Despite staycation demand in the UK being strong, the rise in COVID-19 infections and the requirement to self-isolate if ‘pinged’ could jeopardise summer plans, and tourism operators could miss out on much-needed revenue this summer, says GlobalData, a leading data and analytics company. Similarly, with Australia also battling a rise in COVID-19 cases, domestic travel has reduced there drastically.
According to a live GlobalData poll, domestic holidays are set to be the most popular in the coming 12 months, with 30%* of UK respondents opting for this type of trip, marginally lower than the 32% of global respondents preferring domestic travel. With restrictions continuously changing for international travel, domestic holidays seem a safer bet in the immediate term.
Gus Gardner, Associate Travel and Tourism Analyst at GlobalData, comments: “Despite high demand, the large spike in cases across the UK could reduce some travelers’ confidence. With cases rising, travelers are more likely to adopt a cautious approach towards summer travel. Travel businesses preparing for a busy summer could experience a wave of cancelations or postponements as some shy away from crowded tourism areas as cases rise, despite restrictions easing.”
The ‘pingdemic’ has hit the UK hard, with 618,903 people receiving a notification to self-isolate in the period between July 8 and 14. This is a 17% rise from the previous week.
Gardner continues: “With a record number pinged, travel is likely to experience disruption this summer. A period of isolation is on the cards for those pinged, and being restricted to home quarantine will impact holiday bookings. Pinged individuals with imminent bookings are likely to cancel as they can no longer travel. With cases increasing due to the highly transmissible Delta variant and more being instructed to isolate, travel looks set for a bumpy season. Despite restrictions easing and the hope for a summer revival being high, the ‘pingdemic’ has the potential to restrict travel and inhibit the UK’s domestic recovery.”
To bolster bookings many operators introduced generous refund policies and could be facing the prospect of refunding travelers if cases rise, and travel bookings are impacted.
Gardner adds: “Attractive refund policies have driven increased sales for many operators, however, the rise in COVID-19 cases could begin to impact operator’s revenue. Cash flow could dry up for operators impacted by a high volume of cancelations, income could fall, and financial struggles could continue.”
Whereas, in Australia’s domestic recovery was strong in H1 2021, the reintroduction of lockdowns and state border closures will serve as a blow, and set to weaken and slow down the domestic travel recovery. Additionally, Qantas airline standing down its staff signals the prospect of a longer road to recovery.
About Australia, Gardner comments: “Quick domestic recovery in Australia could be in jeopardy with the cases spiking, and border closures getting extended, despite strengthening the domestic demand in H1 2021. GlobalData’s latest forecast expects the domestic travel to rebound to 93.8 million trips in 2021, returning to 80.4% of pre-COVID trips (2019), but the delta variant could hinder this expected strong recovery. Australia has been a leader in keeping COVID-19 under control with extremely low infection rates and strict international travel restrictions, kept cases at bay.
“The rise in infections lead to a blow to the tourism businesses, currently reliant on domestic travelers until at least mid-2022, when international borders may reopen. If lockdowns persist and traveler confidence drops, demand may dampen, and Australia’s domestic recovery could be prolonged.”
The recent restrictions have starved Australia’s tourism industry of trade, and the country’s biggest airline – Qantas – is beginning to feel the bite by standing down 2,500employees.
Gardner continues: “Qantas’ recovery has focused on domestic routes with international borders largely closed. The carrier was beginning to experience meaningful recovery, although the rise in cases has become problematic. The sudden decline in domestic travels and expected extension of lockdowns has lowered the carrier’s hopeful outlook. Qantas’ quick actions will reduce the financial burden from the loss of traffic and should help protect the future viability of the airline. However, recovery could now be dampened once restrictions lift as it takes time to return employees and could slow the expansion efforts.”
Australia has been slow to vaccinate its citizens due to low case rates. However, this poses a challenge and could delay the rebound in passenger demand if traveler confidence begins to take a hit.
Gardner adds: “The vaccine has provided a confidence boost to other nations and is beginning to underpin travel recovery. With limited vaccination progress, Australia is behind other countries. With low vaccination rates, travelers could be reluctant to travel without the vaccine as the risk has now increased. Therefore, recovery could now be delayed until the vaccination program gathers pace and Australian travelers become confident once again.”