New • COVID-19 Report

How The Pandemic Affected Travel Spending, Intentions, and Plans

Tuesday, April 13, 2021 • 4:00 PM EST

Key Takeaways:

1. Careful on Costs: Less expensive airlines are seeing consumer spending rise more than other carriers and travel aggregators' traffic has risen substantially in recent weeks. 41.3% of Cardify survey respondents ranked pricing as the top decision factor for booking.
2. The Pandemic Drives New Trends: Social distancing needs and contagion concerns have changed how consumers behave. Airbnb spending data tracked by Cardify reflects a stronger business model in the pandemic, while traditional hotel operators' market share remains muted. Only 0.7% of people plan to go on a cruise in the near future, according to survey data.
3. An Uneven Recovery: Survey data reflects travel for leisure is on the rebound. More than 90% of survey respondents said their next trip would be a vacation - but business travel isn't bouncing back yet.
4. Trust is Key for Consumers: Of people who received a full refund for pandemic-related cancellations, 63.7% of survey respondents said they would rebook with the same provider.

The COVID-19 pandemic immediately delivered a gut punch to the tourism, hospitality, and travel industry. Overnight, flight cancellations and shut down orders meant billions of dollars disappearing from travel spend. Now, as vaccinations ramp up and people see the light at the end of the pandemic tunnel, consumers are beginning to travel again. Analyzing both first-party travel spending data from over 200,000 people and surveying 4,222 people, this Cardify report covers key spending trends, breakdowns by type of spend (e.g. Lodging or Airline) and brands (e.g. Airbnb or Delta Airlines), and shares people’s perspectives on where - and how - they want to travel post-pandemic. 

About 80% of travel spending evaporated in March 2020, with the industry hovering at less than half its January 2020 spending rates throughout the year. In 2021, spending is on an upward trend, reaching its highest levels since the pandemic began. However, spending is not yet back to pre-pandemic levels.

The most resilient category has proven to be car rentals. The category reached pre-pandemic spending levels multiple times throughout 2020, and saw demand soar around the holiday season, when many consumers remained reluctant to fly. Now, three months into 2021, car rental spending is up once again as vaccinated travelers are increasingly eager to get on the road again. Airlines is the category where spending suffered the most, and the recent surge in spending only amounts to about 40% of pre-pandemic spending levels. Further, Travel Aggregators experienced a fairly significant uptrend in spending since January 2021.

Comparing Q1 2020 to Q1 2021, a story of recovery emerges. While Q1 2020 ended with the COVID nose-dive, Q1 2021 ended with all travel sub-sectors inching, or in some cases soaring, up.

Reopening trends highlight disparities in top brands’ recovery

Within the key subcategories of Travel - Airlines, Lodging, Car Rental, and Travel Aggregators - most companies fared similarly. Given significant restrictions on air travel, all major airlines tended to follow the same trend, with the exception of a spike in United Airlines around January 2021, potentially driven by south-bound routes from Northern cities as people looked to visit warmer climates for the new year.

In the lodging subsector, the post-pandemic recovery is playing out unevenly among top brands. While luxury global brands like Hilton and Marriott continue to struggle, more ubiquitous and affordable options like Airbnb, Hampton Inn, and Holiday Inn are seeing surges above pre-pandemic spending levels.

Home sharing platforms like Airbnb and VRBO saw the earliest rebound in spending during the pandemic as Americans looking to travel shifted preferences to homes with more space rather than hotels in the earliest stages of the pandemic. The trend further accelerated around the holidays and in 2021 as people began to get vaccinated - and as Airbnb readied for IPO. The home-sharing platform has outperformed Lodging spending consistently throughout the pandemic, and now rests comfortably above pre-pandemic spending levels. A similar trend emerged with VRBO, which is seeing significant growth compared to its growth numbers pre-pandemic. Elsewhere throughout the Lodging sector, the recovery has been uneven, with companies like Marriott and Hilton struggling to reclaim market share.

Car Rentals is the best performing subcategory in Travel, and Turo is leading the pack. The company accounts for most of the significant car rental spending throughout 2020 and, like VRBO and Airbnb in the Lodging subcategory, is now seeing well above pre-pandemic spending levels.

Travel Aggregators are also starting to see recovery, with Expedia seeing a significant upward trend in 2021. While all platforms are at or near pre-pandemic spending levels, Expedia is seeing spending 1.8x more than January 2020. This trend is in line with the early spring surge that all platforms experienced right before global lockdowns started in March 2020.

Stimulus helps drive future travel plans

Cardify spending data shows that people who received stimulus funds almost immediately spent more on travel. They also spent significantly more on travel in Q1 2021 than those who did not receive a stimulus check.

All travel brands rely, to some extent, on customer loyalty. In a Cardify member survey, only 55.0% of people received a full refund when they cancelled their travel plans, 25.8% got a partial refund, and 19.2% got no refund at all. But it turns out refunds in 2020 translate into loyalty in 2021. Of those who received a full refund, 63.7% would rebook with the same provider, compared to 31.3% of people who received a partial refund and only 19.5% of people who didn’t receive a refund at all.

Consumers plan vacations and time outdoors - but they aren’t going as far yet

Regardless of stimulus, price sensitivity reigns supreme in travel decisions. In our member survey, 41.3% of people said low prices and booking deals was their top decision criterion for choosing a travel provider for flights or accommodations. The next most important criterion was flexibility to change or cancel plans, something 35.9% of people said was important. 

When asked what kind of trip people want to take post-COVID, 92.1% cited leisure and 61.7% said they would choose a destination they can fly to. The most popular type of leisure trip was a beach or resort, according to 33.2% of respondents. The next most popular trip was visiting loved ones (24.3%), exploring a city (12.7%), or hiking and time outdoors (12.7%). Notably, just  0.7% said they plan to take a cruise.

Whether beach, resort, family, or something else, most people are planning a domestic vacation first: 17.1% plan to travel within their own state / province, while 43.3% plan to travel to another state / province domestically. Only 15.1% of respondents are planning transcontinental vacations, with Europe (6.2%) and Asia (5.8%) being the most popular options. However, when survey respondents said they would travel in late 2021 or early 2022, transcontinental destinations became more popular, something 27.7% of people would plan.

Bon voyage for some

The pandemic wreaked havoc on travel plans, and for some the only thing on their mind is revenge travel. While traveling to foreign, exotic destinations is popular and often discussed in the media, the data suggests people are planning to stay near home - or at least in their own country, particularly as many nations are still employing travel restrictions. As travel continues to recover, people plan to travel more internationally and transcontinentally. But while many people are making travel plans, it remains to be seen how long it will take for the industry to fully recover from the pandemic.