Ongoing COVID-19 Concerns Prompted Travelers to Watch Their Wallets, Insure Their Trips During the Holiday Season
Travelers are taking a more cautious approach to their winter holiday bookings as financial and pandemic concerns percolate. Brands should be prepared for travelers to leverage unused loyalty program rewards and insure larger purchases in an effort to offset inflated travel costs, and to assume they can cancel and reschedule reservations.
As Americans prepare for the 2021 holiday travel season, many are expecting higher prices and less reliability for planned trips than in a typical year. With COVID-19 still a cause for caution, people are adjusting their holiday travel behaviors. Forty-five percent say they’ll limit their attendance at in-person events, and 41 percent say they’ll travel less this holiday season compared with pre-pandemic times.
Those expectations — combined with personal finance uncertainty, broader economic concerns and a new wave of discomfort over the omicron coronavirus variant — have resulted in consumers adopting more cautious and more fiscally responsible approaches to travel this holiday season.
Travelers are balancing higher expected spending with points and rewards redemptions
Some people will be spending big on travel: 13 percent of survey respondents expect to spend $500 or more on transportation, and 14 percent say the same about accommodation, with millennials and high earners anticipating the highest spending in both categories. But aside from some variation on the lower end of the scale, the share of consumers who say they will spend at every level between $100 and $500 is fairly evenly distributed.
Among those traveling, many are offsetting costs by leveraging points and rewards from loyalty programs. Forty-six percent expect to use points or rewards to help balance their budgets.
The number of travelers who expect to cover full or partial bookings with points or rewards is similar across all types of programs — individual airline and hotel rewards programs, travel booking company programs and credit card programs — at around 30 percent for each. Points are also easier to restore if travel plans change, a growing possibility due to the spread of the omicron variant.
This presents an opportunity for branded loyalty programs to reengage directly with would-be travelers who stayed put during the pandemic. Deal-focused travelers may be enticed not only by the savings associated with leveraging points, but also by the flexibility this affords them in the face of uncertainty. While it may seem like a tall order for brands struggling to recover from the pandemic, now is the time to set the foundation for future loyalty and long-term relationships with customers.
Almost half of holiday travelers have purchased or are considering purchasing insurance
Given the investment required for holiday travel and the ongoing uncertainties surrounding the pandemic, people want a safety net. Nearly 1 in 5 respondents has already purchased insurance, and a further 26 percent say they are considering doing so. These numbers are largely consistent with levels seen during the first wave of the pandemic in the summer of 2020.
As for types of coverage, travelers are most likely to insure airfare and hotel reservations — typically the most costly travel booking categories.
Having already experienced two sudden disruptions in the travel sector — once after the emergence of the coronavirus in early 2020, and again with the rise of the delta variant in summer 2021 — consumers by now are used to navigating the new normal.
But they are also growing tired of travel-related disappointments. And while it remains to be seen just how dangerous the omicron variant will be, its very existence may be enough to push those who were until recently open to travel back to the safety of their homes.
Until we know more about the impact of omicron, the best approach for travel brands will be to double down on customer service and provide flexibility wherever possible.
