by Wouter Geerts + Skift TeamPublished June 2020

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SKIFT RECOVERY INDEX – WEEK OF MAY 24

SKIFT RESEARCH TAKE

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REPORT OVERVIEW

This first report of the Skift Recovery Index provides data and insights from travel dataspanning from December 29th, 2019 to May 30th, 2020 (weeks 1 to 22).

The Skift Recovery Index is a real-time measure of where the travel industry at large — andthe core verticals within it — stands in recovering from the COVID-19 pandemic. It providesthe travel industry with a powerful tool for strategic planning, of utmost importance in thisuncertain business climate.

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Where do we stand?

The coronavirus crisis has obliterated most international travel, and severely cut orcompletely stalled domestic travel demand. By now we know the industry has been deeplyimpacted, but we are also hearing encouraging news about careful reopenings, growingflight capacity, and slowly increasing accommodation bookings. However, travel leaderscannot react to these green shoots without better data. How strong is the recovery,exactly? And how is it unfolding across the globe?

We are launching the Skift Recovery Index to help travel businesses, associations, anddestination management organizations better understand how the recovery is shaping up.The index tracks the recovery in 15 countries, through more than 25 indicators focusing onthe air, lodging, and drive verticals, while also taking into account macroeconomicconditions and traveler sentiment.

The global Skift Recovery Index currently stands at 39 points relative to a baseline readingof 100, indicating that our industry’s output has fallen by just over 60% due to the crisis. Thisrepresents a nascent recovery of 11 points from the absolute low of 28 in the week of April5th.

We are currently working with Arrivalist, Criteo, Hotelbeds, OAG, RateGain, Shiji Group,SimilarWeb, SiteMinder, Sojern, and Transparent as data partners for the Skift RecoveryIndex. Together we are stronger, and that is also true for data insights. By combining andweighting data covering various aspects of travel performance, we are able to build morerobust estimates of where the industry stands. More information about our data partnerscan be found at the end of this report.

In this first report we will take an overview of the broader trends for the past five months,looking back to how the crisis unfolded, and where we stand today. We will update theindex every week, and subsequent reports will provide deeper analysis into specific verticalsand countries as we continue to track the recovery.

All future reports will be available to our Skift Research subscribers. All data — for deeperinvestigation — will also be available to our subscribers. You can find out more aboutbecoming a subscriber here.

We also welcome more data partners to join this effort. Please get in touch if you feel youcan add data to further strengthen the Index.

Recovery is starting in earnest, but it is slow

The Skift Recovery Index tracks the travel industry performance in 15 countries across theglobe: Australia, Brazil, Canada, China, France, Germany, India, Italy, Mexico, Singapore,Spain, Thailand, the U.S., United Arab Emirates, and the United Kingdom. These 15 countriesaccount for just over half of global inbound tourism receipts according to 2018 data by TheWorld Bank, and 61% of outbound tourism expenditure. The countries accounted for 66% ofglobal 2019 GDP.

The Index is built to represent the industry’s overall performance relative to the same time

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last year. An index score of 50 means the industry is performing half as well as it did lastyear; a score of 120 would indicate an improvement of 20% over the prior year.

The aggregate performance of the countries, weighted by GDP, shows that the low point isnow about two months behind us, with the lowest score of 28 recorded in the first week ofApril. Since then, there has been a slight weekly uptick in performance.

As of the week of May 24, the Skift Recovery Index score stands at 39 points, whichindicates that the global travel industry is running at about a third of the performance thatit experienced at the same time last year.

Exhibit 1: The global recovery score is slowly increasing

The country view of the Index clearly shows how the coronavirus pandemic played outacross the world. China was the first country to register the negative impact of thecoronavirus on its travel industry, swiftly followed by other Asian countries highly reliant onChinese tourists. Today, China is one of the strongest performers, as is already widelyreported by the travel industry and media. Even so, the numbers are still way below lastyear’s.

After Asia, Europe started to feel the full effects of the pandemic, with Italy particularly hardhit. European countries are now showing some of the lowest scores as they are just startingto come out of their lockdowns. Many European countries are also highly reliant on foreignvisitors, with a smaller domestic tourist base. This might slow recovery, something we willinvestigate further in the coming weeks.

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Exhibit 2: Regional index scores closely follow the pandemic spread

The U.S. was one of the last countries to start showing a decline in its index score, and as ithas a stronger domestic market than many others, it is showing quicker signs of recoverythan other countries. However, with a messy patchwork of reopening policies throughoutthe country and many areas still showing high levels of new coronavirus cases, the long-term recovery might be slow.

Australia is a slight anomaly here, as its performance in the first weeks of 2020 wasimpacted by the recent wildfires that thwarted the country. Since then, however, thecountry has joined a similar trajectory as all other countries tracked.

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Exhibit 3: China has been slightly outperforming other countries

Drive market shows rebound

For the travel verticals, drive data shows that car journeys and car rental bookings areshowing a strong upward trend, while lodging and flights continue to show a much slowerrecovery. As many country borders were closed mid-March, flights saw a short uptick dueto repatriations before nose diving and remaining largely stagnant now for two months.Lodging has shown a more gradual decline than air, but has also been in hibernation sincemid-March.

A breakdown by vertical also shows how the wider economy — in the form of themacroeconomic indicators — has not seen the same decline as travel verticals. This makessense. We are all aware that the travel industry has been in the eye of this storm, and is oneof the hardest hit industries. While consumer and business spending have declinedsignificantly, and unemployment rose rapidly (e.g. to 14% in the U.S.), stock markets arebouncing back, and many parts of the economy continue to function at near normal rates.

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Exhibit 4: Travel is hard hit, but car journeys are rebounding

Are U.S. residents ready to travel again?

Our Recovery Index also analyzes country performance from a tourism source market vs. atourism destination market perspective. This is important as some countries are netimporters of tourism, relying heavily on inbound tourists, while other countries are netexporters, sending more tourists abroad than they receive. The current border closuresmean that net exporters of tourism theoretically have a bigger stock of potential travellersto tap into for domestic trips, potentially speeding up recovery.

Given that many border closures are still in place, most travel is currently domestic, whichresults in a strong overlap between destination and origin performance. As borders arereopened, the destination/origin split will allow us to track the recovery of theinbound/outbound travel market.

Already, the destination/origin split provides some interesting insights. Takingmacroeconomic indicators out of the equation, we compare destination performanceindicators (how are travel businesses performing in each country) with traveler sentimentindicators (how interested in travel are residents of each country). China and the U.S. standout for their relatively strong destination scores, but U.S. residents show a higher interest intraveling than Chinese residents, although even in the U.S. traveler sentiment levels are stillonly at a third of what they were at the same time last year.

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Exhibit 5: U.S. residents show relatively strong interest in traveling

The careful interest of U.S. residents to travel again is further highlighted by search andbooking behavior for flights and hotels.

Searches for flights and hotel stays by U.S. residents have been at a higher level than theglobal average. That said, bookings have dropped more than searches, and while havingregistered an increase in the past two months, they are still at only 28% of 2019 levels forhotels, and 35% for flights. In both cases, this score is almost double the global average,highlighting the greater interest in travel from U.S. residents, and possibly the more relaxedapproach to lockdown.

We will use subsequent reports to keep track of how this progresses, and how thiscompares to other countries.

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Exhibit 6: U.S. searches and bookings have outperformed global average

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DATA PARTNERSWe would like to thank the following partners who are collaborating with Skift Research byproviding their data which shapes the Skift Recovery Index.

ARRIVALIST uses mobile location datasets to provide actionable insights on consumerbehavior, competitive share, media effectiveness, and market trends, and has beentracking driving behavior of U.S. residents, which we have included in the Index.

CRITEO tracks over US$900B in annual sales spent by more than 2 billion online shoppers.The company tracks airline and car rental web traffic and sales, insights which are includedin the Index.

HOTELBEDS provides over 180,000 hotels across the globe with access to high-value,complementary distribution channels that do not compete with the hotelier’s directdistribution strategy. The company provides data on hotel bookings and source marketperformance.

OAG collects and analyzes data about every journey, every booking, every take-off andlanding, departure, and delay, totalling over 110,000 flights, 100,000 schedule changes dailyand over 4 million flight status updates. OAG provides flight capacity data for the SkiftRecovery Index.

RATEGAIN helps travel and hospitality companies with cognitive revenue management,smart e-distribution, and brand engagement. RateGain supports over 125,000 hotelproperties globally by providing 240 billion rate and availability updates, and powering over30 million bookings. For the Index, RateGain provides hotel bookings and cancellation data.

SHIJI GROUP provides software solutions and services for the hospitality, food service, retail,and entertainment industries, serving over 74,000 hotels, 200,000 restaurants and 600,000retail outlets across the world. Shiji Group provides China hotel bookings and room nightdata for the Skift Recovery Index.

SIMILARWEB gathers digital data from multiple sources, including first-party directmeasurement, public data sources, anonymous behavioral data, and external partners. Forthe Index, SimilarWeb provides unique visitor data to the top 10 travel websites per country.

SITEMINDER works with over 35,000 hotels as their guest acquisition platform to generatein excess of 100 million reservations worth over US$35 billion in revenue for hotels eachyear. SiteMinder provides hotel booking data for the Skift Recovery Index, pulled from itsWorld Hotel Index.

SOJERN provides digital marketing solutions for the travel industry, helping to drive directdemand for more than 10,000 hotels, attractions, tourism boards, and travel marketers.Sojern contributes flight and hotel search data for the Skift Recovery Index.

TRANSPARENT provides business intelligence serving the vacation rental industry,

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including insights around supply growth, demand patterns, rate changes, and propertymanager activities. Transparent contributes occupancy and bookings data for the SkiftRecovery Index. The company draws on data from the 34 million vacation rental listingsthey track worldwide, in every geography.

We would welcome more partners who want to join this effort. Please get in touch to talkabout a possible collaboration.

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ABOUT SKIFTSkift is the largest intelligence platform in travel, providing media, insights and marketingto key industry sectors.

THE SKIFT RESEARCH DIFFERENCESkift Research is the official research arm of Skift. Our reporting combines:

Skift’s extensive industry experienceRigorous financial & quantitative analysisQualitative insights from top executives at nearly every major travel company

We conduct primary research, summarize our findings through desk analysis, and presentthem back to you in a digestible format which you can take to your team, partners, andclients to understand the market and make decisions.

Using our proprietary blend of qualitative and quantitative analysis, Skift Research closesthe information gap faced by businesses today.

Contact us at research@skift.com!