The COVID-19 attack caused a significant change in the way U.S. customers travel, and no one has been hit harder than airlines, who have seen record losses over the past few months. Global air travel will not return to pre-pandemic levels until at least 2024, the International Air Transport Association (IATA) recently stated, and airlines are struggling to fill seats. The IATA estimates that on domestic flights around the world (well below money-making levels), aircraft are only 62.9 percent filled and just 38.9 percent filled for international travel. In the three quarters ending on June 30th, four airlines saw their operating revenue drop by more than 80 percent as the pandemic brought domestic and international air travel to a near complete standstill. Extra details are provided in the following charts from Airlines for America and Statista.
Source: Airlines for America
A Road More Traveled
While this is bad news for airlines, it is good news for those operating in (and on the periphery of) the domestic travel "driving" industry. Over a long weekend, more Americans opt to take domestic road trips, and most prefer traveling with just a few close companions. Operators in the rental vehicle and accommodation industries (hotels, AirBnB, etc.) profit from this trend. Recent research by Generali Global Assistance (GGA) shows that:
73% of Americans said that this year they plan to go on a vacation.
72%, the overwhelming majority, said they would use their car to reach their holiday destination.
9% said they would use a rental car.
47% said that for their main trip this summer they would be traveling domestically (only 5% said they would travel outside the U.S.)
34% said this summer they would take a long weekend getaway for 3 to 4 days.
33% said they would stay on a private lease like AirBnB (up 17% from last summer)
46% said they were planning to stay in a hotel / motel.
15% said they would go camping.
While the domestic travel industry was affected by the pandemic in 2020, it is poised for a rapid recovery over the next three years, as can be seen in Statista's following chart:
A lot of industries have been hard hit by COVID-19, but RV manufacturers and retailers are not among them. Wholesale shipments of RVs reached their highest monthly total in June 2020, with more than 40,462 RVs shipped out, a 10.8 percent increase from the same time last year, according to a recent report from the Recreational Vehicle Industry Association (RVIA). The continued rise of the phenomenon of # Vanlife and growing interest from younger buyers have strengthened the industry, helping to see strong gains for the RV market. This recent growth is shown by the following chart from RVIA.
Source: Recreational Vehicle Association (RVIA)
And Ipsos research shows that in the light of the COVID-19 crisis, RV travel and camping offers an attractive getaway option for American families: one in four survey respondents intends to take some kind of RV-related vacation within the next year. The positive influence of this trend is seen by RV manufacturers, dealers, and campground operators. An interesting twist is that many RV manufacturers are now capitalizing on the Work-From-Home (WFH) trend, designing their vehicles with dedicated workspaces at the end of the working day that can be stored away.
“RVs provide a great way for consumers to enjoy vacations with their families, while still adhering to social distancing policies that are likely to remain in place in some fashion moving forward. The RV industry is seeing both very strong retail traffic as well as sales, especially with first time buyers… In an RV, you can cook your own meals and sleep in your own bed.” — RVIA President Craig Kirby
The RV and camping sectors are growing rapidly as travelers plan to substitute camping trips for trips that include air travel and hotel / resort stays. These are seen as safer, and more affordable, closer to home. In May 2020, a report based on a survey of North American leisure travelers was published by the Kampgrounds of America (KOA) and the results indicate a major rebound in camping activity (which includes both RVs and tents). Bob Rogers, Director of Marketing at Lance Campers, says that “Business is up more than 30% around the country as more and more campgrounds and public lands continue to re-open.” The rental market for RVs is also booming. Bookings on the RVshare peer-to-peer RV rental marketplace RVShare have almost tripled since last year and have increased by over 1600 percent since the beginning of April 2020. KOA's following graph shows the views of American consumers on the safest types of travel during the pandemic.
Staying Near Home
Leisure travel in the U.S. is recovering, and for great success, industry operators who tap into the desire of American customers to take shorter road trips and use lodging that is perceived as safe are poised. A boom in domestic and close-to-home travel is caused by increased travel restrictions combined with economic uncertainty, and recent trends in China can offer a glimpse of what's ahead for the U.S. travel industry. As seen in the following chart from McKinsey & Company, cautious travelers in China prefer to stay close to home, either driving or taking trains to regional destinations:
Source: McKinsey & Company
While in these unprecedented times, it is difficult to predict the future of any industry, it is certain that Americans love to travel and have come up with new solutions to get away from it all, even if that means a short family camping or RV trip instead of the European holiday they planned a year ago. Now is a great time to be in the travel industry's RV or camping segments. This is one business opportunity that is truly future-proof, from the looks of it all.
John Prindle is a Writer/Researcher at Masterplans.