cover

Produced in association with VERSION REPRO OP

SUBS Annual Report 2020-21 ART PRODUCTION CLIENT

‘Welcome back on board’

Produced by Travel Weekly, with exclusive consumer research

BLACK YELLOW MAGENTA CYAN 91TRS2050106.pgs 08.12.2020 14:43 deloitte 1 VERSION REPRO OP SUBS ART PRODUCTION CLIENT

Rebuilding trust in travel

www.deloitte.co.uk/ths

BLACK YELLOW MAGENTA CYAN 91TRS2050157.pgs 04.12.2020 12:40 contents VERSION COnTENTS TRAVEL WEEKLY insight report 2020-21 REPRO OP

4 Executive summary

SUBS 5 Key findings 7 Consumer research Crisis & Recovery

ART 9 Market outlook TRAVEL WEEKLY INSIGHT ANNUAL 15 Consumer research REPORT 2020-21 16 Outbound Editor Ian Taylor 18 Inbound PRODUCTION Senior Designer Emma Winton 22 Domestic Chief subeditor Mike Walsh Business travel Production manager 24 Nick Cripps Travel Weekly Group 26 Cruise CLIENT editor-in-chief Lucy Huxley 28 Hospitality Head of sales Mary Rega 31 Aviation Managing director Stuart Parish Future of Travel Jacobs Media Group chairman Clive Jacobs 36 Investment 39 Health & safety 42 Technology 45 Future travel experience Resilience reimagined 47 Future of work 49 Sustainable travel 53 Resilience

Travel Weekly Insight Annual Report 2020-21 is published as a digital-only publication by Travel Weekly Group Limited. Registration number 6927031. Registered address: Third Floor, 52 Grosvenor Gardens, London SW1W 0AU. Materials in this publication may not be reproduced in any form without permission. Registered at the Post Office as a newspaper. © Travel Weekly Group Limited 2020 PART OF JACOBS MEDIA GROUP

Cover and page 3 images: Shutterstock

Travel Weekly Insight Report 2020-21 3

BLACK YELLOW MAGENTA CYAN 91TRS2050107.pgs 08.12.2020 12:46 VERSION Executive summary exec summary collaboration will be key to recovery REPRO OP

The Covid-19 pandemic forced people and businesses around the world to adapt overnight to a new way of living and working. Despite the initial disruption, we witnessed SUBS immense resilience. Businesses banded together to find innovative ways to address customer needs while putting the health, safety and wellbeing of their workforce and consumers first. ART Though consumer confidence remained low at the end of the year, the deployment of a testing regime for travellers and administration of a vaccine may trigger a faster and sharper return to normality. Vaccination developments PRODUCTION look increasingly promising and, with Consumer holidaymakers expressing concern at the consumers looking forward to travelling impact of tourism on destinations. again, industry leaders can be more preferences There will be higher value placed on optimistic about the future. are evolving authentic and personalised experiences. Travellers will want brands to engage A VISION FOR 2025 and some shifts with and guide them through their

CLIENT The pandemic has highlighted the will continue journey, with personalised offers using interconnected nature of leisure and data they have shared. Solutions and travel businesses and the need to work post‑pandemic, policies that provide choice and control in partnership. To rebuild confidence and says Deloitte’s will help to build trust and confidence. trust, the entire customer journey needs Technology will be at the forefront to feel safe. Governments, businesses and Alistair Pritchard of addressing consumer needs. The destinations can help ease travel concerns industry has rapidly deployed contactless through collaboration and data sharing. technology throughout the journey to Consumer preferences are evolving and address health and safety concerns, and will inform how the travel and hospitality innovations around biometric boarding, industry develops. There will be a need automated health screening, digital health for flexible options, available digitally, IDs and e-passports are moving ahead. which offer safe and authentic travel. Brands will have access to a wealth of Service Science/Kantar consumer data and the ability to use it to help research for this report found more than minimise risk, delays and inefficiencies. half of respondents intending to take an While financial and health security are overseas holiday in 2021 want a refund priorities, changes in consumer behaviour guarantee; two in three aged over 45 are likely to outlast the pandemic. want Atol protection; and almost half Organisations have an opportunity to of respondents want the flexibility to engage with a new audience and support change dates and/or destination. loyal customers using digital platforms. The demand for unique, sustainable Businesses will need to collaborate and and exclusive experiences will rise, as invest in a shared future to keep pace with will the desire to avoid congestion. The and capitalise on these opportunities. research found two in five respondents would prefer to avoid a ‘busy destination’. Alistair Pritchard, lead partner, It also found an increase in the number of Travel and Aviation, Deloitte LLP

4 Travel Weekly Insight Report 2020-21

BLACK YELLOW MAGENTA CYAN 91TRS2050108.pgs 08.12.2020 09:37 key findings VERSION key findings

REPRO OP 31% plan 1 in 2 fear having to overseas holiday self-isolate in 2021, -22pts YoY on holiday SUBS 45% 2 in 5 plan a to avoid

ART domestic ‘busy 1 in 2 fear

holiday, -22pts YoY destination’ catching

2x as Covid

PRODUCTION on holiday many 16-34s 2 in 3 happy to over-45s fly as over-55s want Atol 53% protection want CLIENT 52% likely refund to travel 2 in 5 1 in 5 guarantee concerned by car to book with about flying high street 68% agent won’t fly long-haul 27% concerned till vaccine at tourism impact in destination 2 in 5 available to spend more on 1 in 2 overseas holidaymakers holiday to book all-inclusive in 2021

Source: Service Science/Kantar Graphics: Shutterstock

Travel Weekly Insight Report 2020-21 5

BLACK YELLOW MAGENTA CYAN 91TRS2050109.pgs 07.12.2020 16:32 forward VERSION foreword recovery will come, we just don’t know how quickly REPRO OP

We have experienced a year like no four weeks hence and with three major other and a response to Covid-19 sources of industry data unavailable. The that has been extraordinary, not least Research suggests survey behind UK Office for National by health and care workers and by Statistics’ outbound and inbound data is scientists in pursuit of vaccines and no significant suspended, as is the GB Tourism Survey SUBS treatments. change in the which supplies domestic data. In addition, The effort required – politically, GfK has unhappily ceased collating economically and socially – has type of holiday, outbound booking data. There is search demonstrated the order of response we no great switch to data, of course, but at a time of quarantine will need to address climate change. restrictions, destination searches are Deloitte chief UK economist Ian the outdoors or somewhat akin to a desert island ART Stewart noted the transition to home away from luxury castaway’s fantasies of a fabulous meal. working alone represented “a remarkable The research suggests a substantially adaptation” made possible by technology” hotels, and no reduced number of overseas holidays and suggested “the internet ‘just-in-case’ shift away from in 2021. But counter to some forecasts, model of built-in excess capacity” may it suggests no significant change in the become a model for the future. all-inclusive type of holiday, no great switch to the PRODUCTION There are unique features to the outdoors or away from luxury hotels, and pandemic. Comparisons with past crises – no shift away from all-inclusive. There 9/11, the 2008 financial crash, the outbreaks also appears no great acceleration in of Sars (2003) and Mers (2012) which were embrace of technology, albeit this may contained without travel restrictions – simply be taken for granted. can be useful but also misleading. I’m indebted to Tom Costley of Service

CLIENT The financial crash, the most-useful Science for facilitating the research at comparison, brought travel’s long-term a time when it would have been easy growth to a halt and travel in much of to mothball operations, and grateful Europe did not return to the pre-crisis to Deloitte and the many Deloitte level until 2016. Global travel data does not contributors who gave their time and reflect this because the impact on China expertise. All mistakes are mine. was limited by its rapid economic growth. September 11 barely triggered a Ian Taylor crisis in Europe, certainly not in Britain executive editor, where outbound numbers rose. There Travel Weekly was decline in, to and from the US which ian.taylor@ affected global travel numbers at a time travelweekly.co.uk when Chinese travel was more limited. Sars and Mers were contained because, though more deadly than Covid-19, both viruses are more difficult to catch. This is the fifth Insight report to appear since the Brexit referendum of 2016 and, at the time of writing, the shape of Britain’s future relations with the EU remained unclear. At least this one source of uncertainly will soon be gone. The consumer research which runs through this report is of added THE CHARTS (page 7) reflect research respondents’ view (in importance this year, appearing at a November 2020) of their holiday activity in 2019. The year-on-year moment when no one can judge with comparisons are with the view certainty what bookings will be like of respondents a year earlier PICTURE: STEVE DUNLOP

6 Travel Weekly Insight Report 2020-21

BLACK YELLOW MAGENTA CYAN 91TRS2050110.pgs 08.12.2020 14:44 VERSION UK Holiday Market research results service science/Kantar consumer research

REPRO OP FIGURE 1: UK HOLIDAY MARKET

16.5m 36.4m intend to take m an overseas 24.3m 27 holiday in 2021 SUBS UK adults intend to take take at least one overseas a UK break holiday in a in 2021 normal year UK adults take at least one domestic break in a normal year Source: Service Science/Kantar

ART FIGURE 2: UK OUTBOUND HOLIDAY MARKET, PRE-COVID* % % adults taking overseas holidays took at least -4% 80 one overseas points YoY 63% 64% holiday in 55% At least one 50 % 2019 60 58% 51% 52% Two or more 49% 47% 24% 43% 43%

PRODUCTION 40 34% 36% ...took two 29% 30% or more +1% 24% 25% 24% 24% 22% 18% points 20 14% YoY 13%

0 16-24 25-34 35-44 45-54 55-64 65+ Child No child AB C1,C2 DE Base: 1,279 UK adults Source: Service Science/Kantar, November 2020

CLIENT FIGURE 3: UK HOLIDAY MARKET, PRE-COVID* % of UK holidaymakers in 2019 taking... % UK adults taking at least one Two or more Two or more overseas holiday in 2019, by region -3 overseas holidays domestic holidays points North -6 YoY with +2 +6 children26% points 28% points YoY YoY 49% 86% 42% 42% who took an +3 +2 Midlands -5 points Over-55s points overseas holiday YoY YoY London also had a 47% +3 domestic break Social class +9 points 65% ABC1 YoY South -2 -1 points %point YoY 65% 54% 69% change YoY Source: Service Science/Kantar FIGURE 4: UK DOMESTIC HOLIDAY MARKET, PRE-COVID* % adults taking UK domestic holidays in 2019

-4% -5% 76% points points 80 73% YoY YoY 70% 68% 68% 70% 71% 65% 64% At least one 60 59% 51% Two or more % 47% 48% 40% 42% 41% 41% 44% 42% 40 38% 67% took two 32% 32% took at least or more 23% one domestic 20 holiday a year in 2019 0 GRAPHICS: SHUTTERSTOCK GRAPHICS: 16-24 25-34 35-44 44-55 54-64 65+ Child No child AB C1,C2 DE *November 2020 data: reflects respondents’ holidays in 2019. Year-on-year comparisons are with holiday behaviour in the previous 12 months of November 2019 respondents. Base: 1,279 UK adults Source: Service Science/Kantar, November 2020

Travel Weekly Insight Report 2020-21 7

BLACK YELLOW MAGENTA CYAN 91TRS2050111.pgs 08.12.2020 14:44 kaptio VERSION REPRO OP SUBS ART

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Kaptio Ad-A4-v3-270x203.indd 1 03/12/2020 11:33 BLACK YELLOW MAGENTA CYAN 91TRS2050162.pgs 04.12.2020 12:40 VERSION crisis & recovery market outLook crisis and recovery, 1 REPRO OP Path to recovery remains uncertain

Approval of the BioNTech/Pfizer Vaccine rollout international travel. Details of the ‘test Covid-19 vaccine by the UK regulator, to release’ scheme to reduce quarantine SUBS transforms the MHRA, in early December in England remained to be clarified, but sparked widespread optimism that an outlook for travel the option of paying for a Covid test after end to the pandemic and associated but obstacles to five days’ self-isolation should be available restrictions is in sight. for arrivals from non-travel corridor However, promising as the vaccine and revival remain destinations. others on the way are, a note of caution Travellers may have to wait for rapid ART is necessary. Health experts stressed tests and pre-departure testing which vaccination opened the way to a ‘less- could open transatlantic and other longer Covid’ rather than a post-Covid world. routes. But however awkward and limited Karen Taylor, head of Deloitte’s Centre the initial easing of restrictions, there for Health Solutions, hailed the approval appeared to be momentum behind a as “exciting” but said: “We are far from reopening. PRODUCTION out of the woods.” She noted: “It will take The government announcement in some time to roll out even among those early December of a dispensation on who are prioritised.” quarantine requirements for “high-value” In the meantime, the UK economy business travellers seemed guaranteed to was estimated to have shrunk 11% during annoy would-be leisure travellers and the the pandemic. The UK Office for Budget ‘low-value’ majority in business, but it at

CLIENT Responsibility forecast a cumulative least indicated the direction of travel. rebound of 12% by the end of 2022, with Multiple announcements of testing unemployment to peak at 7.5% rather than FIGURE 5 shows the impact of the trials by major airlines and airports added 12% as previously forecast thanks to the 2008 financial crisis on UK GDP to the momentum. An industry source and outbound holiday numbers. government’s extended furlough scheme. The Office for National Statistics noted: “They are building a body of Deloitte chief UK economist Ian (ONS) holiday data pre-dates a evidence to convince the government to change in methodology in 2019 Stewart declared this “remarkable”, which led to a significant revision of allow rapid testing.” figures for 2009 onwards, making noting: “That is a much lower peak than comparisons pre- and post-crisis We can expect further measures in in the last three economic crises when difficult without use of the old data line with recommendations by the cross- GDP saw a fraction of the decline. The UK has been one of the most free-spending FIGURE 5: governments in the world. At the peak, OUTBOUND HOLIDAYS & GDP, 2000-16 the UK Treasury was supporting one-third UK overseas holidays, ONS estimates to 2016* of all jobs in the UK. That is staggering 45.3m 45.4m 45.5m 44.2m 45m and unprecedented.” 42.9m 42.2m Stewart pointed out “a dramatic 41.2m 40 39.9m deterioration” in the UK’s public finances 38.7m 38.5m 38.5m 37.2m 36.7m 36.4m 36.8m 36.2m left Britain with one of “the biggest budget 4 3.2% 2.9% 3 deficits in the world” and UK government 2.3% 2.2% Holiday trips (million) 2% 2.1% 1.7% 1.8% 1.6% 2 borrowing “at a level last seen after the 30 1.5% 1.3% 1.5% 0.8% 0.9% GDP change YoY 0.4% 1 First and Second World Wars”. However, 0 he estimated the costs of financing the -1 -1.1% debt as “vanishingly low” and said: “Tax -2 rises are going to be needed, but not until -3 -4 recovery is entrenched.” -4.8% -5 This report appeared with the industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *ONS data from 2009 onwards re-estimated in 2019 – see Figure 6 poised for a partial resumption of Source: ONS

Travel Weekly Insight Report 2020-21 9

BLACK YELLOW MAGENTA CYAN 91TRS2050112.pgs 08.12.2020 12:35 VERSION market outlook

Path to recovery remains uncertain crisis and recovery, 2 REPRO OP

government Global Travel Taskforce in there have not been more travel business November. The development of a robust failures, noting: “Many businesses testing regime in combination with the managed to secure additional financing. vaccine rollout could open up travel for a The challenge now is where cost is still significant return from the spring. Easter, being incurred. January bookings will SUBS which falls on April 2-4, looks a realistic only result in an inflow of deposits. It will date from which prospective travellers might book trips with some confidence. FIGURE 6: That said, it is worth bearing in mind IMPACT OF FINANCIAL CRISIS ON the taskforce recommendations came with OUTBOUND DEMAND, 2009-16 a warning: “We must accept a risk that UK ART and foreign governments have to make Outbound holidays % change YoY changes to travel restrictions at short 12 9 +10% +8% +7% notice. Industry and travellers have to 6 +3% +4% +5% 3 +3% +3% +3% ensure they have adequate insurance and +0.5% +1% -2% % 0 -2% measures in place to mitigate these risks, -3 -6 -5% Latest ONS data including being prepared to stay overseas -9

PRODUCTION Previous ONS data for longer than planned.” -12 -15 -15% 2009 2010 2011 2012 2013 2014 2015 2016 DEMAND OUTLOOK ONS data revised 2019, when outbound numbers from 2009 re-estimated What does the economic contraction mean for travel? Alistair Pritchard, Deloitte ONS holiday data revision 30

lead partner for travel and aviation, +2 6% 25 %revised data +22% CLIENT said: “Some UK consumers may find 20 +17% +17% +16% +16% themselves unemployed, others may have +15% +15% 15 +14% +13% greater levels of financial stress than 10 FIGURE 6 shows the % change 12 +7% pre-Covid. That is going to have an impact. year on year in outbound holiday 5 “Yet parts of the economy have had numbers through the period of 10 +10.3m recovery from the 2008 crisis 8 a less torrid time and there is a greater reflected in both the new and older +7.8m +6.5m +6.3m ONS data. The lower chart shows 6 +5.9m +5.8m level of security in the public sector. Not +5.9m +5.5m the extent of the ONS data revision. +5m every consumer is going to struggle to go Figure 7 shows the growth in 4 +2.7m

Europe’s air traffic since 2000 and (million) in holidays Difference on holiday.” 2 contraction in 2020, together with 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Pritchard admitted “surprise” that Eurocontrol’s recovery forecasts Source: ONS

FIGURE 7: EUROPEAN AIR TRAFFIC & PROJECTED RECOVERY European Air Traffic, 2000-20 Air traffic recovery forecasts

Scenario 1: Vaccine widely -2% -6% -57% 12 12 available mid-2021 11m 11.4m 10.2m 10.2m Scenario 2: Vaccine widely 10 9.7m 9.6m 9.7m 9.8m 10.7m 9m available mid-2022 10.2m 8.7m 8.5m 10 9.8m 8 9.1m 8.3m 6 8 8m 8m 4.8m 7.4m millions 4 6.5m 6 5.6m 2 Scenario 3: Insufficient 4.8m 5.5m vaccine take-up, renewed outbreaks Commercial flights (million) Commercial 0 4 2020 2021 2022 2023 2024 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020* *estimate Source: Eurocontrol

10 Travel Weekly Insight Report 2020-21

BLACK YELLOW MAGENTA CYAN 91TRS2050113.pgs 08.12.2020 12:46 VERSION crisis and recovery, 3 REPRO OP

be three to six months into 2021 before the FIGURE 8: destinations? Three, there will inevitably industry sees serious cashflow.” FURLOUGHED STAFF: be people who are more cautious. He said: “The combination of testing, % TO BE RETAINED “We could start to see some the taskforce recommendations and % of CFOs who expect to improvement from April. There is pent‑up vaccines is helpful. Seeing these on the retain furloughed staff demand, evidenced by the first travel SUBS % horizon gives consumers, lenders and 80 corridors when we saw a dramatic uptick investors more confidence. There is a way 70 in bookings. Some businesses managed to 6 3% to navigate through the next months.” 60 achieve 50%‑60% of prior year bookings However, he said summer 2021 “will 50 to Greece and Turkey, and we saw a spate still be difficult for some”, arguing: 40 of bookings when the Canary Islands “One, we don’t know what impact the 30 opened. There is demand and that gives 19% ART 20 testing regime will have. Two, it is early 12% cause for optimism. The recovery may just 10 days for the vaccines. It’s not just about 5% be slow to start. Longer term, I see it being 0 50% 51-70% 71-90% 91-100% vaccinating people in the UK. What is or less gradual and bumpy.” the approach of other countries going to Pritchard expressed more caution Figures rounded so not 100% be? Will restrictions still apply in some Source: Deloitte CFO Survey, Q3 2020 about business travel, pointing out: “Levels of corporate travel never got back PRODUCTION FIGURE 9: to where they were after the financial OUTBOUND HOLIDAYS & GDP, 2009-20 crisis [of 2008‑09]. Corporate travel UK overseas holidays, ONS estimates from 2019 policies will drive behaviour. While 60 58.7m there is a strong desire for people to 57.3m interact, there will be continued use of 54.4m technologies which have cost benefits and 50 50.8m CLIENT 48.5m allow a better work‑life balance. -2 45m -4 “A lot of companies have also made Holidays (million) Holidays 43.1m 42.7m 41.7m 1.6% 1.1% -6 41.2m 41.4m 0.9% 0.6% 0.7% commitments around sustainability and 40 0 1.3% 0.4% 0.8% 1.5% 2.1% -2 their environmental footprint. Covid‑19 -4 has accelerated that and consumers have -4.8% -6 seen the impact. Business travel won’t go -8 -10 away, but it is likely to come back smaller.” -11% -12 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 IMPACT ON AIRLINES *Bank of England forecast Holiday data revised 2019 and outbound numbers from 2009 re-estimated Source: ONS Obviously, that would have consequences for corporate travel companies, but the FIGURE 10: UK OVERSEAS BUSINESS TRAVEL, 2000-15 impact on airlines could reshape the industry more broadly. Change in overseas Change in overseas -11% -26% Pritchard said: “Network carriers make 10 business trips, 2000-03 business trips, 2008-10 a significant proportion of their profits at the front of the aircraft. If business travel 9.1m 8.9m 8.9m is smaller it could mean a reconfiguration of networks. 8.1m 8 8.1m “With vaccines and testing, consumers may be less worried, but there are likely

Trips (million) Trips 7.2m to be route and network changes and an 7m impact on profitability. Many network 6.6m 6.7m

6 FIGURE 8 suggests a majority of furloughed workers will be retained by UK employers. Figure 9 plots the ONS’s 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 latest overseas holiday data against UK GDP. Figure 10 uses the older ONS data on overseas business trips to *Data pre-dates ONS statistical revision in 2019 which re-estimated figures from 2009 Source: ONS show the extent of the contraction post-2008

Travel Weekly Insight Report 2020-21 11

BLACK YELLOW MAGENTA CYAN 91TRS2050114.pgs 08.12.2020 12:46 VERSION market outlook

Path to recovery remains uncertain crisis and recovery, 4

REPRO OP carriers will downsize and reduced or get their money back. However, I business travel will have a bearing on would not be surprised if in six months city‑centre and airport hotels.” There will be consumers return to booking themselves He argued: “When we went into this, because it is easy. People will still book there were only about 30 profitable airlines failures, but unprotected travel arrangements.” around the world. If the pandemic had businesses have The increased debt burden on played out with no financial intervention companies will have an impact. He said: SUBS you would expect the profitable airlines to tried to navigate “The costs of servicing debt and repaying survive. Governments have intervened in the crisis in a way it are going to be significant, meaning different ways. We may end up with some reduced profitability.” historically weaker airlines surviving that leaves them Pritchard noted additional financing and some historically stronger airlines not so stressed “has generally come from banks, investors that struggle.” or governments [which] have been aware ART that they can’t of companies’ ability to repay and not RETAIL FALLOUT come out of it wanted to create levels of debt that lead to Pritchard sees the Covid‑induced ‘zombie’ companies”. uncertainty giving travel retailers a boost, He said: “There will be failures, but but not necessarily on the high street. He businesses have generally tried to navigate said: “Given the uncertainty, the different the crisis in a way that leaves them not so PRODUCTION rules for different countries, there will stressed and strained that they can’t come be consumers who want the comfort of out of it. But if vaccination is not hugely advice from an agent. I see the role experts successful and there is a third wave of infec‑ can play becoming more important.” tion it could become much more difficult.” He sees this happening in tandem with The crisis on the high street saw the “a reduced bricks‑and‑mortar footprint”, failures of Debenhams and the Arcadia

CLIENT arguing “lower footfall on high streets is Group in December. Deloitte real estate probably inevitable”. But he said: “Travel partner Simon Bedford noted: “Bigger advice will be increasingly important for cities are suffering from a lack of footfall a portion of consumers, just delivered in because people have not returned to different ways as people get travel advice THE UK began 2020 as, by work. The businesses that suffered most via videoconferencing.” some margin, Europe’s number- have been department stores and fashion. one aviation market (Figures 11 This should also benefit tour operators. and 12). UK travel agents and Businesses that close have been replaced tour operators were Europe’s Pritchard said: “Consumers want biggest by value also by a by things you can’t do online and that is confidence they can make amendments significant margin (Figure 13) the way we’re probably going to go.”

FIGURE 11: FIGURE 12: FIGURE 13: EUROPE’S MAJOR AIR MARKETS: EUROPE’S MAIN TRAVEL AGENCY & TOUR PASSENGERS AIR MARKETS: OPERATOR VALUE TURNOVER In Europe’s main markets 300 2019 Q1 2020 Q2 2020 297m 20,000 Enterprises Turnover 60 250 35 227m 227m €32bn 50 15,000 200 30 Turnover (€bn) 17,500 17,500 169m €52.2bn 40 161m 25 €23bn €21bn 150 14,465 20 10,000 30 13,145 €35.2bn Enterprises

€ billion 15

Million passengers 100 81m €11bn €12bn 20 9,035

10 €9bn 8,400 5,000 €24bn 50 45m 28m 34m 34m 5 10 21m 14m 1.3m 2m 0.9m 0.9m 0.9m 1.3m €12.7bn 0 0 €12.8bn 0 0 UK Uk Uk UK Italy Spain Italy Italy Italy France France Spain France Spain France Spain Germany Germany Germany Germany Netherlands Source: Eurostat, 2018 data Netherlands Source: Eurostat/CAA Source: Eurostat, 2018 data

12 Travel Weekly Insight Report 2020-21

BLACK YELLOW MAGENTA CYAN 91TRS2050115.pgs 08.12.2020 12:46 VERSION crisis and recovery, 5

REPRO OP But Bedford also noted a counter‑trend, be the same whether there is a deal or not. saying: “The thing we’ve seen most has A deal would have an impact but it’s not been a return of ‘localism’, principally as simple as a deal ‘good’, no deal ‘bad’.” because the local high street is the only Arrangements on services would be place we can go, but also because we’ve “a patchwork” either way, he said. “On realised it’s something we value.” financial services, if we don’t have an Outside of major cities, it seems the ‘equivalence’ deal there will be restrictions SUBS pandemic may yet turn out to have given but this is outside the negotiations and the high street a fillip. most in financial services have prepared on that basis. The impact on the City has BREXIT IMPACT not been as great as predicted.” First, there is the issue of Brexit to More broadly, he said: “Services will contend with, the outcome of which still take place across borders, but there ART remained unclear as this report appeared. will be some restrictions. A lot depends on Speaking in late November, Deloitte regulation at EU and UK level.” Brexit adviser Raoul Ruparel stressed any SPAIN is way out in front as the He forecast “a fair amount of deal would be limited, saying: “The main main UK holiday destination disruption”, saying: “It won’t be significant (Figure 14). The gap in spending thing a deal will do is remove tariffs and between older and younger on inbound goods on day one but may travellers is pronounced (Figure 15). quotas on goods. Figure 16 reflects the recent growth increase over the course of 2021. There PRODUCTION “But 70%‑80% of changes are going to in value of UK industry sectors is potential for large‑scale disruption on outbound.” FIGURE 14: However, disruption to air traffic is TOP-10 DESTINATIONS FROM UK, 2019 unlikely. Ruparel said: “Both sides take a Holidays Bednights pragmatic view of air traffic. The question

Spain 15.8m Spain 137m is, do they take temporary measures and

CLIENT France 7.1m France 53m hold out on an aviation agreement until Italy 3.5m US 37m Greece 3.1m Greece (5) 27m there is a wider deal?” US (6) 2.9m Italy (4) 25m He noted: “There are likely to be Portugal (4) 2.7m Portugal 23m Netherlands 2.2m Turkey 18m differences at customs and immigration Turkey (10) 1.8m Caribbean* 11m [given] enforcement is down to individual Ireland 1.5m Cyprus (-) 10m Germany (8) 1.3m Thailand (-) 9m states. There will be some flexibility if 0 5 10 15 20 0 30 60 90 120 150 tourism is important. Holiday visits (million) Holiday nights (million) “It’s a bit of a black box. We won’t

*Excl. Mexico Source: ONS really know until next year.”

FIGURE 15: UK OUTBOUND TRIPS FIGURE 16: VALUE OF AND SPENDING BY AGE, 2019 UK TRAVEL, 2016-18

% of total trips % of total spending 2016 2017 50 47.1 2018 25 20 2 0% 2 0% 1 9% 39.9 40 40.6 2 1% 40 2 1% 35.8 36.4 20 1 7% 1 8% 15 30 15 1 5% 1 4%

% % € billion 1 1% 11.5% 19.4 10 20 18.8 10 15.9 9% 5 10 2.5% 0 5 n/a 0 0-15 16-24 25-34 35-44 45-54 55-64 65+ 0-15 16-24 25-34 35-44 45-54 55-64 65+ Air Accommodation Travel agency transport services & tour operator Source: ONS Source: ONS, latest data

Travel Weekly Insight Report 2020-21 13

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BLACK YELLOW MAGENTA CYAN 91TRS2050161.pgs 04.12.2020 12:40 VERSION UK Holiday Market research results service science/Kantar consumer research

REPRO OP FIGURE 17: HOLIDAY DEMAND FOR 2021 LIKELIHOOD OF OVERSEAS HOLIDAY % UK ADULTS LIKELY TO TAKE OVERSEAS HOLIDAY Very By age, class, region % UK adults % point change YoY likely Very -17 1 6% likely -20 -19 -17 -23 -27 -18 -25 -20 n/a n/a -25 -26 -18 -14 1 6% 60 5 2% Very 4 5% 4 5% Demand for overseas holidays in SUBS likely Quite 4 0% 1 6% -5 likely 40 3 7% 3 6% 2021 will be down, 1 5% 3 1% but 31% ‘likely’ to % 2 7% 27% 27% 2 4% 2 5% take a holiday is % point +3 2 2% 2 0% remarkable in the change YoY 20 circumstances Undecided* (Figure 17). Concerns 2 1% about Covid-19 are *Includes 0 clearly widespread ‘don’t knows’ 16-24 25-34 35-44 45-54 55+ Child No AB C1C2 DE North Midlands South London (Figure 18)

ART child FIGURE 18: ATTIDUTE TO COVID SAFETY MEASURES Long-haul holiday unlikely More likely to travel on Happy to fly if all passengers Attitudes by age before vaccine available holiday by car than fly tested pre-departure 80 7 3% Long-haul 7 0% 70 6 6% 6 9% unlikely 6 2% 6 0% before 60 5 6% 5 3% vaccine 4 8% PRODUCTION ‘Disagree’ ‘Disagree’ 50 Happy to ‘Disagree’ 1 2% 1 7% 40 fly if pre- % 3 4% 3 2% ‘Agree’ departure ‘Agree’ 30 ‘Agree’ 5 2% 4 8% test before 20 6 8% Agree strongly vaccine Agree 10 Disagree 0 Disagree strongly 16-24 25-34 35-44 45-54 55+

CLIENT FIGURE 19: SPENDING ON OVERSEAS HOLIDAY, 2021 LIKELY SPEND OF UK ADULTS ADULTS LIKELY TO SPEND MORE LIKELY TO TAKE HOLIDAY ABROAD By age, child status, region 60 % point A lot +3 5 3% more 4 9% change YoY 1 4% 4 5% 4 3% A majority 3 8% 40 3 5% 3 7% of those 3 2% A 2 9% intending to little -5 % 2 6% travel in 2021 more 2 4% 2 0% will spend at 20 least as much or more on holiday than -2 About the same last time they 4 7% 0 travelled 16-24 25-34 35-44 45-54 55-64 65+ Child No North Midlands South (Figure 19) child FIGURE 20: UK DOMESTIC HOLIDAY DEMAND, 2021 LIKELIHOOD OF ADULTS LIKELY TO TAKE DOMESTIC HOLIDAY DOMESTIC HOLIDAY By age, child status, region % point change YoY % point -24 -14 -19 -20 -26 -17 -24 -30 -24 -12 -10 change YoY -18 60 5 8% 5 9% Very 5 3% likely 5 0% 47% 47% Not quite half 2 3% 4 3% 3 9% 4 1% 4 0% 4 1% (45%) of UK adults 40 intend to take at -4 least one domestic % Quite holiday in 2021 +4 likely 20 (Figure 20) – a 2 2% good proportion Undecided* but down by the 2 2% same amount *Includes 0 as those likely to ‘don’t knows’ 16-24 25-34 35-44 45-54 55+ Child No North Midlands South London travel overseas child November 2020 Base: 1,279 UK adults Source: Service Science/Kantar

Travel Weekly Insight Report 2020-21 15

BLACK YELLOW MAGENTA CYAN 91TRS2050117.pgs 08.12.2020 14:44 VERSION Outbound

Research confirms underlying demand outbound deloitte view REPRO OP

The Insight 2019-20 report noted the Vaccine rollout Contrary to many forecasts, there outbound sector “had a difficult 2019” is no significant change in the type of amid uncertainty about Brexit and and consumer holidays consumers intend to take. As significant short-haul overcapacity. confidence will the accompanying charts show (page 17), The 2020 experience put that in two in five (42%) plan a beach holiday and SUBS perspective, with travel for the most dictate speed of one in five (19%) a city break – both on a part grounded. market recovery par with a year ago. However, flurries of demand when the Most strikingly, the popularity of travel corridors first opened in July and all-inclusive arrangements appears when a popular destination joined the undimmed, with more than half of corridors list demonstrated hopes of pent- those intending to travel planning an ART up demand were not wishful thinking. all-inclusive holiday and a further one in Consumer research for this report five undecided. Two-thirds of respondents confirmed the underlying strength of with children under 16 identified demand with almost a third (31%) of a all-inclusive as their preferred option. representative poll of UK adults ‘likely’ There is no significant change in to take an overseas holiday in 2021. That intended duration other than a continuing PRODUCTION is 22 percentage points down on the decline in 14-night holidays and rise in previous year, but represents an enormous short breaks. Almost one-third intend vote of confidence in the circumstances. to take a main overseas holiday of seven There was a decline across all age nights, 27% a shorter break, 17% eight-13 groups, but with the sharpest among nights and 9% more than a fortnight. those 55 and over. Younger adults, aged The research suggests flexible

CLIENT 25-44, showed the highest propensity booking conditions and confidence in the to book a holiday abroad, with 45% of availability of a refund if forced to cancel parents with children intending to travel. BEACH holidays remain will be critical considerations for many About one in six respondents (16%) overwhelmingly popular holidaymakers. among those intending to take declared themselves ‘very likely’ to book a holiday in 2021 (Figure 21) and Outbound businesses still have to a holiday, suggesting 8.5 million are all-inclusive resorts appear more survive through to the summer season to popular than ever (Figure 22). bursting to go. Two in five (38%) expect to Confidence in the availability take advantage of this demand, with the of a refund will be important to spend more on their overseas holidays in more than half of prospective winter 2020-21 season sharply curtailed 2021 and half about the same. holidaymakers (Figure 23) by pandemic restrictions.

The Deloitte view No one could have predicted the pandemic lockdown, boosted by the summer break While demand for travel will eventually and its impact on travel. Government data and demand in particular from the 18-34 spring back, the nature of that demand may shows only 939,000 UK residents headed age group. However, the second lockdown be different. The younger generation is more overseas in the three months to June, 96% in England and Northern Ireland, the likely to drive the rebound, and brands that fewer than the same period in 2019. ‘firebreak’ in Wales and the five-level system offer transparency and protection will gain Deloitte has tracked consumer sentiment of restrictions in Scotland dashed hopes of a consumer trust. Consumers are more likely throughout 2020 to see the impact the quick recovery, with further restrictions on to select destinations closer to home which pandemic has had on the intention to international travel and travel corridors. have adequate hospital facilities. travel. At the start of the lockdown in early Our survey in early November showed But with pent-up demand being seen April, sentiment was at its lowest, with only that while 24% of consumers felt safe to fly, when travel corridors such as to the 18% of UK consumers feeling safe to fly only 15% planned to take an international Canaries were announced, let’s hope and, unsurprisingly, only 16% planning an flight in the next three months. Consumers news of a vaccine and testing options international flight in the next three months. are likely to remain cautious about travel improve consumer confidence for the We saw travel intention pick up in the plans due to the uncertainties around travel turn-of-year booking period. summer as we emerged from the first corridors, quarantine and cancellation terms. ■ Danielle Rawson, head of Travel, Deloitte

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BLACK YELLOW MAGENTA CYAN 91TRS2050118.pgs 08.12.2020 14:34 outbound VERSION REPRO OP

Tui agreed additional financial aid FIGURE 21: TYPE OF OVERSEAS HOLIDAY, 2021 of €1.8 billion with the German state % point By age, child status development bank and the group’s largest change YoY Other/ Beach shareholder in early December, adding to don’t know City break 1 1% the €1.2 billion it secured in August and Group Countryside/activity SUBS 60 5 7% €1.8 billion in May. tour 4% 5 1% The facilities matched those required by 50 -1 4 5% +3 4 3%

major airlines, but Tui chief executive Fritz 3 9% Personal +1 40 3 7% Joussen insisted the group benefited from tour 8% % Beach 30

its integrated business model. Speaking in 2 5%

Activity 2 4% 2 3% +1 4 2% 2 3% 2 1% 2 1% holiday 2 0%

August after a loss of almost €2.3 billion 1 9% 1 9% 1 8% ART 8% 20 1 5%

for the nine months to June, he said: “The 1 3% 1 3% Countryside 1 1% integrated business model allowed us 8% 10 7% to restart first. We can make integrated 0 City break 1 9% 0 0 decisions from marketing to delivery. 16-24 25-34 35-44 45-54 55-64 65+ Child If you are independent, it’s much more Source: Service Science/Kantar difficult. Changes [to travel restrictions] PRODUCTION are not problematic for our business. The FIGURE 22: LIKELIHOOD OF BOOKING integrated model also allows us to drive ALL-INCLUSIVE OVERSEAS HOLIDAY, 2021 our digital-first strategy much faster.” Likely Tui announced the closure of 166 80 Undecided agencies in the UK and Ireland in July, 6 4% 6 2% 6 5% reducing its high street presence to 350 60 6 0% CLIENT stores, although 70% of affected staff 5 1% 4 6% could be retained. Likely 5 2% 40 UK number-two Jet2 halved capacity 3 5% 2 8% +2 % for winter 2020-21 after reporting +2 2 1% 2 4% 20 2 0% 1 8% 1 8% 1 7% a half-year loss of £120 million to Undecided September. Chairman Philip Meeson 2 1% 0 hailed news of a vaccine but signalled “a % point 16-24 25-34 35-44 45-54 55+ Child No child cautious approach to summer 2021”. change YoY Source: Service Science/Kantar

FIGURE 23: KEY FACTORS WHEN BOOKING OVERSEAS HOLIDAY, 2021

UK adults intending to take a holiday abroad By age, child status Refund Trust 80 Flexible booking Atol* Cancellation 73% 5 3% refund 70 67% 64% 62% Booking 61% 59% flexibility 4 7% 60 55% 56% 53% 53% 52% 50 48% 50% Trusted 5 0% 44% 44% 44% company % 41% 41% 41% 42% 37% 38% 40 36% 36% 35% Atol 32% 4 5% 28% protection 30 26% Abta 20 member 3 9%

Other/none/ 10 don’t know 12% 0 % 0 10 20 30 40 50 60 16-24 25-34 35-44 45-54 55+ Child No child

*Results for Atol protection and Abta membership broadly similar, but respondents identifying Atol exceeded those for Abta. Source: Service Science/Kantar

Travel Weekly Insight Report 2020-21 17

BLACK YELLOW MAGENTA CYAN 91TRS2050119.pgs 08.12.2020 14:35 VERSION Inbound

Sector needs support to survive to spring inbound deloitte review REPRO OP

Inbound association UKinbound Inbound visitor Without it, we’ll see business failures. urged the government to create a numbers ‘fell off a My concern is when the market comes £45 million ‘Tourism Resilience Fund’ back these businesses are not going to be to support the sector as it warned of cliff’ in 2020 and around.” the loss of almost two in three jobs. He described the summer as SUBS domestic tourism UKinbound members presented “absolutely disastrous”, telling Travel proposals to the Treasury in November, is no substitute Weekly: “There has been no inbound with chief executive Joss Croft reporting tourism. Quarantine had a massive the collapse in international visitors impact – 92% of people who come to the was costing in excess of £450 million a UK come for less than 14 days so 14‑day week. The association, which represents quarantine put people off.” ART 300‑plus inbound businesses, sought a The ‘test and release’ from quarantine scheme of grants to enable businesses to scheme due to operate from December 15 survive until the spring. promised no great relief. However, the A survey of inbound tour operators government’s Global Travel Taskforce and destination management companies which reported in November suggested (DMCs) suggested 64% of jobs could be ‘tour bubbles’ could allow inbound tour PRODUCTION gone by the end of 2020 and six in 10 feared groups to avoid quarantine by arriving their business would not survive. The and staying together and using private association forecast turnover by the end of transport to visit “Covid‑19 secure 2021 would remain below half the level of venues”. The concept would extend the 2019 and pointed out “previously profitable model already in use for sports teams. and sustainable” businesses had been An aviation source told Travel Weekly:

CLIENT “excluded from crucial support channels”. “Inbound group bubbles could work. It’s The proposed fund would allow tour potentially easy to administer. Groups operators and DMCs to apply for capped would be the responsibility of the operator grants based on turnover lost in 2020. and there are a limited number of players.” Croft said: “We’ve seen the number The taskforce also promised a Tourism of international visitors fall off a cliff. A Recovery Plan to support the sector and lot of businesses have used their reserves “a flagship overseas marketing campaign and are on their knees. They need at the appropriate time”. support to be able to operate next year. A spike in domestic holidays in the

The Deloitte view

The outlook for inbound travel is expected pre-pandemic forecasts of 31 million visits to attract international visitors to locations to continue to be challenging, as consumer and almost £24 billion in spending. beyond core destinations such as London. confidence remains low. With a new year on the horizon, usually The importance of, and investment in, The second lockdown – with international an important booking period, it is more transport connectivity, regional attractions travel restricted, most potential visitors facing important than ever to understand and accommodation should increase. quarantine, and lockdowns in neighbouring consumer priorities. Decisions will be made As the industry introduces testing and countries – brought most travel within Europe differently due to uncertainties caused by other safety measures, hope remains that to a grinding halt. With many attractions the pandemic. Businesses will be expected an effective vaccine will speed up the time closed and holiday season celebrations likely to protect consumers from disruption, while when travellers feel comfortable travelling to remain muted, the industry will continue still providing a highly experiential product. again. Once the threat of Covid-19 has to see low numbers in the near future. Alongside enhanced hygiene measures, lessened, consumers will reprioritise travel, VisitBritain forecast a decline of 74% insurance, flexible rebooking and cancellation with holidays among the most-anticipated inbound tourism visits to the UK in 2020 to will be critical to rebuilding consumer trust. of leisure activities. 10.6 million and a decline of 79% in spending The government’s levelling-up agenda, ■ Alistair Pritchard, lead partner, Travel to £6.1 billion. The drops compare with focused on regional growth, includes plans and Aviation

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BLACK YELLOW MAGENTA CYAN 91TRS2050120.pgs 08.12.2020 14:36 inbound VERSION REPRO OP

summer did not aid the sector, Croft said: FIGURE 24: OVERSEAS VISITORS TO UK, 2009-19 “Our member operators don’t have the All trips and % change year on year in nights All trips opportunity to pivot to domestic business. That is not the way they’re set up.” 50 41m 40.8m 40 40.3m

He added: “International visitors 39m SUBS 36.8m 35.3m 33.6m 32.3m typically spend three times what domestic 31.9m 31m 30 30.4m 40 visitors do on a trip. So a domestic tourism +8% 8 20 pick-up is not going to secure jobs in the +6% +6% 6 +5% 35 regions and across the visitor economy.” 10 +4% 4 % change YoY Annual visitors (million) +2% 2 0 0 30 ‘DESPERATELY HARD TIME’ -1%

ART -2% -2% -2% -2 Croft warned of “a desperately hard -4 25 Annual visitors (million) time for British tourism” saying: “These -6 -7% tour operators drive regional tourism -8 20 2009* 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 economies. If they aren’t around, there is nobody to jump into their place. They are market-specific. They have the All trips, including business & visiting friends & relations (VFR) Note: Data from before ONS statistical revision in 2019 which PRODUCTION relationships with international businesses. revised figures from 2009 onwards. Source: ONS “These are businesses that did not receive much income from December to FIGURE 25: FIGURE 26: February, then Covid kicked off and now INBOUND TOP INBOUND MARKETS, 2019 HOLIDAYS TO UK, 2019 they face winter. It’s going to be very difficult for them to get through to 2021.” By visitors % change By source region CLIENT Tom Jenkins, chief executive of on 2018 European tourism association Etoa, noted US 4.5m -2% in September: “There is no UK inbound France 3.6m -1% World beyond activity. Groups coming in are rarer Germany 3.2m Europe/ 2% N America than hen’s teeth.” Yet he insisted there Irish Republic 2.8m -4% 2 3% 41% was “strong underlying demand”, telling Spain 2.3m -5% Europe 6 2% Travel Weekly: “There is real desire to 2.2m OF ALL VISITORS Italy (8) 6% North [EU 57%] have a vacation. There is demand but America ON HOLIDAY Netherlands (6) 2m 0 it’s suppressed and forbidden. This is a 1 5% EXCLUDING VFR China & HK (11) 1.6m 1% hostile environment for group travel and Poland (8) 3.6m 6% FIT [independent travellers]. Belgium (9) 1.1m 1% “But the picture for 2021 is not bad – Australia (10) 1.1m 2% 2020 was going to be a record year and Source: ONS many people have rescheduled, so there By spending % change are almost record bookings for 2021.” on 2018 US Jenkins insisted: “If there is a vaccine, £4.2bn 4% Middle East* £2.7bn we’ll see a recovery rolling through 2021 10% China & HK (5) and achieve real volumes in 2022. It is £2.5bn 15% unlikely to be at the levels of 2019, but Germany (3) £1.6bn 6% we’ll return to something like normal France (4) FIGURE 24 shows inbound visitor £1.4bn 4% numbers to the UK from 2009 levels of demand by 2022.” to the present using the latest, Australia (7) £1.2bn 8% He said: “The big question is the extent revised ONS data which reflects Italy (9) £1.1bn 12% little impact from the 2008-09 to which airlines recover their volumes. *Includes UAE crisis and recession (left chart). Spain (6) £1bn -9% All other slumps have been rescued by (2018, where position The line chart on the right, Irish Republic (8) £1bn has changed) - 1% based on unrevised ONS data, airlines maintaining capacity and leading shows the impacts of both 9/11 Netherlands £0.8bn Source: ONS 10% and the 2008 crisis. The US was with cheap prices. This slump is so deep again the UK’s biggest inbound the airlines have cut capacity.” 0 £1bn £2bn £3bn £4bn £5bn market in 2019 (Figure 25)

Travel Weekly Insight Report 2020-21 19

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Travel Weekly Annual Insight Report__270 x 406.indd 1 03/12/2020 10:03 VERSION domestic

rural destinations outdo cities in dismal year domestic deloitte review REPRO OP

A record year for UK tourism in 2019, A short summer speaking at a World Travel Market online when domestic holiday numbers conference in November, noted: “We were broke 60 million, gave way to the season briefly looking forward to a bumper year. Bits of worst year since wartime. offset the impact domestic tourism had a decent summer, There was something of a domestic but we all know cities suffered.” SUBS of lockdowns but recovery following the initial lockdown. Addressing MPs in September, But the GB Tourism Survey which collects the market could Huddleston said: “We’ve seen some data on domestic trips was unfortunately see good demand positive signs. Hotel and accommodation suspended through 2020 due not only to occupancy rates in coastal and rural areas Covid-19 restrictions but to a planned once travel revives have been relatively high – in some cases, update of methodology. Figures are not back to 2019 levels by the end of August. ART due for release until 2021, meaning we “Self-catering cottages, campsites, have no record of how the year unfolded caravan and holiday parks have generally between lockdowns or of the relative reported a strong summer and many impact of different tier restrictions. outdoor attractions have seen high footfall.” However, VisitBritain research Huddleston defended the identified “restrictions on travel” as the government’s record on support for the PRODUCTION leading reason why UK adults did not sector, but said the government “can’t do feel confident about making overnight everything it’s asked”, adding: “A lot of domestic trips in winter 2020-21, with requests come from the industry. We can’t concerns about catching Covid the save every job. Large swathes of the travel second most-cited reason. and tourism sector did get support.” The research provided a footnote in The minister, who worked in travel

CLIENT the government’s Global Travel Taskforce before being becoming an MP, noted: “The report in November which promised a sector has had periods of difficulty in the Tourism Recovery Plan for the sector past. It has always bounced back.” and pledged the Department for Culture Labour’s shadow tourism and (DCMS) would continue to work closely heritage minister, Alex Sobel, warned the with the sector through the Tourism government in September that ending Industry Council and alongside the the furlough scheme would “mean mass Devolved Administrations. unemployment and business closures”. Tourism minister Nigel Huddleston, In a Commons debate, Sobel noted

The Deloitte view Confidence in travel wavered following Being able to spend time with loved ones level up infrastructure and regenerate local the first Covid-19 lockdown, but by safely is likely to be a core motivation for economies should boost regional tourism. late September consumers had grown travelling in 2021, when domestic holidays As employers show greater flexibility more confident about staying in hotels will remain an appealing choice. City breaks on working locations, combining holidays and holiday homes, driving demand for are predicted to appeal less than coastal with work will become more common, domestic travel. However, a second national and rural destinations. Other segments particularly among the younger generation. lockdown brought a fresh ban on both that enable travellers to avoid contact with Deloitte’s Q3 Consumer Tracker found domestic and international travel. strangers could be preferred – outdoor twice as many under-35s as over-55s want While this was a blow for tourism, demand activities, self-drive trips and self-catering. permanent flexible working post-pandemic. was already soft prior to the lockdown Tourism authorities and businesses Health concerns coupled with financial announcement. Localised restrictions slowed may benefit from promoting lesser-known worries could make travellers more cautious the upward trend in bookings. Before the places, quieter parts of popular destinations about their spending and regard domestic second lockdown, VisitBritain forecast UK and socially-distanced outdoor activities destinations as a financially safer option. domestic tourism spending would reach and experiences. Government initiatives to ■ Alistair Pritchard, lead partner, Travel £46.8 billion in 2020, down 49% on 2019. increase transport connectivity and safety, and Aviation

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BLACK YELLOW MAGENTA CYAN 91TRS2050122.pgs 08.12.2020 14:38 domestic VERSION REPRO OP

UK tourism had “lost Easter, two bank FIGURE 27: UK DOMESTIC holidays and the whole of June” and HOLIDAYS, 2006-19 “51% of hospitality staff were still not Many coach back at work in August”. Inverness MP Holidays Nights Drew Hendry agreed, arguing: “Tourism operators will not SUBS 250 businesses will find it more expensive to be recover. There is open without these [furlough] measures

than to remain closed with them.” very little time left. 218 Nights (million) 208 203 200 Many MPs raised concerns about the The government 197 198 202 200 198 192 195 crisis facing the coach-touring sector after 197 188 185 190 must act Specialist Leisure Group, parent of coach 60 ART operator Shearings, collapsed in May. 150 Holidays (million) Holidays 59m 59m 58m 57m 56m 56m 60.5m

40 58.4m Angus MP Dave Doogan warned: “Many 57.7m 54.7m 52.9m 51.8m 52.2m coach operators will not recover. There 20 50.4m is very little time left for the sector. The 100 government must act.” 0 Huddleston acknowledged “the 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 PRODUCTION important role the coach sector has” and Source: GB Tourism Survey said: “We’re engaging with the DfT on the serious challenges the sector faces.” In December, UKHospitality called on FIGURE 28: UK DOMESTIC HOLIDAYS the government to set up a ‘Hospitality AND SPENDING BY AGE, 2019 and Tourism Recovery Fund’ to support % of holidays % of total spending CLIENT businesses at risk of failure. Chief 25 25 executive Kate Nicholls urged ministers 23% 23% 20% 20% 20 19% 20 to act, saying: “A fund, including rent 18% 17% support to preserve the future of our high 16% 16% 15 15 14% streets, would deliver a huge boost to % % businesses just clinging on to life.” 10 10 7% 7% Research for this report suggested 45% of DOMESTIC holiday numbers 5 5 UK adults are likely, and one in four (23%) hit a record 60 million in 2019 (Figure 27). Older adults are the ‘very likely’, to take a domestic holiday biggest spenders on domestic 0 0 16-24 25-34 35-44 45-54 55-64 65+ 16-24 25-34 35-44 45-54 55-64 65+ breaks (Figure 28). 40% of all in 2021, giving grounds for optimism if domestic overnight stays are businesses can survive the winter. spent by the sea (Figure 30) Source: GB Tourism, VisitBritain

FIGURE 29: FIGURE 30: DOMESTIC ACCOMMODATION, 2019 DOMESTIC DESTINATIONS, 2019 HOLIDAYS Includes VFR holidays Excludes VFR holidays Holidays Nights Holidays Nights Non-commercial Non-commercial accommodation accommodation Small Small town town 13% Homestay 14% 16% Homestay 3% Hotel Countryside 17% 2% 26% 20% Seaside 33% Seaside Hotel 40% Caravan/ 40% campsite 22% Caravan/ campsite 28% Self-catering Self-catering City/large town City/large town 16% 23% 31% 22% Guesthouse/ Guesthouse/ B&B Countryside B&B 6% 21% Source: GB Tourism Survey 7%

Travel Weekly Insight Report 2020-21 23

BLACK YELLOW MAGENTA CYAN 91TRS2050123.pgs 08.12.2020 14:44 VERSION business travel

sector faces structural shifts after pandemic corporate deloitte review REPRO OP

Corporate travel was at a standstill Corporate travel emergence of business travel, but the from March without even the fillip spike will be higher than for leisure of a stuttering reopening in the leaders predict travel.” He suggested: “We need people summer and there were fears the rate a slower initial back in their offices – then we can get of job losses at travel management travelling again. We’re talking about SUBS recovery than the companies could hit 60% by October. 2023 or 2024 before we get back to The last-minute extension of the leisure sector but where we were. It’s hard to predict. furlough scheme helped a little, but a sharper spike Videoconferencing has proven to work, Business Travel Association (BTA) chief but equally you have to meet people.” executive Clive Wratten told Travel Network carriers are certainly not Weekly: “It’s a catastrophe.” expecting a rapid return of corporate ART He dismissed the impact of a reduction traffic. Before stepping down as IAG chief in quarantine through a ‘test and release’ executive in September to take over at regime, saying a release from quarantine Iata, Willie Walsh noted: “We expect a after five or seven days would “make little structural change in the business.” difference” for business travel. But Wratten believes corporate traffic could rise sharply TRAVELLER TRENDS PRODUCTION once it does resume, arguing: “It will be a Almost one in two corporate travel slower start but a faster ramp-up.” FIGURE 31: managers believe employees are willing The government’s Global Travel UK CORPORATE to travel again, according to a Global Taskforce report in November included a TRAVELLERS Business Travel Association (GBTA) poll recommendation “to study the feasibility” Overseas trips, 2019 in November. But only 9% were “very of a short-stay quarantine exemption willing” and more than one in five (22%) % point CLIENT for international business travellers. -2 change +2 not willing to travel, although 60% said An aviation source told Travel Weekly: on 2018 availability of a vaccine would make Men Women “We need the proposal fully worked up. corporates likely to sanction travel. Germany has done it with a letter from A GBTA poll in October found 63% of an employer indicating a traveller is on 74 % members in Europe identified government essential business. It remains to be seen restrictions as the greatest barrier. One whether that can get across the line.” in three (32%) cited company policy as a Wratten argued: “It’s going to be 26 % barrier to travel, with only 9% identifying well into 2021 before we see any real Source: ONS employee reluctance to travel.

The Deloitte view 2020 has been a year of respond, recover only hours to locate and extract employees ‘contactless travel’, from check-in at the and reinvent, for travel managers, buyers from around the world. Some of the key airport to hotels, taxis, rail and restaurants. and suppliers alike. learnings that will be vital as we move Technology will allow us to meet medical and The entire travel ecosystem remains through recovery to reinvention include visa-entry requirements around the world, under immense strain and traditional sustainability and use of technology. removing the need to carry documentation, operating models will continue to be Sustainability: it is now beyond doubt improving the traveller experience and challenged for some time. For example, that many employees can work remotely lowering the cost of service delivery. travel management companies will need to and remain productive. This means Business travel is not just a cost of doing re-evaluate the transaction fee model used organisations can reset when they need business. It enables business, facilitates for some clients because this will no longer to travel and how the need for travel is collaboration and engagement, solves cover the cost of service, as volumes have managed. We call it Smart Travel – meeting problems and generates solutions that make reduced to single digits for many months. customers’ needs and obligations to reduce positive changes for all. How and when is Covid-19 has tested travel teams and carbon emissions through making the right the next challenge for business travel. their supply chains to the limit. Access to choices and balancing those effectively. ■ Jon Bolger, head of Business Travel, locations has reduced rapidly, often with Technology: we are now in the age of Deloitte

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BLACK YELLOW MAGENTA CYAN 91TRS2050124.pgs 08.12.2020 14:40 corporate VERSION REPRO OP

At the same time, four out of five FIGURE 32: OVERSEAS BUSINESS TRAVEL FROM UK, 2009-20 respondents (82%) rated face-to-face 10 +1.8m +2.7m meetings ‘more’ effective than virtual. +1.8m +1.7m +1.9m +2m +1.6m +2m +1.6m 9.3m 2019 Three out of five reported their +0.8m 9m 9m 8 8.6m 8.7m 8.6m 8.7m 8.8m 8.8m revision -97% 8.2m Change in companies had reduced staff or laid off 7.7m in trip SUBS nos overseas employees as a result of the pandemic, 6 business trips, YoY in half had furloughed employees and half 4 Q2 2020

(48%) cut pay. Almost two-thirds (62%) (million) Trips 2 10 considered further job cuts ‘likely’. +7% +6% +5% +4% 5 An earlier poll of GBTA members in 0 +1% +1% 0 % change year on year -1% 0 ONS 2019 August suggested a sharp move against -3% -3% statistical ART -5 booking direct or through online agencies revision led -10 figures from (OTAs). Two-thirds of respondents (66%) -15 2009 to be said they would be less likely to allow revised by -20 amounts travellers to book direct with suppliers -23%* shown in -25 arrows when travel resumes and 65% less likely *Figure based -31% -30 to allow bookings through an OTA. on previous ONS estimates PRODUCTION -35 The BTA took the opportunity to 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: ONS consult members and corporate clients Q1 on industry pricing models, with a white FIGURE 33: LEADING BUSINESS paper published in October laying out the DESTINATIONS FROM UK, 2019 strengths and weaknesses of transaction, subscription and management fees. THE ONS statistical revision in 1,200 By visits 2019 substantially raised the 1,200 CLIENT It aimed to bring clarity to the process recorded number of overseas 1,000 and develop standards for the different business trips since 2009 1,000 957 (Figure 32). It’s difficult to see fee models. Wratten said: “We planned to these numbers being maintained. 821 800 743 (2018 position do this anyway, but Covid accelerated the UK corporate travellers appear where this to spend the most amount of time has changed) process. The world has moved on but the in the US and France (Figure 33). 600 model has not. We hope to come out of Spending on domestic overnight 475 465 business trips appears to 383 360 be in decline (Figure 34) 400

this with standards for each model.” Visits (thousand) 194 200

FIGURE 34: UK DOMESTIC BUSINESS TRAVEL, 2007-19 0

Overnight business trips and total spend 6 Spend adjusted for US (5) Spain

inflation (£bn) Italy (7) Poland France (2) Germany (1) Belgium (8) Switzerland (9) Irish Republic (3) Netherlands (4) 5

8 By bednights 20 18.6m 4 6.7m 18.1m 17.5m 17.8m 6.7m 16.5m 16.5m 16.3m 15 6 15 10 12 (2018 position 4 where this 9 3.2m 3.2m has changed) % change YoY Trips (million) Trips 5 6 2.4m 2.1m

3 Nights (million) 2 1.7m1.6m 0 1.1m 1.1m 0 -3 0 -6 US UAE France Spain -9 Germany Italy (9) Belgium -12 Irish Republic 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Netherlands (7) Source: GB Tourism Source: ONS China & Hong Kong

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BLACK YELLOW MAGENTA CYAN 91TRS2050125.pgs 08.12.2020 14:44 VERSION cruise sector eager to pull anchor and restart cruise deloitte review REPRO OP

UK cruise leaders called for a Taskforce sets FIGURE 35: PLANNED CRUISE timeline for resuming operations DEPLOYMENT, 2020 after the government’s Global Travel out framework % of global capacity Taskforce reported “now is not the for phased Caribbean 32%

time” to restart cruising in November. Mediterranean 17% SUBS resumption But the report set a framework for Europe, beyond Med 11% restarting and noted the pressure to of sailings China 5% Asia, excl. China 5%

resume by spring. Aus/NZ/Pacific 5% The taskforce recommended “a Alaska 5% gradual phasing in of operations, starting South America 2% Other 17% with UK cruises [and] transitioning 0 5 10 15 20 25 30 35 ART % to European ports of call before a full Figures rounded Source: Clia resumption”. It acknowledged concern that without bookings in “the peak season between Phase 2 will allow calls at European ports Christmas and February . . . business for but cruises will continue to start and end next year will be written off” and noted a in the UK, and Phase 3 will see normal PRODUCTION “restart of seagoing cruises since August” operations resume. in Germany, Italy, Greece, Malta, Cyprus, Cruises also remained suspended in Croatia, France, Norway, Madeira and the US as this report was published, but some Caribbean islands, with cruises the US Centres for Disease Control and also due to restart in the Canary Islands Prevention (CDC) issued a ‘Framework and Singapore. for Conditional Sailing Order’ at the end

CLIENT of October, outlining a “phased approach” RESTART PHASES for a resumption. Cruise lines will operate A restart will depend on cruise operators itineraries without passengers to study taking responsibility for repatriating the effectiveness of Covid prevention passengers and seafarers if necessary, and measures. progress in three phases. The order came after a Healthy Phase 1 will see cruises start and THE CARIBBEAN dominates cruise line deployment, followed by Sail Panel of experts, set up by end in the UK and call only at UK ports. the Mediterranean (Figure 35) Norwegian Cruise Line Holdings and

The Deloitte view After years of solid growth, the cruise As the industry plots its way to a restart, a key priority for travellers. The industry industry has been investing heavily in new die-hard cruisers are likely to return when has a range of protocols designed to allow product. Prior to the pandemic, the sector they feel safe to do so. The bigger challenge sailing to recommence in a Covid-19 world, was reaching a critical juncture where the is the need to attract ‘new-to-cruise’ but undoubtedly the journey to rebuild significant increase in new capacity would customers in a world where consumer confidence will not be straightforward. have resulted in supply exceeding demand confidence has been knocked significantly. Prior to Covid-19, the number of sea in the near term. As a result, the industry Different recovery dynamics will play out cruise holidays taken by UK and Irish had been focused on attracting the all- across ocean, river and expedition cruising travellers was expected to grow by 22.5% important ‘new-to-cruise’ consumer. depending on customer demographics and between 2018 and 2023. As the industry Covid-19 has presented significant geographies of operation. resets, it will be important to focus on challenges and will continue to do so over the While cruise lines have taken swift action the value cruising offers and to broaden short to medium term. The task of repatriating to restructure fleet sizes, the key question the customer base to younger travellers, customers and tens of thousands of crew was is how the demand/supply equation will honeymoon couples and families travelling monumental and the industry bore the brunt play out as new tonnage arrives. Focus on with multiple generations. of difficult media reporting despite some of rebuilding consumer confidence will be ■ Alistair Pritchard, lead partner, Travel the issues being out of cruise lines’ control. paramount, with health and safety now and Aviation

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Royal Caribbean Group, submitted FIGURE 36: UK & IRISH OCEAN CRUISE PASSENGERS, 2001-18 74 recommendations to the CDC in 2.5 September. Total Royal Caribbean chairman and Fly-cruise 1.97 2.01 20 chief executive Richard Fain admitted 2.0 1.9

SUBS 1.79 17% 1.7 1.7 1.73 frustration at the continuing suspension, 1.62 1.64 1.48 1.53 15 but insisted there is “light at the end 1.5 1.34 % change YoY (total) of the tunnel” thanks to “greater 1.2 12% 1.07 11% 11% understanding of the virus”, developments 0.96 1.03 10 1.0 0.82 9%

in testing and progress in developing a (million) Passengers 0.77 7% 6% 6% 6% vaccine. 5% 4% 5

ART 0.5 4% 3% 4% He explained: “There are things that 2% 2% make a ship more demanding, but there 0.0 0% 0 are also advantages. A ship is a controlled environment. We intend to make our -5 ships a bubble.” -5% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

PRODUCTION ÔPENT-UP DEMANDÕ Source: Clia/ONS Royal Caribbean’s Quantum of the Seas was due to resume sailing from Singapore THE STEADY rise in the before they leave, on embarkation and UK cruise market is clear in December and the company reported (Figure 36), reflecting the after 14 days. We respect social distancing “a significant bookings spike”, noting: sector’s global expansion and wearing masks where social (Figure 38). However, the US “It’s just one of 53 ships, but it highlights continues to dominate the distancing is not possible.

CLIENT the pent-up demand.” sector (Figure 37) “Guests are allowed to go ashore Norwegian Cruise Line Holdings only on MSC excursions. We isolate chief executive Frank Del Rio similarly any suspect case and all close contacts. reported in August: “Between 15 million Application of these protocols has and 20 million people have not been allowed MSC Cruises to restart. We allowed to cruise this year – there will be showed cruises are possible.” a lot of pent-up demand. Southampton will gain a fifth cruise “People are booking. We’ve not seen terminal for the 2021 season following any major shifts in consumer behaviour. a deal between Associated British Ports, So long as we can ascertain cruising is MSC Cruises and NCL Holdings. The new safe we’ll have customers coming back terminal in the city’s Western Docks will in droves.” be able to accommodate ships of up to FIGURE 37: CRUISE MSC Cruises became the first line to PASSENGER ORIGIN, 6,000 berths. resume operations in the Mediterranean BY REGION in mid-August with flagship MSC % of global total FIGURE 38: Grandiosa launching seven-night cruises GLOBAL OCEAN CRUISE in the western Med, with access restricted South Rest of America world 30 PASSENGERS 30 to Schengen area residents. The line had Asia 3% 28.5 to suspend sailings temporarily from Pacific 26.7 early November following travel curbs in 2 0% 25 25.2 23.1 France and Germany. 22.3 21.3 However, MSC chief executive Gianni 5 0% 20.9 20 20.5 Onorato suggested cruise could become 19.1

Passengers (million) Passengers 17.8 2 5% “the safest holiday option”, arguing: “We 16.3 can arrange all aspects of the journey.” 15 North 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* He explained: “We test everyone at Europe America embarkation. We test all crew at home Source: Clia *Forecast Source: Clia

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The experience of China suggests Hospitality may snakes and ladders. All that hard work to Covid-19 needs to be under control get back to 70%-80% occupancy and now before hospitality recovers. That not see a rapid it’s back down to 12%-35%.” is the view of Robin Rossmann, return, but the He reported occupancy in Spain, managing director of hospitality data Croatia, the Netherlands and Belgium as no SUBS analyst STR. sector has ‘not more than 20%, but said: “France, Germany, He told a Future of Hospitality Summit been permanently the UK, Italy, Poland are doing better – in October: “Travel demand in China has impaired’ countries with strong domestic demand. not been damaged. It recovered quickly. UK [hotel] occupancy is at about 40%. But China has the virus under control. “Lead times are short. Consumers are Restrictions on movement have been booking incredibly late – mainly for the ART lifted. It has not had more than 100 new next 14 days. There is no point booking cases a day since March.” two or three months from now.” Rossmann noted: “The Chinese have Rossmann told the summit: “For there not been able to travel outside China so to be a change, we need the virus under there has been a huge rise in domestic control. We’ve modelled our forecast travel. Revenue per available room based on the recovery from the financial PRODUCTION [RevPAR] is back and in some cases crisis. We forecast Europe next year will ahead of former levels. So recovery remain 40% down on 2019. We expect a requires getting the virus under control.” slow recovery in RevPAR, getting close to In October, Rossmann reported “only 2019 levels by 2024.” about 15% of hotels around the world He noted hotel demand “had been strug- still closed” and said: “The industry has gling to keep up with supply” before the

CLIENT shown amazing resilience. We’ve seen a pandemic and said: “We expect the increase much stronger summer than expected. in supply this year to be only 3%. It will “The hard times are not over. It bounce back but we expect smaller supply depends where you are as to how the growth. Many pipeline projects won’t be recovery will shape out. [But] China completed and many more not started.” reached its low point in February. Now it’s at 50%-70% occupancy with normal CITIES UNDER PRESSURE degrees of seasonality. A Financial Times report on New York’s “The US and Middle East declined not hotels in early November suggested the as much as China and saw a recovery, crisis could result in wholesale closures. It but it stalled since June at about 40%-50%. quoted Vijay Dandapani, chief executive Europe locked down hardest. It saw a of the Hotel Association of New York recovery in the summer, but occupancy City, saying that if half the city’s 640 declined back to about 35% since.” hotels survive, it will be a “great” outcome. Rossmann said: “The shape of Andreas Scriven, Deloitte lead partner recovery is vastly different not just at the for hospitality and leisure, acknowledged: national level but at the micro-market “It’s very challenging at the moment. level. Leisure markets are doing well, There is real stress, but people will want big cities less well. Cities are struggling to travel again. throughout the world.” “City centres are most under pressure In the US, he said: “Occupancy is as people are not travelling into gateway around 50%. Big cities are still struggling. cities and not travelling into London Leisure destinations and inter-state to go to the theatre or sporting events. destinations are doing better – places you The question is whether demand will can reach by car rather than flying.” come back. I would argue it will, but In Europe, Rossmann said: “It’s like perhaps not in the same way, particularly

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corporate travel. There is going to be FIGURE 39: some adapting. But London, Paris, New LIKELY ACCOMMODATION NEXT OVERSEAS HOLIDAY York will still be attractive destinations.” Deloitte’s European Hotel Industry All holidaymarkers Those with children Survey 2020, published in November, SUBS suggested two-thirds of hospitality Camping/ Other/ caravan don’t know Cruise 2% Other/ leaders remain optimistic about the long- 3% 1 0% Camping/ don’t know term future of the hotel market. Scrivens caravan 9% Cruise 5% 3% +1 said: “There is a clear shift to private +1 Airbnb-style +1 equity investment and a focus on the Airbnb-style 2.3m homestay -1 homestay Europe +1 7% +4 62% domestic market and the regions.” 5% 2.2m Hotel Hotel ART [EU 57%] But he noted Europe’s top-three 0 +1 4/5 star- B&B 4% 4/5 star- B&B cities for investment identified by hotel plus 7% plus 0 1.6m -6 5 7% investors were the same as in previous Self-catering 5 3% Self-catering B&B villa/apartment -5 +3 villa/apartment -6 +2 4% years – Amsterdam, London and Paris. 1 3% 8% The survey placed Cambridge as Hotel 2-3 star Hotel 2-3 star the most attractive UK city for hotel 7% 7%

PRODUCTION % point investment, with Oxford and Edinburgh change year ranked second and third. More than two- By age on year thirds of respondents were also ‘strongly’ 60 5 6% 5 8% or ‘slightly’ optimistic about the long- 5 3% 5 2% 5 3% 50 £2.7bn 4-5 star hotel term future of the UK market. However, £2.5bn 4 5% Self-catering half believed a no-deal Brexit could lower 40 £1.6bn Homestay CLIENT the attractiveness of London for hotel % £1.4bn Cruise investment and more than half said the 30 28% £1.2bn UK investment cycle would take more 21% 20 £1.1bn than two years to normalise. 15% 12% 11% 12% £1bn 9% Notably, and no doubt as a reflection 10 7% 7% 7% 6% £1bn 4% of Covid concerns, serviced apartments 1% 2% 1% 2% 2% 0% 0 Source: Service overtook hotels to become the most- 16-24 25-34 35-44 45-54 55-64 65+ Science/ Kantar attractive asset class for hospitality investors in Europe, jumping 25 percentage points year on year. FOUR and five-star hotels vaccine as an immediate fix, but it’s likely remain the accommodation Deloitte director and head of UK of choice for those intending to take time to roll out.” hospitality advisory Nikola Reid said: to take an overseas holiday He suggested: “There is still uncertainty in 2021, especially those with “Hotel investors continue to look for children (Figure 39). There on how the market will move. Younger opportunities in Amsterdam, which appears to be little intention demographics may think twice about to switch to self-catering retained its place as the most-attractive staying in hostels, but it’s too soon to say European city for investment for the how consumer behaviour will change. We fifth year. London is second but investors have seen a shift [by investors] away from indicate some caution. A no-deal Brexit sharing-economy accommodation. That could lower London’s attractiveness.” was a hot asset class, but the view is it is Scrivens said: “Covid-19 will dominate going to be under some pressure.” the next 12 months and Brexit is still a Scrivens noted: “Summer trading was significant factor in terms of the next ahead of where people expected it to be. three to five years. But people see the When hotels in the UK opened on July 4, fundamentals as similar to pre-pandemic. no one knew if anyone would turn up. It won’t be a quick fix. Recovery is But many people felt they needed a break. expected by 2023-24. Some might see a “Those markets relying on international

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REPRO OP travel faced greater challenges. The dialling into a videoconference call.” restrictions came into play where markets He suggested caution among leisure depend on the UK or Germany and I’m not convinced consumers may “depend on booking markets that suffered local outbreaks conditions”, adding: “The industry can do missed out. there will be huge quite a bit to contribute to getting people “Middle East markets like Dubai behavioural to book. We’ll see all types of behaviour. and Doha are hugely dependent on Some will think it’s too soon to travel. SUBS international long-haul travel, the same change once Some will say ‘I need a holiday’. Some as Paris and London. China and to a consumers are will wait to book at the last minute. degree the US have had the benefit of “I’m not convinced there will be huge being largely domestic-driven markets. confident again behavioural change once consumers The US was not as severely disrupted. are confident again. We saw that in the There was not a total lockdown and summer. As soon as people were able to ART many people continued to travel.” travel they did. When we had the Sars outbreak in Asia [in 2003] there was never INVESTOR APPETITE a vaccine. Did it fundamentally change Scrivens said: “I suspect the recovery will how people in the region behave? No.” take longer [elsewhere] than in China In the meantime, Scrivens said: “The even when the virus is under control. crisis has forced a lot of hotel operators to PRODUCTION “Large meetings and conference look at how they control costs. There will events are a concern. There is no be operational changes. There is a lot of indication yet how corporate policy will focus on how to minimise interaction. develop. But people will think hard about “Before any vaccine was announced whether to attend big events. It will take or approved, sentiment in the sector a while for people to feel comfortable remained low. It has been an extremely

CLIENT with visitors from 100 countries attending difficult period, but the sector has not an event and, historically, conferences been permanently impaired. and events have taken longer to come “Hospitality has shown an ability to back after a downturn. bounce back from all sorts of disruption. “Trips where people travel halfway From an investor perspective there is ALL-INCLUSIVE demand around the world to attend a short remains extraordinarily still a huge appetite for hospitality. The strong – the choice of 52% of meeting make less sense when there is UK adults intending to travel investor community believes in the the environmental cost compared with overseas in 2021 (Figure 40) hospitality sector. It will come back.”

FIGURE 40: ALL-INCLUSIVE DEMAND, 2015-20 % likely to book By age By child status all-inclusive for next summer 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 60 80 80

5 2% 69% 70 6 9% 5 0% 70 6 5% 50 64% 4 6% 63% 63% 62% 6 1% 4 4% 4 3% 60 60% 60% 60 5 8% 5 9% 4 0% 55% 54% 40 53% 52% 51% 50% 51% 4 8% 50 % 50 47% 4 5% 4 6% % 42% 42% % 4 1% 4 2% 4 1% 40% 30 40 37% 38% 38% 38%38% 40 3 7% 3 8% 34% 35% 35% 3 4% 31% 20 30 28% 30 20 20 10 10 10 0 0 0

201520162017201820192020 16-24 25-34 35-44 45-54 55+ Child No child

Source: Service Science/ Kantar

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Aviation chiefs issued a series of Debt-laden to have 200 aircraft still parked in 2022. stark assessments in September and Airline association Iata warned that united in calling for a relaxation of airlines must slashing labour costs by half would not travel restrictions. British Airways’ play difficult save airlines from insolvency. Iata chief then chief executive Alex Cruz economist Brian Pearce said in November: SUBS warned BA “can only survive if the balancing act to “We expect revenues in 2021 to be only government works with us”. match capacity 48% of those before the crisis. Airlines Ryanair head Michael O’Leary with demand need to shrink to that level.” dismissed the winter travel market as He warned: “If we’re going to avoid a “write-off” and Heathrow chief John significant failures, we have to see travel Holland-Kaye suggested the airport was restrictions reduced or we need more ART at risk of “what we saw with mining support.” The Iata forecast predated the towns in the 1980s”. news on vaccines, but was based on a BA parent IAG reported an operating vaccine being available in 2021. loss of almost €6 billion for the nine Norwegian Air entered bankruptcy months to September and reported protection in Ireland in November. capacity for the final weeks of the year The move followed Norway’s refusal PRODUCTION would be 30% of the 2019 level. Ryanair of additional state aid after providing cut capacity to 40%, while easyJet planned NOK3 billion (£240 million) in May. to operate just 20% of flights up to the The airline ceded majority control to its end of the year. creditors in May but in December sought Air France-KLM mirrored IAG a second debt-for-equity swap. with a loss of €6 billion for the nine Virgin Atlantic had to race to find

CLIENT months to September after receiving investors after the UK government substantial state aid. France provided rejected a request for a £500 million loan Air France with €7 billion and the and credit guarantee in April. The carrier Netherlands advanced €4 billion to KLM. confirmed a court-backed rescue deal in Lufthansa reported a loss of €5.6 billion July with a private refinancing package to September and required €9 billion in worth £1.2 billion. The carrier closed state aid from Germany, with additional its base at Gatwick and in September, support for group carriers Swiss, having confirmed flights to the US Austrian and Brussels Airlines from their would not resume until 2021, announced UK air passenger numbers would respective governments. have passed 300 million in 2020 redundancies taking its total job losses but for Covid-19 (Figure 41). The German carrier forecast such a Instead, they plunged 99% in April to one in two. gradual return of demand that it planned and May 2020 (Figure 42) By contrast, Wizz Air planned

FIGURE 41: UK AIRPORT FIGURE 42: UK AIR PASSENGERS PASSENGER NUMBERS, 1999-2019 BY MONTH, 2020 300 297m 30 284m Percentage change YoY 25 25.9m -2% -55% -99% -99% -98% -88% -78% -79% 251m 250 20m 21.3m 240m 20 19.3m 227m 228m 18.8m 218m 219m 15 199m 200 180m +2% 10 10.1m 168m Passengers (million) Passengers 6.8m % change (million) Passengers 0.5 5.7m 150 2019 v 2018 3.5m 335k 385k 698k 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 0 Oct Nov Dec Jan Feb March April May June July Aug Sept 2019 2020 UK and international passengers, outbound, inbound and domestic, to nearest million Source: CAA Source: CAA

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VERSION AVIATION uncertain demand to shape sector’s recovery

REPRO OP expansion with chief executive Jozsef regulations and complexity. Flying is not Varadi insisting in August: “Almost every going to be easier.” airport in Europe is in discussions with Airports association ACI Europe us. We have a significant pile of cash.” warned of “extreme financial distress” Ryanair’s Michael O’Leary similarly among Europe’s airports and said insisted in November: “We’re in extensive a recovery would be “hampered negotiations with airports on where by significant supply pressures”. SUBS we can return quickly. Airports that Director‑general Olivier Jankovec told come with the best incentives will see the ACI Europe conference in November: traffic return quicker. A huge amount of “Almost all airports offer rebates and capacity has been taken out and won’t HEATHROW remained Europe’s incentives to airlines under normal busiest airport in 2019 despite its return. We’ll fill those gaps.” capacity constraints. By September conditions [but] 70% have added Covid‑19 Passengers face higher fares and 2020, three airports in Turkey and incentives. They are pricing below costs.”

ART four in Russia were busier, in part fewer flights as a result of the pandemic, reflecting holiday traffic between the according to Airlines for Europe countries (Figure 43). However, both ‘NO PERMANENT DAMAGE’ were also in the grip of escalating managing director Thomas Reynaert, who Covid-19 crises. Transit passengers Despite the industry’s losses, easyJet form a sizeable proportion of UK air chief executive Johan Lundgren insisted warned in October: “Flying is not going traffic, reflecting the international to get cheaper with all the additional importance of Heathrow (Figure 44) the pandemic had done “no permanent damage” to the sector. Reporting a loss PRODUCTION of £1.27 billion for the 12 months to FIGURE 43: EUROPEÕS BUSIEST AIRPORTS September, Lundgren said: “It will take up 2019 September 2020 to 2023 before we see a recovery to 2019 100 2.5 levels, but demand will come back. We 2.25m 2.2m see that when restrictions are removed. 81m 80 76m 2.0 2m 72m “I don’t believe the industry is 70.5m68.5m 1.8m 1.8m CLIENT 62m 1.5m permanently damaged.” 60 1.5 1.4m 53m 50m 1.35m 1.34m 48m 46.5m 1.26m The good news on vaccines late 40 1.0 in the year came alongside the first

Passengers (million) Passengers positive news in almost two years for Passengers (million) Passengers 20 0.5 Boeing, with the US Federal Aviation Administration lifting its grounding 0 0 order on the 737 Max. European approval

Schiphol Istanbul Madrid MunichGatwick HeathrowParis CDG Frankfurt Antalya Schiphol was expected to follow and in December Barcelona Paris CDG Heathrow Moscow SVO Istanbul IST MoscowMoscow SVO DME IstanbulMoscow SAW St VKO Petersburg Ryanair agreed to buy an additional 75 of Source: ACI Europe the aircraft in what one analyst described FIGURE 44: as “a screaming good deal”. Boeing saw UK AIRPORTS, 2019 orders for more than 1,000 Max aircraft Passenger numbers Scheduled domestic traffic by airport cancelled after the two fatal crashes in

-1% % change five months that killed 346 people and led 6 % Domestic International +2% on 2018 to its grounding. passengers 5.3m arrivals/ -7% 5 4.87m 0 With an easing of travel restrictions departures -7% 42m in sight, Deloitte partner and head 4 3.9m 3.9m ( 14%) -3% 3.45m -2% of aviation Andy Gauld forecast: Total 3 2.5m -20% -11% “Demand will be subtly but not passenger 170m 2.3m numbers (57%) fundamentally different.” 85m 2 1.55m

Passengers (million) Passengers 1.45m ( 2 9%) 297m He suggested: “There are several types 1 of consumers for airlines to think about. 0 One is the traveller who will jump on a Transit plane as soon as they can. Second, a lot passengers Glasgow Gatwick Edinburgh Heathrow Stansted Aberdeen of people will want to visit family. Third, Belfast Intl ManchesterBelfast City there is the business traveller. Demand Others one million-plus: Bristol (1.37m), Birmingham (1.33m), Luton (1.2m), London City (1.1m). Figures rounded. Source: CAA for businesses to develop relationships

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BLACK YELLOW MAGENTA CYAN 91TRS2050132.pgs 08.12.2020 15:14 aviation, 3 VERSION

REPRO OP and opportunities and to deliver work to be revised. You will see a much more has not shrunk. But the demand has dynamic approach to flight activity and CAA figures suggest the changed probably for a longer period than proportion of UK adults who flew a lot more pop-up activity with travel people expect. Virtual meetings mean at least once in 2019 reached 57%. corridors changing. Airlines and airports But the proportion taking three or there is less likelihood of jumping on a more flights was just 20% and five that embrace a volatile approach will be long‑haul flight.” or more merely 7% (Figure 45). more successful. Holiday flights dominated Gauld said: “There will be differences (Figure 46), as did flights under “The flip side is there will be SUBS in how we travel. Do we wear a face four hours (Figure 47). For UK passengers, Gatwick was the opportunities. You will see airlines mask? Have we had a Covid-19 test? biggest airport (Figure 48) reacting to where they are able to fly.” There are vaccines becoming available and a variety of ways we can be tested. FIGURE 45: FREQUENCY OF FLYING, 2019 The challenge for the industry will be % UK adults whose last flight was... Number of flights standardising an approach and developing ART 35 All flown in past All UK a single solution for sharing information. 1-4 years ago 33% 12 months adults 1 8% In past 12 Getting commonality will be challenging.” months 30 29% 25 He insisted: “The majority of people 5 7% want to be able to travel again. Demand 20 19% More % 17% will be there. But there are challenges. than 4 15 13% years 2 5% One is how do airlines start to bring staff 10 10% 9% ago/ 7% PRODUCTION 6% and fleet back online? Most airlines are never 5 4% 5% 2% caught between response and recovery. 0 “Uncertainty is likely to remain until One Two Three Four Five More One Two Three Four Five More there is some coherence on how we tackle Figures rounded Source: CAA, survey November 2019, published May 2020 this globally. FIGURE 46: MAIN PURPOSE OF FIGURE 47: LENGTH OF “It will take time to vaccinate LAST FLIGHT, 2019 UK FLIGHTS, 2019 CLIENT everyone. Those countries that can afford All flown in past 12 months % of all UK originating passengers to vaccinate will come back relatively Business Other quickly, but there will be countries not 3% Domestic 7% 13% able to vaccinate so quickly. “Most airlines are pinning their hopes VfR 17% Long-haul on a short-haul recovery. There may be 17% (7+ hours) 44% International reluctance among consumers to be on a short-haul flight for four to five hours. So the bigger network carriers have decisions to make 73% Holiday on long‑haul.” 25% Medium-haul Figures rounded CAPACITY LIMITS (3-4 hours) Source: CAA Gauld’s colleague Martin Bowman, FIGURE 48: AIRLINES & AIRPORTS, 2019 Deloitte director of digital aviation assets, Airline flown by UK passengers UK passengers’ departure airport said: “One of the biggest challenges as we 25 All flown in past 20 All flown in past come out of this is going to be capacity. 23% 21% 12 months 12 months 20 There are going to be limits on capacity 15 and limits on throughput where before 15 it was all about volume and maximum % 11% 10 10% % throughput. 10 9% “We’ll hit the capacity limits when 5 5 4% 4% 4% we reach 60% to 70% of the traffic of 3% 2019. Aircraft turnarounds are going to 0 0

Flybe* Bristol take longer. The relative predictability of EasyJet Ryanair Gatwick Stansted Jet2.com Emirates Heathrow Edinburgh Newcastle Tui Airways ManchesterBirmingham flight schedules is out of the window. An British Airways Virgin AtlanticThomas Cook* East Midlands ability to react to volatility is going to be *Thomas Cook ceased flying, September 2019. Flybe Airports used by 4% or more of UK air passengers. Others: ceased flying March 2020. Only airlines carrying 2% Luton, Glasgow, Belfast International, Leeds Bradford and essential. Traditional ways to plan need or more of UK passengers shown Source: CAA Liverpool (3% each), London City (2%) Source: CAA

Travel Weekly Insight Report 2020-21 33

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DPS_v5.indd 3 03/12/2020 13:24 investment, 1 VERSION FUTURE OF TRAVEL INVESTMENT IN TRAVEL REPRO OP Airlines in forefront of cash squeeze

Travel has been at the centre of the Survival is the “The next stage is many airlines are pandemic since March with airlines going to need to go to leaseholders and at its heart, stuck with the high fixed priority, with negotiate different terms. Leaseholders SUBS costs of aircraft. consolidation have their own debt funding and may not Deloitte partner David Gard, a be prepared to be very flexible since that specialist in restructuring, said: “Aviation on the cards. would require restructuring their own has seen a decline in passengers But there will be debt arrangements. approaching 80% in 2020 and that loss of opportunities for “But there is no sense in causing the revenue passes down through the sector. collapse of an airline if it can be avoided ART Airlines, airports and many of the service the better funded right now. Repossessing aircraft raises a partners to both – ground handlers, significant risk of no alternative use in maintenance, aircraft manufacturers, the current climate, so leasing companies leasing companies – are significantly need to support existing clients to impacted. maintain flying so that they benefit as “Furlough has allowed airlines to passengers return. PRODUCTION reduce employee costs, but they still have “We will probably end up with more large fixed costs, in particular the cost of ‘power by the hour’ arrangements. aircraft, and the sector will probably not Absent of that some airlines may fail.” recover income to the level of 2019 until the end of 2023, assuming a vaccine is GOVERNMENT AID CRUCIAL widely available in 2021. Gard said: “Financial support is going to

CLIENT “Everything has squeezed travel be crucial to survival for many airlines. firms’ ability to sell. The dilemma is “Some countries are supporting what can you do? The first element is the sector much more strongly than to understand where cash is going and others. It’s not clear what support many what to do to conserve it. The industry airlines will get. Early engagement with will need to make tough choices to key government stakeholders will be ensure survival.” important. Gard estimates the value of aircraft “Government support is complex and has declined by up to 40% during the unlikely to be decided on quickly. pandemic, “closely followed by lease “It’s entirely possible more airlines rates”, and said: “With about 60% of an FIGURE 49: will take on financial support that will airline’s fleet leased, carriers need to IMPACTS OF mean commitments on executive pay, on capture the change in rate. COVID & BREXIT jobs, on dividends. “Many have been flying with much “We’ll see a continued reduction of % of CFOs rating impact flight frequency and connectivity. lower load factors than they can make over next 12 months money with and need to assume that will “But if someone has funding there will continue through most of 2021. 50 46% be slots available at airports once we get 37% “Airlines need to restructure 40 35% beyond the waiver of the ‘use it or lose it’ arrangements with leaseholders and 29% rule. There will also be opportunities for 30 move to something use-oriented. That is % some to pick up routes other airlines have 20 19% a challenge for aircraft lessors because 15% withdrawn from.”

their debt arrangements are fixed. 10 8% Gard said: “For low-cost carriers there 5% 4% “A lot of airlines are relying on 2% will be pent-up demand to travel, in 0 sale and leaseback deals to generate No Mild Some Significant Severe particular for leisure. liquidity. The challenge is you extract impact impact impact impact impact “Long-haul business travel is going to money upfront, but you can lock in Covid-19 Brexit be more of a challenge. It’s likely we’ll see enhanced cost. Source: Deloitte CFO Survey, Q3 2020 less business travel because people have

36 Travel Weekly Insight Report 2020-21

BLACK YELLOW MAGENTA CYAN 91TRS2050134.pgs 08.12.2020 15:25 investment, 2 VERSION REPRO OP

found they can do business from home FIGURE 50: UK CONSUMER CONFIDENCE, 2016-20 and many corporates are aware of their % point difference between ÔconfidentÕ and Ônot confidentÕ carbon footprint. SUBS “Airports also face a significant Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 challenge. Many larger airports have the 2016 2017 2018 2019 2020 0 funding to cope. But some UK regional -3 -5 -4 -5 -7 -5 airports were already feeling the impact -6 -6 -4 -6 -8 -5 -7 -7 -7 -7 -7 from the failure of Flybe. There is a level -8 -8 -10 -9 -9 -9 of operation that needs maintaining, but -10 -11 ART also a logic in keeping airports going. -14 -15 -16 “In all these situations the government -16 -16 -16 -17 -16 -15 -15 -17 -17 -18 -18 -19 -18 is the lender of last resort. It is going to be -20

Percentage points Percentage -20 -21 -21 challenging and there is some pushback. -20 -24 But it is a very difficult decision to allow an airline to fail.” -25 -27 PRODUCTION Gard said: “A substantial number of -30 airlines will emerge with heightened Overall confidence Confident in disposable income debt. Better companies will look to In job security recapitalise. It’s easier to raise equity when in recovery and hard to justify Source: Deloitte Consumer Tracker putting in new funds when a business is

CLIENT struggling. UK CONSUMER confidence and Parent consortium Connect Airways job security took an obvious hit “Those that can present themselves in 2020 (Figure 50). The impact said the carrier had “been unable to as profitable pre-pandemic will be more of Covid-19 preoccupied business overcome significant funding challenges (Figure 49), but there remained attractive than those not. The risks concerns about the impact of a . . . compounded by the outbreak of the should make financing more expensive, no-deal Brexit (Figure 51) coronavirus”. but base rates are so low there is a chase Virgin Atlantic had acquired a 30% for yield and airlines have been among stake in Flybe as part of a consortium the beneficiaries of that to date. with Cyrus Capital (40%) and Stobart “We’re going to see consolidation Group (30%) which took over the airline of parts of the industry. A number in early 2019. of companies will be sufficiently Flybe was on the verge of collapse at loaded with debt that they won’t feel FIGURE 51: the time and close to collapse again in comfortable growing.” NEGATIVE January 2020 when Connect Airways But beyond immediate cash concerns, IMPACT OF BREXIT agreed a rescue deal with the UK Gard said: “There are going to be % of CFOs fearing government, pledging to put in fresh opportunities. Better-funded airlines impact on funds in return for government promises 3 0% 30 to review Air Passenger Duty (APD) on could pick up slots and routes rapidly. 2 6% “Covid-19 presents an opportunity 25 domestic flights and temporarily delay both for organic growth and mergers collection of outstanding APD as well as 20 17% % 15% and acquisitions.” 15 consider a loan of up to £100 million. 11% 10% 10 But rival airlines condemned the FLYBE AN EARLY CASUALTY deal and the government subsequently 5 Regional carrier Flybe was an early appeared to go cold on the idea. 0 casualty of the crisis, entering Hiring Capital M&A Following Flybe’s collapse, then administration in early March after expenditure aviation minister Kelly Tolhurst said: No deal its owners, including Virgin Atlantic, ‘Thin’ deal “Companies do fail and it’s not the role of declined to provide funds for a bailout. Source: Deloitte CFO Survey, Q3 2020 government to prop them up.”

Travel Weekly Insight Report 2020-21 37

BLACK YELLOW MAGENTA CYAN 91TRS2050135.pgs 08.12.2020 15:26 investment, 3 VERSION INVESTMENT IN TRAVEL Airlines in forefront of cash squeeze REPRO OP OPERATOR FAILURES on February 14. But Jackson said: “We Shearings Holidays owner Specialist never had an opportunity to realise the Leisure Group went into administration Companies benefits.” in May after failing to secure a rescue, Having failed to secure a CBILS loan, taking Wallace Arnold Travel, National do fail and it’s by July, he said: “We required a loan Holidays, UK Breakaways, Caledonian from the shareholders which was not SUBS not the role of Travel, Sportingbreaks, Bay Hotels, forthcoming.” Coast & Country Hotels and Country government to Cruise & Maritime Voyages, based in Living Hotels with it. prop them up Essex, ceased trading in July after also SLG had been acquired by Lone Star failing to secure a loan under the CBILS Funds in 2016, following a management scheme and drawing a blank on private buyout in 2014 from private equity equity funding. The company operated ART owners who had assembled the group six ships and had a seventh on order. after buying a controlling stake in Also in July, US and Caribbean Shearings in 2005. specialist Funway Holidays announced it Luxury tour operator Fleetway Travel would cease operating from September. ceased trading in July after failing to The operator had been acquired by the secure a loan through the government’s US-based travel, hospitality and leisure PRODUCTION Coronavirus Business Interruption Loan group Apple Leisure in 2018. Scheme (CBILS) and private equity and Another well-known name, STA other investors declined to help. The Travel, went into administration in operator, which sold direct through August after its holding company was flash-sale sites, had been acquired by placed in administration by its wealthy private equity groups Synova Capital Swiss family owners. STA Travel finance

CLIENT and Tenzing in 2015, then merged director Anthony Mercer said the with New York-based DH Enterprise & company was “sitting on cash when it Associates in February 2020 to form the failed, but this was tied up providing TravelSmart International Group. collateral. We had tens of millions tied up Fleetway chief executive Stuart with Iata.” Jackson told Travel Weekly: “We had The business suffered from exposure a good business proposition.” But to the Australian bush fires in late 2019 COMPANY restructuring and IT in 2019, he said: “We faced a lot of appear likely to be the biggest and Mercer said: “We were already headwinds. Thomas Cook went bust. areas of business expenditure in crisis mode.” STA Travel was yet (Figure 52). Homeworking, Multiple airline problems hit our cash pandemic planning and another business to be denied a CBILS government intervention appear reserves. Brexit slowed demand.” The here to stay and tax rises loan having reported losses in the merger deal with DH Enterprise closed are expected (Figure 53) previous two years.

FIGURE 52: FIGURE 53: COVID-19 & CAPITAL EXPENDITURE LONG-TERM EFFECTS OF COVID-19 Net % of CFOs expecting investment to rise/fall Net % of CFOs expecting increase in:

Restructuring/automation 6 5% Flexible/homeworking 9 8% Data/IT 3 3% Pandemic planning Other 9% 9 7%

R&D - 9% Taxation 9 4% Training -11% Government role in economy 7 8% Marketing -17% Corporate debt 5 2% Equipment -19% Workspace -64% Regulation 4 3% -70 -60 -50 -40 -30 -20 -10 0 10 20 30 40 50 60 70 80 0 20 40 60 80 100 % % Source: Deloitte CFO Survey, Q3 2020 Source: Deloitte CFO Survey, Q3 2020

38 Travel Weekly Insight Report 2020-21

BLACK YELLOW MAGENTA CYAN 91TRS2050136.pgs 08.12.2020 15:16 VERSION

HEALTH & SAFETY health and safety, 1 Vaccination and testing bring real promise REPRO OP

The UK Medical and Healthcare The UK rollout especially at the scale now required.” Regulatory Agency approved use Taylor again stressed “cautious of the first Covid-19 vaccine as this of a Covid-19 optimism”, but said: “I’m generally report neared publication, with vaccine gives optimistic that science will find a way. vaccination due to begin as the There have been amazing developments SUBS report appeared. It brought a realistic cause for in the last nine months, the like of which prospect of pandemic restrictions ‘cautious have never been seen, particularly the high easing in 2021 once the vaccinations optimism’ level of collaboration and partnerships process has been widely rolled out. alongside the sharing of data and expertise. Karen Taylor, head of the Centre for “The results are so positive it does give Health Solutions at Deloitte, welcomed cause for optimism, tempered by some ART the string of vaccine announcements vaccines still needing regulatory scrutiny. in November, but stressed “cautious The focus now is to get approved vaccines optimism” about the impact. She said: as soon as possible to those most at risk.” “Obviously it’s significant. What However, Taylor said: “The world surprised the market were the high levels is likely to need more than one type of of efficacy reported by all three vaccine vaccine, particularly as children will have PRODUCTION front-runners. to be included at some point.” “UK regulatory approval was Restrictions will need to remain in fast-tracked so vaccination will begin place and testing will remain vital until sooner than might have been expected. vaccination is widespread. The UK’s test Vaccines will be rolled out to care staff and trace system came in for criticism and vulnerable groups first. While this despite capacity reaching more than

CLIENT is undoubtedly good news, there are 500,000 tests a day. caveats, particularly in terms of how long Taylor pointed out the UK test and the vaccine will be effective, how it will trace scheme had to be developed from work in different groups of the population scratch, in contrast to that of South Korea and whether it will continue to be – which drew widespread praise – which effective in relation to any mutations of “had an infrastructure in place because the virus, as is the case with flu vaccines. of their experience of Sars [Severe Acute “Some of the vaccines have to be Respiratory Syndrome] and Mers [Middle transported and stored at very low FIGURE 54: East Respiratory Syndrome]”. temperatures. The UK government has CONCERN ABOUT She added: “Governments and COVID-19 AMONG published a distribution plan based TRAVELLERS regulators were rightly cautious about around the hospital and primary care approving tests too soon. But there are network of GP practices, with the Concern on scale of 1-10 now hundreds of types of tests being (low to high) distribution channel determined by the rolled out globally, so the capacity is there,

‘cold chain’ transportation and storage Highest and a lot of new tests such as point-of-care concern (10) needs of the particular vaccine. 1 0% lateral flow tests that are much quicker to No “There is the experience of rolling concern provide a result and don’t require being out the flu vaccine programme this year, 2 4% sent to or tested in a laboratory. Concern so in some ways we’ve had a trial run. level “These lateral flow tests are being 6-9: There are other drugs that need to be 3 0% rolled out for testing hospital and care Concern transported at very low temperatures, level 2-4: home staff where you need to test Concern so there is an element of the life sciences 2 2% level 5*: regularly, so we’re getting more of a supply chain that is used to dealing with 1 3% longitudinal [repeated observation over

these challenges. But the existing global *Average rating a period] and population insight. For vaccine ‘cold chain’ has not had to work Base: 50,000-plus US air travellers example, Slovakia introduced testing of at airport, Sept-Oct 2020 with such low-temperature requirements, Source: JD Power the whole population and found more

Travel Weekly Insight Report 2020-21 39

BLACK YELLOW MAGENTA CYAN 91TRS2050137.pgs 08.12.2020 12:41 VERSION HEALTH & SAFETY

Vaccination and testing bring real promise health and safety, 2

REPRO OP cases than expected, demonstrating that a after five days’ self-isolation, were due to percentage of people are asymptomatic.” be available for arrivals from December 15. She noted: “The virus is still an That promised a partial easing, but unknown quantity. There have been cases there was recognition that more will be of individuals who were asymptomatic needed to open up travel, with pre- and spreading the virus and others, departure testing and bilateral government particularly children, who have the virus agreements the likely next stage. SUBS but don’t spread it. There is also a genetic Callum Irvine, Deloitte health, safety link that is being explored.” and environment practice lead, said: “The Taylor said: “Once mass vaccination biggest challenge is having customers is under way we’ll be able to take a more confident to travel. There might be informed attitude to risk in our response to protections in place at my departure Covid-19. Once you’ve had a vaccination airport helping to reduce the risk of ART and a negative test it could provide a level travel. But if I’m given the all clear, it of confidence to open up society.” tells me nothing about whether everyone CONCERN about rates of I encounter during my trip has met the TEST AND RELEASE Covid-19 in destination countries same standard of control.” rises with the age of those Alongside the vaccine developments, the intending to travel in 2021 Teresa Arnone, Deloitte risk advisory government moved to establish a ‘test (Figure 55). Having to self-isolate manager, agreed: “Customers have to on holiday or being ill while away PRODUCTION and release’ scheme to reduce quarantine are the biggest concerns among trust that everything is in place – they prospective holidaymakers, restrictions on travel arrivals. but 43% appear concerned need trust and confidence in the operator Privately provided tests, to be taken about flying (Figure 56) and clear messaging about where they can and can’t go.” She said: “There have been some FIGURE 55: LEVEL OF COVID CONCERN AMONG HOLIDAYMAKERS great strides in Covid-secure services,

CLIENT % UK adults intending to take an overseas holiday in 2021 but there are two challenges. First, some 80 consumers don’t yet recognise Covid- secure certification. Second, rules and 70 6 8% 6 6% High rate 6 2% of Covid-19 restrictions continually evolve, making 60 in destination 5 3% 5 3% 5 2% 5 3% 5 1% a ‘good’ standard harder to define. The 50 4 5% Falling ill abroad 4 2% focus has to be on industry associations 3 9% 40 3 6% 3 5% collaborating around common standards. 30 There has to be a unified stamp so 20 1 8% consumers can be confident, and industry 10 associations need to drive that. “Unless the industry works together, 0 Source: Service All 16-24 25-34 35-44 45-54 55-64 65+ Science/Kantar we’re not going to get to a positive end

FIGURE 56: COVID CONCERNS AMONG HOLIDAYMAKERS

All UK adults considering a holiday, overseas or domestic Rate of concern by age % Having to self-isolate on holiday Being ill on holiday 80 Having to self-isolate on return Being in a busy destination Having to self-isolate on holiday 5 1% 70 Taking a flight Having to self-isolate on return 4 4% 60

Being ill on holiday 5 0% 63% 60% 60% 60% 50 59% 59% Infecting others 4 7% 56% 52% 50% 50% 49% 48%

40 46% 46% Being in a busy destination 3 9% 45% 44% 44% 43% 42% 40% 38%

Having to pay to return early 3 6% 30 37% 37% 34% 31% 28%

Taking a flight 4 3% 28% 20 27% 25% 22% Travelling overseas 2 9% 10 No concern 8% 0 0 10 20 30 40 50 60 16-24 25-34 35-44 45-54 55-64 65+ % Source: Service Science/Kantar

40 Travel Weekly Insight Report 2020-21

BLACK YELLOW MAGENTA CYAN 91TRS2050138.pgs 08.12.2020 12:43 VERSION health and safety, 3

REPRO OP point.” She noted: “Cruise operators global international standard, inclusive are working together. The frustration of smaller, independent hotels and large for the cruise industry is each port Safety is not chains, would aid efficiency. Other authority has different rules. It requires industries have managed to do that and more collaboration.” competitive. [The there is an appetite to do it.” Irvine agreed “some consumers have industry should] She sees health and safety becoming never heard of these certifications” and inextricably linked with sustainability, SUBS suggested it requires “everyone to work push competition suggesting: “Health and safety will shape together to align what we mean by to one side, sustainability and how we do that. They Covid-secure and to package this in a can’t be separated. way that will resonate, regardless of who collaborate, wait, “The way to get destinations up and people book, travel or stay with”. and see double- running is to work collaboratively on He argued: “A common rule set is a safety. If customers don’t feel safe, there ART key step towards more consistent control. digit growth will be no travel industry.” With a longer run-in, you would perhaps when we come Closer to home there is the issue of see some Covid-related controls becoming back together safety at work and concerns over mental regulated to achieve this. Compliance health. Irvine said: “We’ve seen some is going to continue to be a challenge good practice emerge – allowances so and puts a huge weight on frontline people can set up at home and investment PRODUCTION employees to make tough decisions. in mental wellbeing. But many businesses “For example, if I check in people at an don’t know whether what they do is airport, I check their passport and ticket good compared with others. Businesses and I’m in no doubt as to my licence to communicating with one another on what do so. It’s harder to land the same level they’re doing can help.” of compliance with Covid-19 controls. He insisted: “The industry needs to

CLIENT I can ruin someone’s holiday because return together. Safety is not competitive their temperature is a bit high. Suddenly, – it’s in the best interests of everybody I’m making big decisions in an area and in the industry’s best interests. where ambiguity reigns. The key will “Either we can let frustrations surface, be Covid-19 controls that can be easily deciding ‘Let’s hurry up and demonstrate implemented with little ambiguity.” US AIR travellers appear most we’re Covid-secure’, take a competitive concerned about flying and time at the airport and least edge, sneak a couple of percentage points SAFETY IN DESTINATIONS concerned about contactless of business. Or we can push competition technology, according to a US Irvine noted the challenge in destinations, survey (Figure 57). The same to one side and collaborate, wait, and saying: “You have to find cash for extra survey did find almost one in four US air travellers with no see double-digit growth when we come controls and it’s difficult when bookings concerns (Figure 54, page 39) back together.” are at an all-time low. “Operators may put in all the right FIGURE 57: controls, but if guests go on excursions AIR TRAVELLERS’ CONCERNS AND SAFETY PRIORITIES they could contract Covid-19 and bring it Where travellers are most concerned Safety measures rated most important back to a resort. Top of my mind would be finding the balance point at which you’ve On aircraft 3% done all that is reasonable to make a resort 3 7% Contactless check-in/boarding 3% safe without digging deeper only for your Taxi, train 1 3% Contactless payment Improved cleaning 1 3% efforts to be undermined as people flow At airport 3 1% Physical distancing 7% in and out from other services.” Require all passengers In destination 6% 4 8% Arnone agreed: “It’s going to be a wear face masks Reduce congestion at gates 5% At hotel 2% challenge in some destinations. It’s a Thermal screening 4% 2% challenge to survive at the moment. In rental car Hospital-grade disinfection 6% Hotels have demonstrated a commitment 0 5 10 15 20 25 30 35 40 0 10 20 30 40 50 % % to health and safety, but now there is a Base: 50,000-plus US air travellers at whole host of additional things to do. A airport, Sept-Oct 2020 Source: JD Power

Travel Weekly Insight Report 2020-21 41

BLACK YELLOW MAGENTA CYAN 91TRS2050139.pgs 08.12.2020 12:43 technology, 1 VERSION technology investment will focus on drive for value REPRO OP

Digital technology was transforming Technology partner and head of aviation, agreed travel before Covid-19, but the saying: “Collaboration has come on pandemic triggered a surge in use of credited with dramatically. There is not only industry contactless technology for payments, providing collaboration, there is collaboration with check-in, self-boarding and many those outside the industry. This crisis SUBS other processes. solutions and affects everyone. Martin Bowman, Deloitte director of facilitating “There is a lot more openness and aviation digital assets, said: “All the big collaboration communication with airports and airlines passenger processing vendors reacted trying to work together to make the very quickly to enable contactless in response to experience more seamless. One of the check‑in and so on. But aspects of it are biggest challenges in the past was the lack

ART the pandemic more challenging. How do you make of communication. We’ve seen a change airport security contactless? How do you in that. There is a lot more collaboration do a contactless pat down?” on areas like health passports.” He said: “One of the big‑ticket spending items for airports is the VIRUS ÔA CATALYSTÕ next generation of CT [computerised Covid‑19 has been “a catalyst” for PRODUCTION tomography] security scanners. Some digitisation around a health passport airports put plans for these on hold. “and we expect to see that develop”, said Others saw CT scanners minimise Bowman. contact. Passengers don’t need to remove “Pre‑pandemic, everyone agreed on a liquids and laptops from bags. They vision of seamless travel. The challenge adopted a strategic lens.” was there wasn’t a clear business case or

CLIENT The industry may have to adapt a clear return. Now a Covid‑19 Health continually for a period to comply with Passport as a subset of a digital ID can be changing border requirements. Bowman the foundation of seamless travel.” pointed out: “Whatever policy changes He forecast “multiple initiatives” not we see are not going to be the last. “a silver‑bullet platform”, saying: “The “There will be a need to align testing last thing we want is to create another approaches, so you have the complexity single‑platform monster.” of that. A Covid‑19 travel health Bowman added: “Finally, they credential will be a major challenge UK ONLINE sales soared during have found a use case for blockchain lockdown before settling back to because medical records are subject to the a level above the pre-pandemic [distributed ledger technology]. It was highest level of data‑privacy regulations. proportion (Figure 58) a technology looking for a problem. But Airports ideally don’t want to touch that data let alone hold it and store it.” FIGURE 58: He said: “There are a number of ONLINE SALES initiatives on Covid‑health passports and Online sales value as % of all retail that is helping to develop the discussion 35 and future policy. The future will be based 33% around trust, choice and interoperability. 31% 30 30% “This has encouraged stakeholders 28% 27% to work together and share information. % 26% At the policy level there is alignment 25 22% between airline association Iata, airports 21% 21% 20% association ACI and the International 20 19% 19% Civil Aviation Organisation. By and large there has been a single voice across the 15 Oct Nov Dec Jan Feb March April May June July Aug Sept aviation industry.” 2019 2020 His colleague Andy Gauld, Deloitte Excludes auto fuel Source: ONS

42 Travel Weekly Insight Report 2020-21

BLACK YELLOW MAGENTA CYAN 91TRS2050140.pgs 08.12.2020 15:26 technology, 2 VERSION REPRO OP

distributed ledger technology does work services and drive efficiencies through really well for a digital health passport. technology, but there is a lot more The ability to validate the authenticity emphasis on digital passports and the of a record without having to share technology to support it. Work on a new that record is key – being able to trust financial system or reservations system SUBS the credential while minimising the has gone on the back burner. There is a requirement to share data.” reluctance to spend on projects that won’t An issue for many businesses will yield immediate value. be the additional debt taken on to “I can see the outlay on new operations survive the pandemic. Could that curtail CAA FIGURES suggest UK travel systems being on hold for some years. technology investment? Certainly agents and tour operators sell Investment in technology that can

ART about one-third of all flights, the need to cut costs led to wholesale and intermediaries in total 65% improve the experience or offer a more (Figure 59). Those aged 35-64 are suspension and stripping back of planned most likely to make the highest- cost-effective process will take priority.” capital expenditure. priced purchases online (Figure 60) Programmes put on hold include Bowman said: “The financial challenge is real. In the short term no FIGURE 59: one is expecting any major investment. UK FLIGHT BOOKINGS, 2019 PRODUCTION Normally, you would have a strategic Information source How booked reason for a project. Take CT scanners 100 95% 94% Online – you can see why you would invest in Phone Airline 39% In person them, but they are really costly.” 80 71% Asked if he sees IT projects being OTA/comparison site 27% delayed, he said: “In the main, delay, but 60 53% CLIENT focused acceleration if you can show clear Tour operator/agent 34% % 47% benefits and savings. There is an awful lot 40 32% less resource in the industry.” TMC 4% 20% 20 15% 17% Gauld insisted: “It will be down to value 13% 12% generation. Investment in technology will Other 12% 3% 3% 0 be around things that drive value.” 0 5 10 15 20 25 30 35 40 TMC* That has brought a reordering of % Tour operator Travel agent priorities. Gauld said: “We’re still doing Direct with airlineComparison site consultancy work on how to improve ‘Most common’ information source, total exceeds 100% *18% booked by another/don’t know Source: CAA

FIGURE 60: VALUE OF ONLINE SHOPPING, 2020 % UK online spending in 3 months* Higher rates of spending by age

% point +4 -3 % -7 -3 -4 -5 +6 -8 % point change 50 change YoY in +1 46% 47% on 2019 12% 44% spending £500+ 40% 0 40 38% in three months 35% 32% 32% 18% 1 4% 30 30% 26% £1,000+ 20 18% £500-£999 14% 16% 13% 12% £100-£499 10 10% Green bars -2 6% 6% include % £50-£99 4 2% spending <£50 0 above 16-24 25-34 35-44 45-54 55-64 65+ £1,000 Data latest available pre-Covid pandemic *Total not 100% as figures rounded Source: ONS

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BLACK YELLOW MAGENTA CYAN 91TRS2050141.pgs 08.12.2020 15:19 VERSION TECHNOLOGY

investment will focus on drive for value tech deloitte review

REPRO OP those of airlines for New Distribution forecasting models are not going to help. Capability (NDC). Gauld suggested: “It’s hard to say what summer 2021 “There is a still a lot of thinking about It’s going to take a will look like. If demand is higher than what NDC can enable, but I don’t see it expected, are airlines going to be able to coming in the current format.” Bowman while to get back respond? Will they have the fleets, the agreed: “I’ve not heard NDC come up in a on track [but pilots, the crew? Airlines are good on conversation all year.” planning, but there are too many factors SUBS the industry’s] in play. Where airlines previously looked MANAGING VOLATILITY openness and at weather and destination data, now The travel industry faces unprecedented they are looking at the R-rate [Covid-19 volatility. Bowman said: “The whole sharing gives reproduction rate] in destinations. aviation operating model is built around me confidence “Airlines most able to use data analysis the predictability of schedules and slots. are likely to have more success in how ART it can recover The challenge now is to manage the much uncertainty they level out.” volatility. The industry has never had to Gauld insisted: “Two areas have deal with that before. changed and hopefully the change will “It’s difficult to predict what demand A MAJORITY of those intending to be maintained. One is the increase in take an overseas holiday in 2021 is going to be. It is a real challenge to will book through intermediaries collaboration. Players are sharing the (Figure 61). One in five intends to ensure sufficient capacity is in place use a high street travel agent, seven pain and trying to work together. Second, PRODUCTION without over-resourcing. Standard percentage points up on a year ago we’ve seen a pattern previously where, if you weren’t born in the industry, you can’t know how it works. Now there FIGURE 61: LIKELY WAY TO BOOK NEXT OVERSEAS HOLIDAY is a greater emphasis on openness to organisations that don’t have a track By age OTA High street agency record in aviation. If you speak to a Tour operator Direct with airline/hotel

CLIENT 35% 41% 42% 41% 42% manufacturer or a retailer, you can learn. 35 39% 40% 29% 40 37% 38% 38% “It’s going to take a while to get things 25 34% 35% 30% 28% 28% 28% back on track. The openness, the sharing 20 20% 26% 26% 24% 24% % 17% % 23% 21% 21% 20% 20% 20% gives me confidence the sector can recover. 15 19% 18%19% 20 16% 17% 10% 14% 14% “We’re not going to lose our desire to 10 12% 7% 10% 11% travel. It may take time and we’ll see a 5 6% 0 transformation and a different experience. 0 OTA Phone 16-24 25-34 35-44 45-54 55-64 65+ Child No child Two or But businesses that take time to think not Tour operator Don’t know more High street agency holidays only ‘how do we transform in the short Direct with airline/hotel a year term but how do we operate in 24 months?’ Base: Respondents intending to take overseas holiday in 2021 Responses exceed 100% Source: Service Science/Kantar will become leaders in the market.”

The Deloitte view How has the pandemic changed the unseen levels of agility to enable trials, when technology, infrastructure and mobility landscape? First, we must not only helping collect data to inform regulation are developed concurrently. For acknowledge the impact Covid-19 has had future regulation but enabling operators example, the removal of a pilot needs to be on aviation and the job losses colleagues in to validate the technology and business considered alongside operational safety, the industry have endured. models. Deloitte is working on a pilot certification requirements and travellers’ But like all crises, the pandemic has programme in the Scottish Highlands, but willingness to make a journey. catalysed innovation. Take Beyond Visual there are many others. A stepping-stone course of action is most Line of Sight (BVLOS) drones. Previously What does this mean for mobility and, likely to succeed: removing the pilot from solid-use cases for BVLOSs, such as specifically, air mobility? Combined with the a vehicle to control it remotely, then using delivering medical supplies in harsh evolution of vehicles, advances in artificial increasing levels of machine assistance geographies, have shown benefits with intelligence and autonomy have the potential through to full autonomy. respect to minimising human contact. to repurpose the regional airline model. ■ James Cranswick, director, Aviation, Regulators have shown previously However, this can only be successful Deloitte

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BLACK YELLOW MAGENTA CYAN 91TRS2050142.pgs 08.12.2020 15:19 VERSION future travel experience future travel, 1 navigating the ‘new normal’ REPRO OP

The travel and aviation industry Deloitte director enhanced cleaning and sanitisation, has been particularly hard hit by and head of especially hotels and resorts. the pandemic with travel bans The level of service provided by travel or restrictions in most countries. travel Danielle companies will influence consumers’ Covid-19 has left consumers nervous choices. It will be essential to make SUBS Rawson considers about their safety when travelling. customer service more robust, either While the sector’s recovery will be the future for through human interactions or digital uneven, there is a strong desire to return travel businesses tools. Pre-booking check-in slots and to normal, whatever the ‘new normal’ may protection shields, for example, will help be. Consumer behaviours are evolving to alleviate safety concerns. and this will dictate what the future of ART the travel and tourism sector looks like. CONTACTLESS TECHNOLOGY The travel industry is rapidly adjusting its As the initial shock of the pandemic approach to stay in line with these trends. subsided the industry focused on It is critical that businesses consider addressing traveller concerns regarding which emerging behaviours are here to health and safety across each touchpoint. stay. With economic activity not expected Airport authorities used crowd PRODUCTION to return quickly to pre-pandemic levels, management technology to enforce social businesses will need to start gearing up distancing and manage queues. The now to rebuild the industry. speed of implementation of contactless technology at airports and hotels has FLEXIBILITY AND CONTROL increased, allowing travellers to print Pandemic-induced uncertainties have boarding passes and luggage tags, go

CLIENT resulted in consumers wanting more through boarding gates and use self- choice and control of their experiences. service check-in to access hotel rooms. Access to robust, transparent, personalised, Hotels have increased deployment actionable and real-time updates will help of keyless access to rooms using mobile build trust and brand loyalty. CATCHING Covid-19 when phones, robots for in-room cleaning and travelling is a bigger concern Companies will need to empower than quarantine for UK communication systems to minimise travellers and technology customers to build their own flexible ‘solutions’ not uppermost in interaction between guests and staff. itineraries using connected digital tools most people’s minds (Figure 62) Consumers have become more and make it easier for them to modify or cancel plans. Furthermore, companies FIGURE 62: must recognise that factors which promote TRAVEL, TECHNOLOGY & COVID

customer loyalty may have shifted. Near- Catching/transmitting virus 48% UK traveller term uncertainty may mean, for example, Being stranded 41% biggest concerns that the ability to cancel a reservation Quarantine 40% UK traveller matters more than brand choice or price. Flexible booking 43% preferences Consumer decisions on which travel Limits on numbers 42% UK traveller Reduced queues/congestion 41% preferred provider to use will be influenced tech solutions 40% by transparency and clarity around No self-isolation Improved track & trace 31% cancellation and rescheduling policies. Limited face-to-face contact 30% Simple messages that communicate a high Technology solutions 30% level of flexibility will be most impactful. Increased automation 15% Additional measures like cancellation of Contactless payments 37% change fees or improved insurance policies Self-service check-in 36% will increase consumer confidence. Covid notifications/guidance 34% Safety and efficiency with cleanliness 0 10 20 % 30 40 50 have also emerged as key priorities. Base: 6,074 respondents in UK, France, Germany, India, Singapore and US Travellers want providers to prioritise who travelled abroad in past 18 months. Source: Amadeus, October 2020

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BLACK YELLOW MAGENTA CYAN 91TRS2050144.pgs 08.12.2020 15:26 VERSION FUTURE travel experience future travel, 2 navigating the ‘new normal’

REPRO OP hygiene conscious and more uneasy about travel journey. Brands already have access handling cash. Adoption of contactless to a wealth of data, from geolocation to payment surged across all industries in In the post- individual preferences, and can use it not response. A YouGov survey found 80% only to create seamless customer journeys of UK adults made more contactless pandemic but to minimise risk and disruption. payments and 24% more mobile-wallet world, there However, the increased digital use and payments after the first lockdown. When data sharing comes with cybersecurity SUBS asked why, 57% said it “feels safer”. will be higher risks. Online fraud in the aviation sector Travellers also seem open to using value placed rose by 61% in 2019, according to the nascent technology including biometrics, Fraud Attack Index from Forter. Loyalty facial recognition, health screening moni- on authentic fraud across the industry increased 89%. tors, digital identification and e-passports. experiences, Robust digital and data-safety processes These technologies reduce human touch- will be crucial to mitigate such risks. ART points as well as turnaround times. focused on Demand for unique experiences was relationships OPERATIONAL RESILIENCE on the rise pre-pandemic. In the post- Responding to the pandemic has required pandemic world, there will be higher and memories organisations quickly adapt and deploy value placed on authentic experiences, workforces to different areas of the focused on relationships and memories. business. Data-driven decision-making PRODUCTION Travellers are likely to make fewer will continue to be critical in meeting trips and demand for locations away changing customer needs. from popular holiday destinations could The slowdown in travel presented an increase, providing opportunities to opportunity to evaluate ways of working. boost regional and seasonal spread of Stronger organisational resilience will be tourism across destinations. Major cities required to weather future storms. Supply

CLIENT and venues may be forced to offer more chains, technology, premises, privacy and exclusive and ‘intimate’ experiences. data will all play crucial roles in enabling Covid-19 has also accelerated demand for a safe and resilient resumption of core wellness breaks and outdoor activities. business and physical operations. Awareness of environmental impacts Above all, maintaining the good health has increased, fuelled by media coverage and wellbeing of staff is paramount. and cleaner air during lockdown, and Although it’s difficult to predict future some consumers may consider options behaviours accurately, the opportunities offering more-sustainable modes of and challenges organisations face as a transport or destinations closer to home. result of the pandemic are becoming clear. A key indicator of how well businesses SHARED DATA may perform post-pandemic is the degree It is no surprise that consumers are to which they embrace new digital tools resorting to more online activities, as these will have a significant role. especially for communicating. The Engaging customers via active pandemic has become a catalyst for communication will also be a driver of digital transformation. post-pandemic success. Travel agents The ‘new norm’ could mean more will continue to play an important role videoconferencing between consumers as consumers seek more-personalised and businesses. For hotels, this could information and more human touchpoints. mean adding an online video concierge No doubt some businesses will rebound service for guests. Travel agents could faster than others. Those which are faster offer the option of virtual appointments. enablers of technology and emerging Travellers want brands to engage with consumer behaviours are likely to prosper. personalised offers using data they have already shared, meaning brands may need Danielle Rawson, director and to form end-to-end alliances across the head of travel, Deloitte

46 Travel Weekly Insight Report 2020-21

BLACK YELLOW MAGENTA CYAN 91TRS2050145.pgs 08.12.2020 15:20 VERSION

resilience reimagined future of work, 1 future of work REPRO OP ‘change is going to accelerate’

The Covid crisis triggered the Covid-19 get people into the office based on lift most‑rapid change in work anyone capacity, with a ‘blue team, red team’ has experienced since the Second condensed years concept in which teams attend two days SUBS World War. The full implications of change into one week, three days the next.” have yet to become clear. a few months. The Deloitte consumer tracker suggests Oliver Graves, organisation that regardless of current working transformation director at Deloitte, said: Some of the arrangements, workers’ expectations “People responsible for the technologies transformation around working from home have changed. we’re utilising now say it has accelerated On average, office-based workers would ART adoption by seven years. So there is a will be permanent like to work from home for half the massive transformation. working week and only 15% are ready to “In most cases, people continue be entirely office-based, dropping to 9% working in the same way using these among younger workers. The research technologies, many of which allow you found half of office-based workers would to capture things live and manage them like permanent flexible working policies. PRODUCTION across teams. So this is adoption of Graves suggests flexible working will technology that is not yet fully utilised.” “likely become an important decision He added: “I can’t see us going back. driver for prospective employees” and The new generation coming into the said: “Companies which lag behind might workplace are often shocked because struggle to attract and retain talent.” companies don’t use some of the more For now, he said: “The numbers in an

CLIENT common platforms. Change is going to office will be determined by the Covid- accelerate. Organisations adapted quickly. secure capacity. The priority will be those Now people will say ‘We did it during who need to be in the office or where Covid, why will it take two years?’” technology in the office needs accessing. The first question for many businesses “That will continue as a vaccine rolls beyond managing employee safety is out. The likelihood is those who do work ‘Do we return to the office?’ Graves in the office will continue to communicate ALMOST half of Abta member explained: “Many organisations have companies have introduced on a computer. So offices will generally worked out how long it will take to homeworking (Figure 63) be used for collaboration, creativity,

FIGURE 63: ABTA MEMBER HOME WORKING Introduced working from home Changes to work due to Covid-19

More work from home 50%

Don’t know/ Yes Full-time work from home 22% undecided 25% Expect to restructure 3 1% 46% Reduction in locations 20%

Reduction in premises size 18%

29% Likely relocation 14% 0 10 20 30 40 50 No % of Abta members

Base: 255 Abta members Source: Abta/RSM survey, October 2020

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BLACK YELLOW MAGENTA CYAN 91TRS2050146.pgs 08.12.2020 15:22 VERSION FUTURE OF WORK ‘change is going to accelerate’ future of work, 2

MOST of the UK office workforce

REPRO OP face-to-face meetings and learning.” medium term. Graves said: “We’re getting worked only occasionally from Graves believes increased working home pre-Covid-19 (Figure 64). together virtually and still able to do from home could change the hours of Despite the transformation, less business. A lot of people enjoy getting on than one in three were working the working day. He said: “People at solely from home by October 2020 a plane, but has there been a need to do home have in many cases extended (Figure 65). Hiring rates in travel that at the scale we have? Probably not. not surprisingly lagged other sectors their working day.” He noted there are throughout 2020 (Figure 66). Many have found they can still deliver restrictions on sending emails after 6pm Two in five businesses expect to without getting on a plane. SUBS reduce their workforce (Figure 67) in some EU countries and suggested this “A chief executive may want a get- may lead to workplace emails requiring a together but consider the expense of note that: “I’m sending this now because getting 200 people together from 40 it suits my situation. That doesn’t mean I locations and question the benefit. Do we expect you to respond at this time.” need to come down to London for business in the same volume? A chief financial ART WORKPLACE DOWNSIZING officer may ask ‘Why am I spending He considers a reduction in the size of FIGURE 64: £1,000 a week for someone to travel from many workplaces inevitable. Graves said: WORKING FROM Leeds to London? They have had many “There will likely be some downsizing. HOME PRE-COVID months of not signing off these expenses. This has been limited so far by furlough, Businesses will also be more acutely % of UK workforce but the combination of Covid and Brexit office-based aware of their impact on climate change.” PRODUCTION will continue to cause disruption. He suggests businesses will ask: “What “A chief executive will be less likely to Unsure can we automate? Do we need a full-time Worked 1% sign off on a 45-year lease. Many are now equivalent? I see greater flexibility and from home Never worked 30%-50% from home considering utilising short-term rented of time an uptick in the gig economy. We see office space.” extensive use of third parties that can be 12% He added: “The management style for turned on or off depending on needs.”

CLIENT years has been ‘You’re in front of me, I can Adaptability and flexibility will be see you’re working.’ This ‘presenteeism’ 20% key and “arming people with technology 52% has now changed. Organisations no that is mobile”. He said: “I can’t longer need to say ‘We all need to be in imagine a desktop PC being the go-to the office’.” However, Graves said: “People solution anymore.” thrive on social interaction. They will 25% Diversity will likewise be “an Worked want to congregate.” from increasing focus”, with organisations He predicts a reduction in travelling home Occasional recognising that “diversity brings a 20% work from Source: for business, at least in the short to of time home Deloitte diversity of thought to business”.

FIGURE 65: UK WORKFORCE FIGURE 66: UK BUSINESS FIGURE 67: WORKING FROM HOME HIRING RATES, 2020 FORECAST CHANGES TO WORKFORCE BY 2025 October 2020 Year-on-year change, by month Didn’t Retail % of companies surveyed Solely worked work (incl. 10 All sectors furlough) from home 0 Recreation/travel 12% Reduced -10 workforce due to 4 3% 29% tech/automation -20 Expanded -30 use of 42% % contractors -40 Changed -50 location 38% -60 47% 12% Worked Expanded from -70 workforce due to 35% home but tech/automation went into -80 Travelled work April May June July Aug Sept 0 10 20 30 40 50 to work % Source: ONS Source: World Economic Forum, October 2020 Source: World Economic Forum, October 2020

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Covid-19 dominated the headlines The world is “how different climate change pathways in 2020, but the year began with could impact businesses”. catastrophic wildfires in Australia at a ‘critical Cromwell explained: “A two-degree and drew to an end following a juncture’ and the warming in southern Europe could impact record-breaking hurricane season, tourism by €6 billion a year. You would see SUBS highlighting the growing impact of a ‘travel industry both an operational and a business impact – warming climate. could take more consider sea-level rise on coastal properties Scientists drew attention not just to decisive steps’ and Unesco World Heritage Sites. the 30 tropical storms in the Atlantic by “Our actions now will likely have mid-November, but to the strength and impacts many decades into the future. rapid intensification of the storms. The travel scenario we considered was in ART Emily Cromwell, Deloitte director a four-degree warming world, which is for climate change and sustainability, where we may end without action. suggested the impact of Covid-19 “Events in the last couple of years accentuated the need for climate action show climate change is beginning to have and welcomed the UK government a quantifiable impact. We did a project for announcement in November of an end a hospitality investor looking at coastal PRODUCTION to sales of new petrol and diesel cars by flooding. It would be naive not to consider 2030, saying it conveyed “the right sense whether an island coastal property is of urgency”. going to be there in 30 years – that is not Cromwell also noted that “TCFD- doom and gloom, it is due diligence.” aligned reporting [Taskforce on Climate- related Financial Disclosure] will be CONSUMER EXPECTATIONS

CLIENT mandatory by 2025, initially for banks and THERE was a five-point increase Cromwell acknowledges that squaring premium-listed companies”. year on year to 60% in the sustainability with luxury “is the million proportion of UK holidaymakers She said: “Combined with the 10-point registering a concern about dollar question” but she said: “It’s about sustainability. The big rise was in consumer expectations. Rife consumerism green plan and the electric vehicle target, awareness of tourism’s impact the UK is moving in a decisive direction. on destinations (Figure 68) and population increase paired with a Ambitious targets will be needed to achieve the goals in the Paris Agreement. FIGURE 68: Businesses have to step up as well.” HOLIDAYMAKERS’ SUSTAINABILITY CONCERNS The TCFD was set up by the % UK adults planning overseas holiday in 2021 international Financial Stability Board of the G20 economies and the European -1 Commission. The 2016 Paris Agreement +3 -1 +7 +1 +1 30 set emissions targets aimed at keeping the 2 7% % point change Don’t know on 2018 rise in global temperature this century 1 0% 25 2 4% below two degrees. Concern 20 1 9% 1 9% about 1 7% Cromwell said: “While setting these sustainability % 1 6% targets is positive, they won’t be easy to 6 0% 15 achieve. We need government intervention -6 +5 10 and businesses to take decisive action. No concern 5 “Many companies are grappling with 3 0% climate risk. For travel, the appeal of 0 some locations is based on climate. We

published a paper on climate change with Water use the Met Office in September, with four Impact of flying Waste disposal potential scenarios.” The report, ‘Climate Do locals benefit? Impact on destination scenarios and consumer business: four % point change year on year Staff wages/conditions futures for a changing sector’, explores Source: Service Science/Kantar

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BLACK YELLOW MAGENTA CYAN 91TRS2050148.pgs 08.12.2020 15:26 VERSION

SUSTAINABLE TRAVEL sustainability, 2 covid must not obscure the climate imperative

REPRO OP luxury lifestyle will stress the Earth’s communities and take a stand against resources. It’s time for a reset on biodiversity loss. Hoteliers first need to consumer expectations. understand the risk to biodiversity and “Sustainability and luxury don’t have then aspire not to have just a minimal to be mutually exclusive. If you define impact on a locality, but explore how they luxury as eight swimming pools and can have a regenerative impact.” having the air conditioning on with the Looking at sustainability more SUBS windows open, it is incompatible with broadly, she said: “Hoteliers have to CAA RESEARCH reveals a sustainability. But it’s not inherently steady rise in awareness of the take a strategic view rather than have a incompatible. Luxury in future can still environmental impact of flying and checklist. This means not simply looking suggests an increasing willingness be mindful. ‘Ultimate luxury’ could mean among air passengers to pay more at towels and air conditioning use. The disconnecting.” to reduce the impact (Figure 69). aspiration should be not only to minimise Concern about overcrowding in She said: “Hotels need to understand destinations appears to have negative impacts but also to give back ART their carbon footprint and minimise it to soared among prospective to communities. Travel is in a unique holidaymakers (Figure 70). The the absolute amount they can. sharpest rise in awareness of position to have a broad positive impact.” sustainability in the past year “Beyond climate, hoteliers are in a appears to be among travellers Cromwell insisted: “There is more unique position to engage with local aged 55 and above (Figure 71) awareness now than 24 months ago – driven by the wild fires, by high-profile figures and by the financial sector. There

PRODUCTION FIGURE 69: CONSIDER IMPACT OF FLYING, 2016-19 is also a big push from investors. Strong environmental, social and governance ’I think about the impact of flying on the ’I would pay more for flights to reduce the environment when purchasing flights’ environmental or noise impact’ (ESG) strategies are considered alongside financial results now. Companies are 50 47% 47% 4 8% 50 Disagree expected to report on ESG and TCFD 4 3% Agree metrics. We have increased awareness

CLIENT 41% 41% 4 1% 4 0% among consumers and increased 40 3 6% 40 3 7% government action. 3 5% % % 3 2% “A lot of companies are taking action 3 4% 3 4% 3 1% on sustainability and climate change and 30 3 3% 30 3 0% 3 1% if they haven’t they will be left behind. A 2 4% 3 0% 2 9% 2 2% 2 2% 2 8% 2 2% 2 2% 2 2% 2 8% hotel with great sustainability and climate 20 20 credentials should be a no-brainer for travellers. Those in the industry who are

Oct 2016 Mar 2017 Oct 2017 Apr 2018 Oct 2018 Apr 2019 Nov 2019 Source: CAA Oct 2016 Mar 2017 Oct 2017 Apr 2018 Oct 2018 Apr 2019 Nov 2019 early, bold movers on sustainability will

FIGURE 70: CONCERN AT FIGURE 71: OVERCROWDING IN DESTINATION ANY TOURISM SUSTAINABILITY CONCERN % of adults planning overseas holiday 2021

% point change 2012 year on year +20 +13 +12 +20 +20 +28 +14 +23 2018 40 3 7% 80 2020 7 1% 35 3 3% 3 3% 3 3% 7 0% 6 8% 7 1% 3 2% 3 1% 3 0% 6 1% 6 0% 30 60 5 7% 5 6% 5 7% 5 6% 5 6% 2 4% 4 9% 25 % 4 4% 4 4% 4 2% % 20 40 15 10 20 5 0 0 All 16-24 25-34 35-44 45-54 55+ Child No child 16-24 25-34 35-44 45-54 55+ Source: Service Science/Kantar Source: Service Science/Kantar

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BLACK YELLOW MAGENTA CYAN 91TRS2050149.pgs 08.12.2020 15:26 VERSION sustainability, 3

REPRO OP turn this into a commercial opportunity.” footprint outside of developments in fuel Cromwell challenges the idea that efficiency and sustainable fuels. sustainability should cost more, saying: Mass tourism Cromwell is careful in her assessment “Relying on consumers to spend more of offsetting, saying: “There is a wide on sustainability means you go after a could be variety of schemes from the highly certain demographic, whereas going for compatible with reputable to those that require a lot more sustainability as a core strategy could drive work. If you’re relying on offsets you SUBS savings. Think of sustainability as efficiency sustainability and need to approach it with a critical eye and and of access to debt at lower rates. address climate conduct your due diligence to ensure it is “Sustainable finance has very much having the impact you believe. Also, with landed. Sustainable businesses can get change. It needs carbon pricing, offsetting could become money at cheaper rates. The business clear goals and increasingly expensive. benefits of sustainability probably “There are all kinds of anecdotes about ART eclipse the costs. But if we rely on to be structured carbon offsetting, [but] without it a lot of consumers, we may be waiting a while in the right way companies would not be able to achieve and it is inherently unequal. You will have their carbon reduction goals. Offsetting is sustainable travel for the wealthy. filling a gap now, but companies need to set “Mass tourism could be compatible bold, meaningful, measurable goals paired with sustainability and address climate with plans to reduce overall energy use.” PRODUCTION change. It needs clear goals and to be She added: “A lot of companies are structured in the right way.” making net-zero commitments. Carbon offsets can be part of that with due AVIATION CHALLENGE diligence, but we urge companies to focus Cromwell acknowledges “the biggest on reduction of energy use, increased effi- challenge is air travel”, but she said: “For ciencies and a shift to alternative energy.”

CLIENT areas where we don’t think it’s realistic Cromwell gave an equally careful to meet goals, we should put contingency assessment of carbon capture and storage, plans in place. If one-fifth of the solution saying: “I hope it comes about. But is impossible, it needs to be made up for decisive action is needed now rather than elsewhere. We need to do what makes the relying on a future technology that may most impact while being realistic about THE RESEARCH suggests or may not deliver.” greater awareness of how people will travel in future.” the impact of tourism on She said: “We’re at a critical juncture. destinations and of concern Carbon offsetting forms a big part of that local people benefit among The travel industry could take more efforts to mitigate the aviation sector’s older holidaymakers (Figure 72) decisive steps and accept a leadership position for some of these initiatives. FIGURE 72: Travel plays a unique role in people’s SUSTAINABILITY CONCERNS, BY AGE lives. It captures imaginations and inspires, and can drive change in the way % of those planning overseas holiday in 2021 people behave when they return to their 3 4% 3 3% normal lives. The industry should look to 35 16-34 30 how it can spread an important message. 2 6% 35-54 “Sustainability does not need to be just 25 2 3% 2 2% 2 2% 55+ 2 0% 2 0% 2 0% a cost. It needs to be viewed through a 1 9% 1 8% 1 8% 20 1 7% 1 7% 1 7% 1 7% long-term not a quarterly lens, with other 1 5% 15 1 3% types of capital – environmental and social 10 capital and biodiversity –considered.” She warned: “Not being sustainable will 5 put the commercial feasibility of a business 0 at risk in the years to come. Companies

Impact Waste that understand and manage the risks will Do locals Impact on benefit? Water use disposal of flying Staff wages/ survive. This is going to be the foundation destination conditions Source: Service Science/Kantar of corporate strategy for years.”

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Research Partner research partner Travel weekly Insight annual report 2020-21 REPRO OP SUBS

Service Science brings insight and expertise together

ART Service Science is a specialist market Service Science was founded in 2010 research agency focused on the by Clive Nicolaou, a market researcher hospitality, leisure, tourism and with 27 years’ experience in the travel sectors. We work with clients hospitality, leisure and tourism sectors. to bring actionable findings, from Prior to that Clive was head of hospitality their customers and people, to help and leisure at Kantar TNS having PRODUCTION improve the customer experience. previously been a successful operator in We have four practice areas: the hospitality sector. He is a fellow of the ● Think Like Your Customers: using Institute of Hospitality and a member of behavioural science techniques, qualita- the Market Research Society. tive and quantitative, we provide insight to Tom Costley is the most experienced help understand and influence customer researcher in the team with almost 40

CLIENT behaviour. years’ experience in market research from ● Online Reputation Management: both a client and agency perspective. through the monitoring and management He has wide-ranging experience but of online reputation we provide the means especially in travel, transport and tourism to increase loyalty and maintain clients’ research. Prior to joining Service Science competitive edge. in 2018, Tom headed the travel and ● Service Quality Measurement: through tourism team for Kantar TNS, the UK mystery shopping, brand standards audits market leader in travel, transport and and survey tools we ensure clients deliver tourism. His client portfolio included exceptional service. national tourism organisations, leading ● Employee Engagement: our innovative operators, airlines, hotel groups and approach ensures our clients’ teams are travel firms. He is a member of the motivated and engaged so they deliver Market Research Society and a fellow of service that sets them apart. the Tourism Society.

Clive Nicolaou Tom Costley managing associate director, director, Service Science Service Science clive@ tomjcostley@ servsci.com gmail.com

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Almost no one could say they were Demands for hospitality and leisure team. He noted: prepared for the Covid-19 pandemic. “The crisis brought to the fore a range of But Deloitte partner Tim Johnson, data sharing frauds exploiting the change in business a specialist in crisis and resilience, grow as cyber operations, including the rise in remote denies the crisis was a total surprise. working, changes to supply chains SUBS He said: “This was reasonably risks ‘increase and claims for government support. A foreseeable. It has been 100 years since exponentially’ number of key processes and controls the last global pandemic. It won’t be were not able to function adequately and 100 years until the next because of fraudsters were able to exploit the gaps.” globalisation and travel. Meadowcroft said: “We have worked “It begs the question whether with several airlines and transport ART investors will reward greater financial businesses on how they transform their resilience in future and whether ‘just risk and control resilience and come out in time’ processes will be accepted by of this in the strongest possible way – consumers and by the market.” considering how they were prepared, Johnson highlights two features of ensuring silos are broken down and the crisis which made it “different from having one version of ‘the truth’ – so PRODUCTION classic crisis management”. He explained: risk-intelligent decisions can be made.” “Crises divert management attention, Johnson said: “A lot of clients created leadership and resources, and one of the Covid special taskforces or committees. challenges is making sure a business We support those in a range of ways, continues to function. That was not an including scenario planning. issue with Covid. At the same time, there “Very few businesses prepared

CLIENT was no one to blame. It was happening to robustly for a pandemic.” everyone. That is unsettling for a sector He added: “When an organisation is that is pretty well prepared for crises.” in crisis there is a break in how it sees the future. A crisis puts a barrier between RESILIENCE IN THREE AREAS now and ‘then’. Do you reconnect to the He said: “The first task is to survive – future you once knew or a new future? and that is about balance sheet strength For some players in the sector, there will and, potentially, government support be a new future. CONCERN at the risk of travel – and then to build a more resilient and company failure has risen, “The big issue is, what is in your adaptable organisation. hardly surprisingly (Figure 73) control? For example, airlines have very “We talk to clients about what resilience means in three areas – FIGURE 73: financial, operational and reputational. CONCERN AT RISK OF TRAVEL COMPANY FAILURE “You can define reputational risk as % for whom failure Failure a concern, by age and child status what is expected of an organisation and ‘a concern’

what it does. 35 3 5% 50 40 2017* 3 2% “When you’re in a crisis it begins with 35 2018

30 3 8% 2 8% 40 2019*

what you need to do. Most businesses 4 4%

30 3 4% 25 2 4% 2020

know what they would like to do. It’s a 30 3 8%

2 1% 25 2 9% 2 9% 35% 35%

20 3 4% 33% 3 3% 2 6%

% 32% question of not being able to do it. % 20 2 5% 29% 2 8% 2 2% 27% 15 20 2 7% 2 6% 24%

“Crisis management involves 2 4% 15 1 9% 2 0% 2 0% 2 0%

10 19% understanding there is a trade-off and 10 10 15% choosing the least bad option. It is not 5 5 clear-cut. Those with deeper resources 0 0 0 16-24 25-34 35-44 45-54 55+ Child No Child will be able to make trade-offs quicker.” 2016 2017 2018 2019 2020 Fellow risk advisory director James *2017 survey followed collapse of Monarch; 2019 survey followed collapse of Thomas Cook Meadowcroft leads Deloitte’s transport, Source: Service Science/Kantar

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REPRO OP little control at present. So we see an exposure? There is a ticking time increasingly vocal industry asking bomb there.” for testing to mitigate the impact of Some The Covid crisis also raises issues quarantine and to reassert some control.” with the requirements to share data. organisations Gooch said: “Sharing data is VULNERABILITIES GROWING may have their increasingly the fundamental risk to Johnson noted cyberattacks “have organisations. Health passports have SUBS increased exponentially over the guard down huge ethical implications. Are travel last nine months because of the because people firms set up to do it? Should firms even opportunities”. be doing it? They should be deploying Deloitte cyber and privacy partner are working privacy by design if they do. Peter Gooch agreed: “We’ve seen an from home. It’s “What data do we need to relax exponential increase and we were restrictions and how will it be used? ART seeing organisations struggle to keep up a real challenge Do you collect data you don’t know with ever-more sophisticated attackers how you will use? This is uncharted before. Travel companies hold a lot of territory and different regulators will data and that provides opportunities for take different views. There is a lot of talk criminals. Some organisations may have about Covid health passports, but there their guard down because people are is no data to back it up and a lot of the PRODUCTION working from home. It’s a real challenge. talk has not materialised. The data would “We see threats changing with more have to be perfect. Will people choose remote working, but fundamentally the not to be vaccinated? There are huge threats and vulnerability are increasing hurdles to a health passport.” – particularly for this sector. “Some of the threats with homework- DATA BREACHES

CLIENT ing are not obvious. Vulnerabilities are He noted organisations will also be increasing dramatically and it’s easy to wary of fines for data breaches, despite take your eye off the ball because of the the UK Information Commissioner’s need to keep things running. Office (ICO) sharply reducing the first “There is also the speed of change. major fines for breaches since the Some organisations suddenly had General Data Protection Regulation CONCERN about the risk of 20,000 people working remotely and terrorism when on holiday has fallen came into force in 2018. The ICO to a five-year low, but remains were installing remote access servers significant among travellers confirmed fines of £20 million for British in a rush. What has that done to their aged 65-plus (Figure 74) Airways and £18.4 million for Marriott International in October 2020, after FIGURE 74: initially informing BA it would be fined £183 million and Marriott £99 million for UK HOLIDAYMAKER ATTITUDE TO TERROR THREAT breaches in 2018. % terrorism ‘a concern’ Terrorism a concern, by age Meadowcroft said: “There is a clear link between cyber and fraud. The crisis 40 3 7% 3 6% -1 -13 -11 -4 -11 +1 -13 -1 % point has shown organisations where the gaps 35 change on 2019 and weaknesses are. A key part of the 3 9% 30 2 8% 2 8% 40 response will be considering these gaps 35 and what changes need to be made in 25 2 3% % 2 1% 30 2 5% order to enhance resilience.” 20 25 2 3% % 2 1% 2 0% Johnson added: “There are a lot of 1 8% 1 9% 1 8% 15 20 legacy players in travel. This provides 15 10 an opportunity for a reset. There will 10 be opportunities to make changes 5 5 organisations perhaps wanted to bring 0 0 2014 2016 2017 2018 2019 2020 16-24 25-34 35-44 45-54 55-64 65+ Child No child about anyway. We will see some structural Source: Service Science/Kantar change – there is no doubt of that.”

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Alistair Deloitte is an industry leader in the travel and aviation sector. Pritchard ART The team works across the globe on complex, major programmes lead partner, and projects for some of the industry’s largest companies. Our Travel and dedicated team offers a range of integrated services ranging from Aviation audit and tax advice to more specialised advisory, corporate finance, strategy, technology and operations excellence, blending deep industry knowledge with core methods and techniques. PRODUCTION Our team provides insight and understanding of the challenges of today’s environment and the ever‑changing travel and aviation landscape. We work with most of the world’s leading companies and provide an outstanding service – with a focus on maximising value for our clients and enabling them to make informed decisions. If you would like to discuss any of the topics in this report, or our

CLIENT services, please contact one of our travel and aviation specialists. Andy Gauld head of Aviation

Contributors

Alistair Pritchard lead partner, Travel and Aviation [email protected] Andy Gauld head of Aviation [email protected] Jon Bolger head of Business Travel [email protected] Raoul Ruparel OBE Brexit Advisor [email protected] Danielle Karen Taylor director, UK Centre for Health Solutions [email protected] Rawson Peter Gooch partner, Cyber Risk Services [email protected] head of Danielle Rawson head of Travel [email protected] Travel Emily Cromwell director, Risk Advisory [email protected] Martin Bowman director, Aviation Digital Assets [email protected] James Cranswick director, Aviation [email protected] David Gard Financial Advisory UK Aviation lead [email protected] Andreas Scriven lead partner, Hospitality and Leisure [email protected] Callum Irvine Health, Safety & Environment practice lead [email protected] James Meadowcraft director, Risk Advisory [email protected] Tim Johnson partner, Risk Advisory [email protected] Andreas Teresa Arnone Health, Safety & Environment manager, Risk Advisory [email protected] Scriven lead partner, deloitte.co.uk/THS Hospitality and Leisure

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Resilience reimagined

www.deloitte.co.uk/ths

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