Travel spend in the US is gradually increasing. Small steps but encouraging signs of improvement

13 July, 2020

Since the beginning of Mar-2020, when the Covid-19 pandemic began in earnest, the US travel industry has suffered an estimated USD273 billion in cumulative losses according to an 8-Jul-2020 report by Tourism Economics for the US Travel Association. The good news however is that the national travel spend is on the increase, up +17% over last week to USD13.2 billion with the 4th of July holiday providing a large boost.

Now 31 states are reporting weekly losses of less than 40% for the first time since the pandemic began, although Washington DC and Hawaii are continuing to see declines of over 70%. Among the states showing the most improvement are Rhode Island, Michigan and Nabraska.

This increase means that travel spending has increased fivefold since the week ending 25-Apr-2020 which was when spending bottomed out in the country, with ten consecutive weeks of expansion. However that is still 44% below last year's levels for the same period.

CHART - Travel spending has increased fivefold since the week ending 25-Apr-2020 which was when spending bottomed out in the country, with ten consecutive weeks of expansionSource: Tourism Economics for US Travel Association

The travel spend for the full year is expected to fall 45%, with domestic dropping 40% and international inbound spending expected to be down 75%.

Passenger numbers, according to the number screened by the TSA, dropped to below 100,000 at the lowest point in Apr-2020, a drop of 96% year-on-year, but this past week has increased with a peak of 764,000 on 2-Jul-2020 as people got away for the Independence Day holiday weekend. However this is still 73% below 2019 levels but definitely an encouraging trend.

Road travel has gradually been increasing over the past few weeks. Two weeks ago it was just 1% down on pre-pandemic levels, but this week saw the level return to just below 2019 levels, presumably also boosted by the July holiday weekend. At the lowest point in Apr-2020 road travel was 73% below pre-pandemic levels and it has been rising at a steady rate, up to 12% above Feb-2020 levels last week.

According to a US Travel Association report, before the pandemic, the travel industry contributed USD2.6 trillion to the economy and supported 15.8 million jobs, 8.9 million directly. Travel was the second biggest export for the US with one in 10 employers in every state involved in the industry. Since the pandemic and up to Apr-2020 more than eight million jobs have been lost, which is 38% of all job losses in the US.

The US Travel Association predicts that the impact of the pandemic will be worse than the effects of 9/11 and the Great Depression: The year after 9/11 travel spend declined USD57 billion while this year the forecast is for a decline of some USD519 billion, or nine times that of 9/11.

The Association is calling on the government to take steps to help get the industry back on its feet. These steps are: extend and enhance CARES Act relief; incentivise a safe restart of the travel economy; support community-based economic recovery; provide limited, temporary and immediate safe harbour for businesses that follow proper health and safety guidelines to protect against Covid-19; strengthen the Federal role in Covid-19 testing, production, research and contact tracing; and provide a Federal backstop for pandemic risk insurance.