline numbers suggest continued trouble. Destinations such as Disney World adjusted plans for holiday celebrations.
Sources: USA TODAY research, Airlines for America, STR, American Hotel Lodging Association, OAG, U.S. Department of Transportation, Bureau of Transportation Statistics, Hawaii Tourism Authority, Cruise Lines International Association
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