Winter is here

For anybody who is, or has been a tour guide, it's like when a tour gets off to a bad start, and there's just a really bad atmosphere. You're looking for some signs of life, one or two characters to help spark some energy, which will then hopefully spread to everybody else.... Its pretty quiet right now. After so many false hopes and false starts, a lot of people need to see it to believe it this time. From all sides of the industry, its just a lot of deadlock - resellers are struggling to find operators and markets to sell, and operators are find it really difficult to plan for some unknown future date where things might start to look normal. Nobody knows who is left. Nobody has their contacts that were around in 2019 (Magpie has an upcoming campaign to solve this problem). Its like the quiet after the storm.

As always, there are exceptions. 

Actual success stories. Anybody with any kind of small boat (or other watercraft), apparently is having some of the best days ever. I wish we heard more stories from those doing well, whether through luck, or through good strategy / marketing / product modifications. Anything others can take lessons from, I believe would be well received. Maybe there's a degree of survivors guilt from those who have lucked into a positive environment - and it feels better to keep a low profile. Maybe they don’t want to draw attention from potential competitors?

Mis-use of statistics. There are also plenty of examples of horrific manipulation of data, which if you only glance through (as almost everybody does), give you a very false impression.

“Our % of revenue from locals is up 40% over 2019”

“Our Q3 2020 was up 437% over Q2”

Mostly there’s a reason people post things like that; for marketing purposes or for current or potential shareholders (in which case, fair enough, if it serves a purpose). Sometimes it's just because the person posting it doesn’t know its junk. My point here is to take most of these stats with a grain of salt - don't compare your own stats with them. 

The bad news, clearly, is that the short term is bleak. It always was though. We were told from early on to expect multiple waves, especially in the winter, although I’m not sure anybody told us there’d be 4 or 5. A couple of times there, the USA was being out-waved by the Europeans. But as always, the USA will have the biggest and the best waves. My birth country (UK) and my residence country (USA) are arguably last and second last in terms of dealing with the pandemic. Whatever happens next is too late for too many people.

As bad as it is right now, it's the 4th quarter (that's towards the end of the second half, for those civilized people). Even with the new variants, the vaccines will start to catch up, and the finish line is in sight - at least for some parts of the world (North America and Europe)

Some reasons to be optimistic for the Travel Industry:

Over-negativity

For a variety of reasons, the majority of people are too pessimistic - their perception of the world is more negative than the reality. There’s a great book called Factfulness which goes into this, and some great TED talks.

So probability says that the general state of play is actually better than YOU think it is. If you want to align yourself with reality - then increase your optimism about 20%. (I’m not sure if that's possible - it's probably really annoying to pessimists to read that. I don’t care.)

Vaccine News

Yes, there are frustrations with early production, and a little with distribution, but overall the vaccine news couldn’t be better. Even Bill Gates (who knows more about vaccines than anyone - almost) said in March it would be a minimum 12-18 months (To be fair, if he’d known they could combine stage 2 and 3 trials, I think he got it exactly right). 

Nobody expected multiple vaccines after just 9 months, nobody expected an efficacy of 95%, and nobody said we could produce billions in the first year. Who would have guessed - even the Sputnik V works!

Revenge shopping

This is real. Travel is the worst impacted sector in this pandemic. Some other sectors have been badly affected too, but the vast majority of the population have not been financially impacted, and have plenty of money to spend. They also WANT to spend money, and most importantly they want to spend money on leisure, and on companies that they know have suffered over the last 12 months.

Business travel

I don’t like this factor, because the decline of business travel is clearly not a positive for the industry as a whole. It is a benefit for the majority of Tours & Activities people, because those hotels are all about yield, they will have to find a way (it’s called discounting) to fill those rooms up with leisure travelers - a much more lucrative market.

Bloat.

It's an awful way to describe it - but I can attribute this term to Barry Diller (Expedia). I don’t think it needs much explanation. I doubt there was a mature company on the planet that didn’t have a large % of wastage, whether that be human resources or other costs. Unfortunately, a huge number of great people were let go at the same time. Ignoring what happened up to this point, and the impact of that on so many in this industry, at least the surviving companies will be efficient coming out of this. The more efficient they are, the quicker they can grow and start to hire back a lot of those great people (sorry, if you were part of the actual ‘bloat’).

Governments

As much as many complain, most western Governments have been spending very heavily. The US Government is about to borrow another $1.9T, with probably more to come after that. That's a chunk of change - and together with other huge spending by other major economies, it's too much to ONLY end up in Gamestop stock - it ends up in economies all over the world - it's a significant boost to the global economy.

Israel

All eyes right now should be on Israel. They’ve had some of the worst case numbers, but they are the clear leader in vaccines right now (over 60 per 100 people). What happens there should be an excellent indicator of what will happen in the UK and USA in March / April, and what will happen in Europe soon after that.

Tipping Point

There is a number. I don’t know what it is. My guess is 54.7%. The tipping point. Where all of the vulnerable (a decent western average is that age 65+ make up 75% of Covid deaths, and represent 15-25% of a population) are vaccinated, and the rest; the young and healthy + anti-vaxxers will go ahead with their lives much as they were doing before, along with some additional safety measures like masks. At that point, at least domestic travel should start to look better every day. International - it's a race against time for long-haul, at least for the summer season. For intra-Europe, which is critical for so many, we just need those Europeans to get their act together with jabs.

We’re cutting it very close in some places, but I think for most Northern hemispherers, we need that tipping point to hit by June to get a proper travel season. I’m very hopeful. If you raise your optimism level 20%, you’ll probably be hopeful too.

Next up is the state of travel distribution and OTAs in 2021 (its not good)