Is travel demand down due to the omicron variant?

Dec 14, 2021

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The omicron variant came at an inopportune time for travel: The beginning of the busy winter holiday season.

We know that the variant may be more contagious than others and contains several spike protein mutations that may make it less responsive to COVID-19 vaccines. There are also signs it may be more virulent than other variants. All of these factors played a part in why it was deemed a “variant of concern” — the most severe category — by the World Health Organization.

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Fearing a return to March 2020, countries worldwide imposed travel bans and restrictions on much of southern Africa, where the variant was first detected.

This month the U.K. reimposed various COVID-19 measures, and last month saw the return of the country’s red list for certain nations — although there are currently reports that this may be scrapped as soon as this week as omicron becomes the dominant variant.

Related: We put 6 ‘fast-track’ COVID-19 PCR services to the test: from cheap and cheerful to speedy and high-priced

The U.S., which has already detected the omicron variant in more than a dozen states, banned non-citizen travellers from a handful of African countries and put in a sweeping and confusing new COVID-19 testing policy.

However, there are some positive signs. The U.S.’s top infectious disease expert said omicron appeared to be less severe than last summer’s delta variant, and Pfizer said three doses of its vaccine proved to “neutralize” the variant.

But the seeds of fear and unease may already be in place. Are people postponing their travel plans, even during the holiday season, because of the new variant? Here’s what the experts (and data) say.

Is travel demand down due to the omicron variant?

(Photo by Zach Griff/The Points Guy)

Check any major airline or hotel’s social media feed (or mentions), and you’d think the holiday travel season was getting off without a hitch.

British Airways has announced the return of short-haul flights at Gatwick Airport from March 2022 with return fares for as little as £39. Meanwhile, Alaska Airlines offered a buy one, get one free promotion earlier this week, while several major U.S. domestic airlines are currently in fare wars with internal flights to sunny Florida for £75 or less. On the hotel front, several chains are forging ahead with plans to extend elite status to loyal members into 2023 due to the pandemic. Additionally, Hyatt just announced a new Bonus Journeys promotion, which is extremely popular with World of Hyatt loyalists, that will offer 2,022 bonus points for every two qualifying nights.

So, with all of these promotions and excitement around them, is travel demand actually down, or are pundits, travel bloggers and travel experts overreacting?

Here’s what we know so far. A request for Cirium data showed that airlines aren’t experiencing significant schedule changes due to the variant. Airlines are reluctant to share whether travel demand is down, as the U.S. Department of Justice could consider it as signalling, which is a possible violation of antitrust laws. Meanwhile, U.S. hotel occupancy for the week ending 4 Dec. was actually up nearly 2% from the previous week (which was 53.0%), the research firm STR found.

With what’s expected to be a busy holiday travel season just weeks away, it doesn’t look like omicron will have a significant impact on holiday travel … at least, not yet. A survey from the travel deals site Scott’s Cheap Flights found that travellers are concerned about omicron but not enough to prompt them to cancel their trips.

But while passengers may still be willing to travel it’s not been an easy ride for the U.K.’s travel sector with some of the U.K.’s largest airlines and travel companies expressing concerns and criticism towards the travel restrictions imposed by the British government.

In a letter to Boris Johnson, as reported by The Independent, the chief executives of seven companies – including British Airways – have accused the Prime Minister of breaking his promises to fix the expensive and prohibitive cost of PCR tests for travellers.

“As leaders of U.K. airlines, we are deeply concerned about the haphazard and disproportionate approach by government to travel restrictions following the emergence of the omicron variant”, they said.

“We and our customers feel sincerely let down, having believed a more pragmatic, evidence-led approach to travel, in line with the rest of the world, had been achieved and agreed by all concerned just a few months ago,” they wrote following the U.K. reimposing various measures that add additional steps and concerns for British travellers planning holidays.

Globally and across the pond, the situation currently appears more hopeful. According to Misty Belles, the vice president of global public relations at Virtuoso (a luxury travel network), travellers have had no “typical” behaviour during the pandemic.

“Everyone has a different threshold for risk, and evidence of that surfaces whenever a new COVID variant emerges, whether it’s delta or omicron,” Belles told The Points Guy via email. “Those who are more cautious are more likely to postpone their travels. People who are determined to travel are less deterred by the news and are generally more accepting that this is the new reality.”

Belles said she’s noticed that most bookings being cancelled or put on hold have been to destinations that have closed their borders in light of the omicron variant. Holiday travel already booked remains largely untouched. However, she also noted that “close-in bookings,” or departures that are within the next week, are more likely to be affected. What that points to is a preference by travellers to shore up their travel plans (and wait to see if their destination is even open for visitors) instead of taking spur-of-the-moment vacations.

Tori Emerson Barnes, an executive vice president at the U.S. Travel Association, said that 45% of Americans have tentative holiday travel plans, which is up from 28% in 2020.

“Early indications are that the omicron variant is not having a huge impact on holiday travel plans,” Emerson Barnes said in a statement to TPG, “but the public is very much in a cautionary mood.”

But even as U.S. airlines press forward with their holiday deals and scheduling, there is some indication that they’re concerned about the threat of the omicron variant.

Scott Kirby, United Airlines‘ chief executive officer, told the Financial Times that he theorized that “we’ll have less flying to Europe than we would have in January” because of the new variant. The U.S.-to-Europe travel corridor, which just rolled out after the U.S. reopened for travel in November, is a boon for airlines … one airlines can’t afford to lose.

Kirby also said, this time in an interview with CNBC, that his airline always knew there would be new COVID-19 variants and that “recovery would never be a straight line.”

“We look confident about the long term. Nothing changes about where we’ll be 12 months from now,” he said.

What did we see after delta?

Travellers check in at the Qatar Airways check-in counter inside the international terminal at San Francisco International Airport (SFO) in San Francisco, California, U.S., on Monday, Nov. 8, 2021. The U.S. is lifting entry restrictions for more than 30 countries, allowing fully vaccinated travellers to fly from places including Europe, China and India. Photographer: David Paul Morris/Bloomberg

Joe Leader, the chief executive officer of the Airline Passenger Experience Association, said he’s noticed airline demand has been resilient in the U.S., but that doesn’t tell the whole story.

“The global impact has been much more uneven,” Leader told TPG through email. He also noted that travel bans may actually be doing more harm than good.

“Countries that have imposed draconian new rules ahead of scientific findings on omicron are seeing air travel demand plummet,” Leader said, adding that countries with massive travel demands, like the United Kingdom, have seen forward bookings drop “around 40%.”

Kirby told CNBC that the omicron variant “is certainly going to have a near-term impact on bookings… There will be a short-term dip in revenue, but the dip will be smaller than it was for delta.”

There’s some precedent to show that we may see this again with the new omicron variant, as some data suggests that travel waned slightly due to the delta variant. The Wall Street Journal reported that online travel agencies like Priceline and Kayak experienced fewer bookings last summer due to the delta variant. Additionally, several airlines sounded the alarm on the delta variant, including Southwest Airlines, which noted that it “experienced a deceleration in close-in bookings” in a filing with the Securities and Exchange Commission back in August.

Last summer, on behalf of TPG, YouGov surveyed nearly 2,400 adults and found that many people — particularly those who were fully vaccinated — said they felt less comfortable with specific activities in light of the delta variant’s spread. Among those who travelled at least occasionally, half of those fully vaccinated people said they felt “less comfortable” taking domestic flights, and 53% said they felt less comfortable flying internationally.

Travellers quickly pumped the breaks on their plans due to delta; however, this isn’t something we’ve yet seen with omicron.

Bottom line

Ultimately, it’s far too early to tell how omicron will impact both travellers and traveller sentiment as it did with delta.

Some initial data shows the omicron variant isn’t as severe as delta, though it’s roughly twice as infectious as earlier COVID-19 variants. More people are also fully vaccinated against COVID-19 now than they were last summer, with more than 55% of the world’s population fully vaccinated.

These factors, along with one of the busiest travel seasons on the calendar fast approaching, may mean that the travel industry will continue its slow recovery in 2022.

Featured photo by Paul Hennessy/NurPhoto via Getty Images

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