The spread of the coronavirus (SARS-CoV-2 / COVID-19) is not the first global health crisis we have had to face, but it is certainly one whose extent cannot yet be fully assessed. Especially the tourism sector, which includes the vacation rental industry, is suffering from the current situation. With isolation, border closures and international travel bans, it is a difficult time for all of us. Now, solidarity and thoughtfulness for one another are of utmost importance.
After looking into our own data, we thought it equally important to give you potentially surprising and yet certainly optimistic facts during this difficult time. Although at the moment cancellations are high and morale is low, there are younger generations taking advantage of cheap flights to plan upcoming vacations and there is otherwise every reason to believe that the market will rebound in a big way after this crisis. Just as the market has after previous crises.
Resilience: Yes, There are Still Some People Planning Vacations
Although the trips planned for the next weeks and, in some cases, months are being cancelled on a large scale, some travellers have been organising their next vacation. Whether it is due to the extra time on their hands, the discounted prices for flights, or the urge to be somewhere (anywhere!) besides their locked-down home, some travellers’ imaginations are in vacation-planning mode.
Some trends in particular:
– Millennials especially have recognized the opportunity to take advantage of extremely cheap flights.
– More vacations are being planned with less notice. Instead of booking 30 or 60 days before departure, reservations are happening just days before.
– Especially for trips planned in the nexts months, ‘drive-to’ destinations are more popular than ‘fly-to’ ones. This likely is due to travel bans and the fact that in some countries domestic travel, while not encouraged, is not strictly prohibited.
– Coastal and rural destinations are experiencing a greater demand than urban ones. This probably is related to fears of infection in denser populations as well as the urge to escape the confinements of isolation into natural scenery.
Germany, where traveling is deeply ingrained in the culture, is even showing a high demand for vacation destinations – especially domestic ones:
Recovery: Rapid Climb after the Fall
“One of the main takeaways from our data is that people, having been cooped up only a couple of days, are already itching to travel. So as soon as travel bans are lifted and things settle a little, we can expect huge increases.”(Ellen, Data Analyst at Bookiply)
To be clear, despite this search behavior, the tourism industry is going through a significant downturn. However, there is good reason to believe that the market – particularly for holiday homes – will recover well and emerge even stronger. Here are three main reasons why holiday rentals will bounce back in a big way.
1. Tourism Generally Remains a Megatrend
A megatrend is a trend that persists over several decades and significantly influences all areas of life. The graph above shows how strongly the number of tourists has developed over the last 25 years, growing by nearly 1 billion tourists from 1996 to 2018. Favoured by globalisation, there is no foreseeable break in this trend, meaning that the number of tourists is extremely likely to continue to climb after the crisis is over.
2. Lesson from History: Fast Drop, even Faster Recovery
Disasters such as 9/11 in 2001 and the global financial crisis in 2008 also led to sharp drops in demand and major setbacks in the travel industry (see graph). Some travellers were fearful to fly while others lacked the financial resources in the aftermath to travel as often or as far as they would like to. However, the figures confirm what we all hope and expect to see after the Corona crisis: a strong and fast recovery. After all, what more could people want than to take a break after tough times?
3. The Fortunate Position of Holiday Homes
Vacation rentals are far more crisis-resistant than other holiday accommodations such as hotels, motels, B&Bs or cruise ships. As a result, they are still the least affected by the current pandemic and are therefore the most resilient.
There are several reasons for their advantage in this crisis. Firstly, due to the more personal and private nature of a rental home, there are fewer points of contact with other people. Instead of staying in a hotel with hundreds of occupants, guests stay with their immediate family, with some friends or with their partner. During and directly after times of a contagious virus, this has clear advantages.
In addition, vacation rentals are often located in more remote or rural places. They therefore benefit from the trend in search behavior called “urban escape” where travellers are seeking to flee cities and the virus into more open, scenic areas.
The vacation rental market is furthermore a highly localized market – meaning that there is no dominating, international chain whose crash could negatively affect the smaller fragments of the market. The local markets that are suffering the most correlate with the regions where the largest COVID-19 outbreaks are. This means that some regions can still be profitable while others are suffering.
COVID-19 will continue to challenge the globalized world – none of us will remain unaffected. However, looking to our data and the lessons of past crises, there is reason to hope for an even stronger future. Tourism and the holiday rental industry in particular will recover and flourish.