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  • Atul Prashar

Summer Travel



 

It’s July 4th weekend and we’re supposed to be celebrating and traveling, right? But summer vacation plans are looking bleak or subdued to say the least. Here is what the new summer vacation may look like….

The global pandemic has pretty much put any big travel plans this summer on hold meaning most airlines, cruise lines and hotel chains are suffering mightily. More on that at the end of this piece. But where there is a will to summer vacation, there is always a way which means there are still some interesting summer vacation trends that are picking up some of the slack. Here is what this summer travel season may look like:

Road trips galore

While most folks are still rightfully wary of hopping on a plane, road trips this summer are looking like a much safer and more affordable alternative. With gas prices at a historic low – averaging $2.17/gallon nationally (in today’s dollars, equivalent to 1985 gas prices) and many families wanting to stay local, expect to see a lot more driving to your summer vacation destination as the preferred mode of transportation. That may be some much-needed good news for automobile manufacturers that have had to shut down facilities for an extended amount of time and even car rental companies - Hertz, anyone? (A separate, deep dive into how Hertz actually makes money. Hint: it’s not renting cars). That also means plenty of good deals to be had for car purchases/financing and car rentals. Yes, car rental companies have been hit hard with Hertz declaring bankruptcy, but there are signs that car rentals will be picking up. Some international markets which are ahead of the U.S. in re-opening are already seeing this with Uber even launching an Uber Rental trial in Australia. And when a car is simply not enough to accommodate the entire family on a road trip, RVs are becoming the popular way to go. Just ask peer-to-peer rental operator RVshare who has already seen bookings more than double from last year.

Nature and more

So once you have the car or RV all set up, where to? Well, to avoid crowds, state and national parks which have largely re-opened around the country are looking like the most popular destinations offering plenty of nature and outdoor space to socially distance from others. But because of increased demand, you will need to plan accordingly and make sure you reserve your campsite well in advance when possible and check park capacity. From experience, head out early in the AM to beat the crowds. Park regulations will understandably be stricter than usual so be sure to reference local websites for updated park notifications.

Of course, you’ll also need to get all your outdoor gear ready if you’re looking for that authentic camping experience with tent and all. Many retailers which have just re-opened their physical stores are certainly hoping to see a boost in sales, REI is taking it a step further, for example, announcing a new partnership with West Elm to perhaps also target the growing number of ‘glampers’ out there.

Work from your vacation home

But if camping and RV-ing aren’t your thing - and let’s face it, it’s not for everyone - then vacation home rentals is another good alternative, especially for longer stay vacations. And since most of us are still working from home, who says we can’t work from a more scenic location? Airbnb, VRBO, Homeaway, and Flipkey are just a few of the popular peer-to-peer accommodation platforms out there that have plenty of supply from the dearth of activity during the height of the pandemic. And still seen as a safer option compared to hotels that have more public spaces that may be difficult to avoid. Sure, you’ll probably still want to wipe everything down when you get into your vacation home rental, but you also won’t have cleaning staff and public high touch areas to avoid.

Airlines and Cruises As of June 24, 2020, only 495K passengers entered through a TSA checkpoint compared to nearly 2.6M on the same day in 2019, and most airline stocks have fallen by 50% or more7. They have started flying a bit more of late, as people are becoming more comfortable with wearing masks while sitting on window/aisle seats with the middle seat empty, and so on. This 66% occupancy, it should be noted, is less than the 75% occupancy needed by most airlines to earn a profit. SouthWest Air, the largest airline by market cap, expects a 95% decline in revenue from one year ago. Also, just last week, anyone traveling to New York, New Jersey, or Connecticut from one of the states where the coronavirus is spiking will be required to quarantine for 14 days.


Cruise lines are faring much worse. They have temporarily suspended operations worldwide and altered future sailings for the foreseeable future. Last year, Carnival Cruises was the leader domestically with 41% market share ($19B revenue, $3.2B profit last year), followed by Royal Caribbean ($9.5B, $1.8B) and Norwegian ($5.8B, $955M). These profits will be massively lost this year.

Back to the good news! Yes, summer vacation this year is definitely not going to look like previous years, but that doesn’t mean it has to disappear completely. Even if you don’t want to leave your home, for those of us who are lucky enough to have a backyard, that could also be your own personal campground. So, get your graham crackers, chocolate, and marshmallows ready and have a great summer vacation…wherever it may be!


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