Within the last five years, tourism in the United States was very popular. On average, tens of millions of tourists from around the world visit the country’s famous cities, national parks, and entertainment options.

After more than a decade of growth, the number of foreign tourist arrivals to the United States reached nearly 80 million in 2019. The travel and tourism industry contributed over 1.1 trillion US dollars to the country’s GDP and funded millions of jobs in 2019 as a result of this influx of tourists and an increase in US travel spending. Nevertheless, following the outbreak of the coronavirus pandemic in 2020, the job rates and economic growth of the United States travel industry were seriously harmed.

Impact on Tourism in 2020

Contribution to GDP: In 2019, tourism accounted for 10.3% of Global GDP, i.e. US $ 8.9 trillion contributions to the world’s GDP. Losses to the travel industry would be approx $651 billion in 2020 resulting in a total GDP effect. The Employment Losses for the US economy was projected to lose 8.0 million jobs by the end of April as a result of the 2020 travel decline. The unemployment rate of 4.4% in March increased significantly in the coming months. Travel-related job losses alone would drive the unemployment rate to 8.4% by the end of April.

• 330 million employees, 1 in 10 jobs worldwide (World Travel & Tourism Council)
• US$1.7 trillion in tourist exports (World Travel & Tourism Council)
• US$948 billion in capital spending (World Travel & Tourism Council)

CAGR (2009-2017):

• Restaurants: 4.4%, Airlines: 4.6%, Hotels: 6.0%, Car Rental: 4.6%, Cruise: 5.2% This information gives us an idea that there is always a gradual growth in the above sector but all of them are pretty much saturated. The demands are fulfilled by the industry and also, there seem to be no drastic fluctuations in the needs of the passengers and hence a company projecting a growth more than the individual sectoral growth is stable and would be considered to be performing good.

Figure 1: 2019 Travel & Tourism Industry

The graph indicates a clear picture of the 2019 scenario of the travel and tourism industry around the world. North America topped the charts in terms of revenue generated by direct or indirect services and products related to the Travel and Tourism industry. The Caribbean was seen to have the highest growth of 13.9% for this sector and the lowest was seen in South Asia 6.6%.

Figure 2: Projection on Tourism Revenue

The cumulative impact of COVID-19 on U.S. GDP was around $ 650 billion dollars by the end of the year 2020. There was an expectation that there would be an increase in revenue in this sector, and the graph indicates the same as the loss peaked in April and May, and reducing after that. It is also seen that there was a steep rise in losses after February and April.

Travel’s Unprecedented Turbulence

Many people have never thought that 2020 will bring one of the worst public health emergencies in recent history. The COVID-19 pandemic is primarily a medical and humanitarian epidemic, responsible for 941,000 deaths and 29.9 million cases at the time. Governments, the private sector, and health practitioners across the globe have mobilized to meet this problem, treat patients, and seek a vaccine. To restrict the spread of coronavirus, governments have closed vast swaths of their economies to a scale never seen before. The outcome was a fall in the gross domestic product (GDP) and unemployment levels are last seen during the Great Depression of 1929.

More than six decades of advancement in travel have been rolled back in just a matter of weeks. The launch of the Boeing 707 in 1958 marked the beginning of the Jet Era and the beginning of mass tourism. Jet aircraft and the advent of the modern visa system have made international travel so commonplace that it could almost be taken for granted. Then, in reaction to the virus, international travel was practically reduced to zero in 2020. The World Openness Index, a measure of free travel between countries by the Passport Index, found that international mobility decreased by 65% due to COVID-19, bringing that measure to historic lows.

Market Overview

The hospitality industry in the United States has been the, with an increasing number of foreign travelers visiting the country on leisure trips and an increasing number of business trips within the country. The overall booking value rose from USD 116 billion in 2009 to USD 185 billion in 2017. International arrivals in the country increased by 0.7% in 2017. Cities, like New York, have continued to report high numbers of both leisure travelers and business travelers. Growth in digital innovation has helped to record this growing number and has also helped players operating shared spaces, such as Airbnb, to reach out to their target audiences. The overall expenditure of foreign travelers in 2017 was USD 251 billion at an all-time high level. Gross hotel bookings had a volume of USD 185 billion in 2017, which was USD 116 billion in 2009. Together, all these rising numbers have encouraged the Department of Commerce to target 95.5 million foreign visitors annually by 2023, which is twice the amount reported in 2000.

Recent Trends and Strategies

The hospitality industry in the United States has always been able to score an increasing number over the last few years. While occupancy rates fluctuate from month to month, total revenues from the segment continue to grow. The region reported USD 280 billion in revenue generated in 2018, nearly double the revenue generated in the early 2000s. Since 2000, the region has reported positive revenue growth, which fell from USD 152 billion in 2008 to USD 133 billion in 2009, due to the global recession.

Airbnb was hardly introduced to the general public when it joined the hospitality industry in the United States in 2008. Yet, with its revolutionary concept of space sharing and digitalization technology, it attracted the younger generation and achieved a break-even point after a year from its inception. Currently, more than 60% of Airbnb’s accounts are millennials. It has succeeded in gaining a larger number of consumers through its pricing approach. Airbnb is offering shared spaces at relatively lower rates in the leading cities of the United States and the United Kingdom. There are spaces available for USD 14 per night, also in the world’s top cities. According to recent figures, Airbnb has nearly 150 million users and more than 65,000 cities worldwide, with more than 5 million listings.

The Current Status (2021)

$630 million spent on marketing and sales in the 4th quarter by Airbnb, this highlights the fact that the sector and the company are expecting a rise in travel in 2021 as compared to 2020. A study forecasting travel patterns for 2021, suggesting people would concentrate on rural destinations rather than crowded tourist hotspots was released by the company in January. In the study, Airbnb said survey data showed 54 percent of people participating in the study plan to travel this year. A turnaround is expected in travel in the second half of 2021, with a full recovery by 2023. (Live Mint)

According to the trends for 2021, long-distance domestic stays, Airbnb predicts that Colorado’s Breckenridge, Florida, Tennessee’s Great Smoky Mountains, Davenport, just outside of Disney World, and Palm Springs will be among the top destinations in 2021. Instead of focusing on major international destinations such as Paris, Rome, or Los Angeles, people would be expanding their horizons and would travel to other destinations. The projections for the travel industry seem certain when it comes to this company. The vaccine has clearly shown hope of travel, vacationing, and other experiential activities which would boost the travel and hospitality industry. There would be many precautionary measures that would be taken to make sure that the guests and travelers are in comfort, and hence it is expected that the cost in the travel industry would rise. That being said, they would not want to charge the guests high prices as the business is on low already and hence this would mean that there would be a decline in the profits. 2020 was a slowdown no doubt, but 2021 is where this industry appreciates and paves way for new services, trends to come.

Expedia releases information about the initiatives regarding the COVID-19 and how they are going to help in appreciating the travel industry. When a COVID-19 vaccine is readily available, nearly half of those polled say they are more likely to fly. 42 percent said recent vaccine news made them more optimistic about travel or prompted them to book an upcoming vacation. This shows that there would be an increase in the number of bookings which could eventually lead to the person traveling when required if there are no spikes in the number of COVID-19 cases. According to the predictions, 44 percent will travel to destinations more in 2021 than in 2020, with younger generations traveling the most. More than one-third of those polled said their next trip would last a week or longer.

The average person is saving $3,444 for their next holiday, but Millennials expect to spend considerably more. According to flight consumption data from Brand Expedia, American citizens plan to visit places such as Los Angeles and New York City. Travel, according to 63%, fosters greater cultural awareness, while travel, according to 56%, is soothing (Business Wire). There were services like virtual tours, a new area of expansion came into being during the lockdown. This has confirmed that even with the whole paradigm shift flexibility, adaptability, and giving the required experiential services on demand is essential.

Conclusion

The travel and hospitality sector has clearly taken a hit due to the COVID-19 Pandemic. Their sector has seen severe losses, job cuts, and slow revival rates due to this. However, as there are ups and downs, this would be counted as one of the worst downs that this sector has seen in history and there would be a revival of the same in time to come. As the majority of work is done through video conferencing and other internet services readily available worldwide the need for business travel in the near future at least for a brief period of time would reduce. This is an opportunity for this sector to welcome change and designing their service and products to service the needs of the passengers/travelers. The rise in the demand for travel would be slow but would eventually rise and thus would pave way for an improvement for this sector.