New U.S. spending data suggests that some brands, such as Enterprise, Vrbo, and JetBlue, had a better first half of 2021 than their rivals. The travel industry as a whole should be grateful for the U.S. federal stimulus checks to consumers.
The pandemic restrictions that defined the U.S. travel sector during the pandemic are easing. Still, some travel brands are benefiting sooner than others — with federal stimulus checks helping to juice the rebound.
A case in point is United Airlines, which said in a filing on Tuesday that leisure fares for summer travel have surpassed 2019 levels on tickets issued since May. Leisure flight bookings thrived. United saw a higher average revenue generated from passengers — measured by the number of revenue passenger miles flown — versus the comparable period in 2019.
Across travel brands, U.S. spending and survey data in April showed a rebound in consumers’ willingness to book travel as the government sent its third and largest round of stimulus payments of the crisis.
For those who did get stimulus checks, travel spending increased 105 percent between the low in January to the peak in March, according to spending and survey data from market-research firm Cardify.
Cardify studied data from about 200,000 consumers who use mobile rewards platform Drop. The stimulus analysis was done using its anonymized credit and debit data by identifying a stimulus recipient based on a direct deposit made to debit accounts from the U.S. Treasury Department. About 100,000 of the consumers received a stimulus payment. The panel skewed younger than the U.S. average, and panelists had an average income of $60,000.
If you guessed that the best metric of resumed travel spending was a high rate of coronavirus vaccination in a local area, you would only be partly right. On the one hand, U.S. traveler confidence has been boosted nationwide as vaccinations cover more of the population. But the picture was more complicated beneath the surface.
States with higher vaccination rates have had populations more reluctant to return to travel on average. Visits to airports and hotels in more vaccinated states had recovered in April to only 52.7 percent of pre-pandemic levels, said Earnest Research, a data analyzer. That compared with a fuller recovery of 71 percent of pre-pandemic levels in states with lower vaccination rates. Differing regional attitudes toward evaluating pandemic risk are a possible explanation.
Car Rental Boom
A critical driver in a U.S. travel recovery has been the jump in household income, which rose 21.1 percent in March thanks to federal-stimulus checks and a strong labor market.
The car rental sector as a whole outpaced the lodging and airline sector in spending by consumers, according to Cardify.
Enterprise Rent-A-Car was the most-used traditional car rental company in the Cardify data. Enterprise’s broader footprint outside of urban areas and airports may have helped during the early months of this year as U.S. cities and airports remained under-trafficked.
Cardify measured gross bookings by dollar value, meaning, it looks for amounts that would show up on a credit or debit card statement at the time of payment rather than on the actual trip itself. So, some of the spending was for future trips rather than immediate travel.
Hertz has been the weakest performer among the major car rental brands, according to Cardify. The company has struggled to cope with bankruptcy-related issues.
Turo, the peer-to-peer marketplace for renting cars, did even better than Enterprise in spending. (Turo is likely to go public within the next year, as Skift has noted.)
“Looking at the average booking size since the beginning of last year, March this year had the highest prices we’ve seen, higher even than those seen in the peak summer months, and 30 percent to 80 percent higher than typical for this time of year,” said the Earnest Research report.
One factor benefiting car rentals has been higher pricing power, given that demand is exceeding supply.
“Having sold a larger portion of their fleets last year to generate cash, the lack of supply is now driving customer prices to record highs,” said Earnest Research.He
Lodging’s Winners and Losers
Expedia Group vacation rental booking brand Vrbo was the clear winner in travel accommodation. Consumers spent more than twice as much on Vrbo as they did on Airbnb in March, according to Cardify.
The data dovetails with other survey findings that Airbnb’s inventory skews toward urban areas that have been slower to recover than destination resort areas, which are more of Vrbo’s sweet spot. In 2019, Airbnb accounted for only 11 percent of the guest check-ins made at the 2,300 property management companies worldwide studied by Key Data. Airbnb has boosted its take to 20 percent recently. But it continues to mostly serve only lower-value rentals, which is why it is contributing only 13 percent to overall revenue for professional property managers.
Airbnb isn’t hurting, however. The online travel agency said it would have to add millions of new hosts to meet a demand from travelers for short-term rentals in its urban markets, CEO Brian Chesky told CNBC recently.
A relative laggard in hospitality appeared to be the largest U.S. chain, Marriott. Consumers only spent approximately 40 percent of what they were during pre-pandemic times on the brand in April, Cardify said.
Gradual Airline Recovery
JetBlue Airways may be leading the way out of the pandemic. In March, consumer spending on JetBlue reached 65 percent of what it was during January 2020, Cardify said. JetBlue has historically been strongest with leisure travelers, which have returned to booking travel faster than business travelers.
Some larger network carriers believe that time is on their side. Delta Air Lines said at the Wolfe Research conference on Tuesday that its sales recovery in premium cabins has recently outpaced sales of economy-class seats. For more airline executive commentary from the Wolfe Research conference, turn to Airline Weekly.
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Tags: airbnb, coronavirus recovery, data analytics, enterprise, jetblue airways, rental cars, Turo, united airlines, vrbo
Photo credit: An Enterprise Rent-A-Car location in Phoenix, Arizona. Enterprise