3 Signs Coronavirus Fears Are Driving A Major Falloff in Domestic Travel

Many years ago when you’d open a checking account the bank would give you a free toaster. During the financial crisis and Great Recession if you bought a new toaster you’d get a free bank.

From the carnage in the markets over the last week it certainly feels like we’re approaching that territory even if the Federal Reserve Bank of Atlanta’s GDPNow forecast is for 2.6% growth during the first quarter (though that’s down 10 basis points from a day prior). In fairness of course that’s the upper end of forecasts.

As hard hit as the market is overall travel companies are bearing an especially heavy brunt from reduced demand and the expectation that things will get even worse. Airlines haven’t just cut China and Hong Kong flights. United is reducing capacity to Tokyo, Seoul, Osaka, Taipei and Singapore. That’s not because of fear of coronavirus, but because of passengers’ fear of coronavirus causing them not to buy travel.

What’s most striking I think, though, is the extent to which even domestic travel is already scaling back. Allow me to make three observations.

  1. Alaska Airlines and JetBlue are waiving change fees to get people to commit to buying tickets. These are primarily domestic operators plus travel to the Caribbean and Latin America. They do not fly to China, South Korea, Italy or any region that’s already broadly affected by coronavirus.

  2. U.S. hotel occupancy was down for the week ending February 22. No doubt things will be worse when they report for this week.

  3. The sharpest decline in hotel occupancy was airport hotels. However the decline was steepest not in the busiest airports (that are seeing a decline in Chinese arrivals and Asia departure) but at airports that are not among the 10 busiest. That would seem to be more about domestic travel being down.

    Of note, U.S. airport hotels reported a 4.8% decrease in occupancy for the week, which was the steepest decline among all location types tracked by STR. The decline was steeper in airport markets outside of the country’s 10 busiest.

Oddly the Seattle, New Orleans and Oahu markets performed well while the biggest bloodbaths were San Francisco/San Mateo (revenue per available room down 22% and occupancy down 11%); Houston average daily rates down 8%; and Minneapolis occupancy down 9%.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Pingbacks

Comments

  1. Lol calling San Francisco a bloodbath. They’ve been bleeding corporate expense accounts dry for the last 10 years….I’d call it “reversion to the mean”.

    I booked a Hilton property in Silicon Valley on a weekday for under $120 a night. I’m not complaining.

  2. Logical
    One is the reasons airport hotel occupancy is down is the risk from infected transit passengers that overnight there. Too hard to back track so folks are avoiding commuter disease transmission by avoiding layovers, especially at flight crew hotels. (when was the last time you heard a hotel was disinfected?)

  3. Gary, I stayed in the Four Points SFO last night, and on check-in was told “no upgrade for you, because we’re full tonight.” (I’m Titanium Elite.). Just one datapoint. But still, so much for the SFO occupancy bloodbath. —-Rob

  4. Well when the wh chief’s if staff response to the question about the virus is to tell folks not to watch news reports and Fox News playing games on prime time while cnn and msnbc are finally starting to get the info out there and the administration basically has no plan to deal with it here in the US folks are scared to travel and possibly end up quarantined somewhere or unable to fly home etc, who can blame them? On the bright side, if you’ve got cash it’s a great time to buy quality stock cheap.
    As Buffet says “Be greedy when others are fearful and be fearful when others are greedy”

  5. Given that most Americans have extremely limited paid sick leave benefits and that many people who work can’t really afford to be off from work sick and unpaid/more poorly paid than usual, it’s not really all that surprising that American individuals may be more cautious than some others — and this is even before the US has any reported massive breakout of this Wuhan virus. What will be interesting to see is how much the Wuhan coronavirus concerns change Scandinavian travel habits in the short-term, when these countries have a much higher proportion of people who can afford to be off from paid work for two weeks or so than is the case in the US for the average person living paycheck to paycheck or is the average flying stiff.

  6. Due to toilet paper hoarding in Hawaii, I expect a mandatory toilet paper surcharge to soon be added to guest bills in addition to the resort and parking fees at Hilton, Marriott and InterContinental Hotels Group (IHG) properties. My travel tip: If you need an emergency supply of paper, at the business center of many hotels, a few sheets of paper can usually be found stored in the computer printer. In the Aloha Spirit of sharing, please refrain from taking home extra toilet paper from the aircraft lavatory. Read more: https://www.khon2.com/local-news/worries-over-panic-buying-arise-as-some-supply-shelves-at-stores-empty-out/

  7. @SE Rob – All the Marriotts now tell you they have no upgrades for Elites even when they are half full. You are being Bonvoyed!!

  8. Sign #4: Doug Parker, American Airlines CEO, announces that AA is waiting to see how Delta handles the virus. Meanwhile, AA will be releasing a new video explaining why cramming more seats into a plane improves passenger health.

  9. SE_Rob,

    Offer the front desk staff that since their occupancy is so high at the moment you will do them a favor as a valued long term elite customer and cancel your reservation on the spot so they have adequate rooms available for their important customers. Let them know you will help them out and never come back to the property. Then go to the nearest Hyatt where they care about their elites.

  10. @Penny – I hadn’t checked in on CNN and MSNBC for awhile. Great to hear they finally quit slobbering over Michael Avenatti’s nascent presidential run long enough to get serious about COVID-19!

  11. @SE Rob

    Look online to see what rooms are acIlAble just before you check in and if they say no upgrade correct them that they in fact show available suites for sale

  12. I’m waiting for all the great sales and other promotions by the airlines and hotels to get people traveling again. People are so paranoid and over react. Frankly, I could care less and this doesn’t change my behavior at all. I’m retired and have a number of domestic trips booked already (including 2 to Las Vegas where I’ll definitely be around a lot of people), a trip on Singapore Air in 2 weeks to Frankfurt and a 2+ week family trip to Italy (along w a cruise) in August. BTW, given the make up of this virus and its similarity to others in the same family it will almost certainly die out when temperatures warm up so April/May should put an end to it.

    Also, even if I get the virus the vast majority of people are no sicker than the flu (many less impacted). No major health issues so not sweating but PLEASE go ahead and wear your facemasks (that don’t do anything but make you look stupid and lock in your own germs) and avoid travel. I’ll enjoy it not being as crowded.

  13. @Penny: I think you’ve mistaken one week of AI computer-driven declines for people being fearful to own stocks.

  14. I leave for Europe on Sat. Can’t wait! I am so happy places will not be crowded. And no Mainland Chinese picking their noses in public!

Leave a Reply

Your email address will not be published.