THE IMPACT OF

ON CORE TRAVEL SECTORS ATA GLANCE

COVID-19

REPORTOVERVIEW

Several reports provide insights into the effect ofthe coronavirus on the tourism industry, advice onpricing, marketing and so on. This study attempts toexplain by providing a single narrative across themillions of available voices and different snippetsof data.

So there is a discussion on the situation in the UnitedStates, which is monitoring Asia and Europe, but whichis starting to show a significant rise in reports anddeaths, and we examine what sector performance inAsia and Europe may tell us about what the nationis going to achieve.

We are as uncertain as anyone about the future,but see signs that this might be a long way to recovery. However, we do believe that the industry willrecover.

We follow the timeline for the virus of COVID-19,which has spread as a basis for discussions centeredon some of the countries most affected so far, beginningwith China where the virus was born and then headingto Europe, which is the epicenter of this globalpandemic at the time of the writings.

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

Airlines are on the frontlines of media attention and youcan quickly see why. Borders and travel restrictions haveimpacted the industry. Whole airlines and airports shutdown operations before the situation improves andexperts expect the need for some financial assistance from virtually all airlines to cope with this crisis. If governments wonʼt intervene, CAPA predictsthat most airlines will bankrupt by theend of May.

On 28 January, the first decline occurred as airlinesstarted to cut flights to China. The capacity of flights fromChina to the rest of the world was that by 80 per centaccording to ForwardKeys. However, from 11 Marcha second and deeper wave occurred, when the United States declared its border closure forEU nationals.

In comparison with 2019, IATA predicts a loss inpassenger income of $252 billion, down 44% overthe year. The forecast assumes that limitations onthe border remain ongoing for up to three months and a slow economic recoverywill follow.

AIRLINES

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

70.000

1-Ja

n8-

Jan

15-Ja

n

22-Ja

n

29-Ja

n

5- Feb

12- F

eb

19- F

eb

26- F

eb

4- M

ar

11- M

ar

18- M

ar

25- M

ar

90.000

110.000No.

of fl

ight

s

Global Flights Per Day - 7 - Day Moving Average

130.000

150.000

170.000

190.000

Jan 28First flights toChina canelled

Mar 11U.S. announcesborder closurefor EU nationals

PLANYOURVACA-TION

As with airlines, travel agents and online travel agentsoften feel pressure, as the travelers stop and try to cancelbooked trips.

In the first quarter of 2020 Chinese Trip.com, owner ofCtrip, Skyscanner and Qunar travel brands, expectsrevenues to fall by up to 50%. It was attributed to aslowing of growth in late 2019, as outbound demandfrom China, which was already extremely strong forseveral years, started to slow.

Both Expedia Group and Booking Holdings, the twolargest online travel agencies outside China, have withdrawn their guidance in 2020 because their stockshave fallen in the face of the coronavirus uncertainty.

CEO Glenn Fogel revealed in a letter of 23 March forBooking Holdings that he and other executive teamMembers have neglected their pay, detailing further steps to minimize expenses, particularly in their marketingspending. He wrote: “This is not the first major disruptionto travel we have endured as a business, but the impactof COVID-19 is more than all the previous disruptions... combined.”

ONLINETRAVEL AGENCIES

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

Cuts in marketing spending on reservations may also flowthrough Google. Booking Holdings is known to be one ofthe biggest marketing customers of Google and weestimate that the search engine spends up to $3 billionon this. World Touris Forum Institute reports that thetravel industry will spend up to $16 billion on Google around the world and the effect of drying up advertisementrevenues for Google has already been seen.

For hotels running metasearch engines the cost per click(CPC) has decreased significantly. During the span ofthree days between 12 March and 15 March, CPCs onmeta search engines decreased by %40 and auctioningfor leading selections fell prices by %75, according toKoddi results.

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

Tourism is loading... Please Wait!

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

HOTELINDUSTRY

The situation for hotels differs slightly, since the impactof the hotels on the location, price segment and form ofaccommodation is different. Moreover, although someof the hotels need to be entirely closed, some arereserved for stranded travelers and workers, convertedinto homeless shelters, doubled as quarantine centersor are provided for use by healthcare staff.

This does not mean that the hotel industry has less impactthan the airlines on the coronavirus crisis; far from that.The data that are now beginning to appear showsignificant declines, particularly in the worst affectedcountries and cities, in occupancy and room rate nearlyeverywhere. Whereas, cancelations are through the roof.

Every sector, from the small hotelier to major globalchain operators, is hit by the crisis. Stocks and big hotelchains are in the firing line having crashed. In a videomessage recently for staff and shareholders, MarriottPresident and CEO Arne Sorenson said: “Covid-19 ishaving a more severe and sudden economicalimpact on our business than 9/11 and the 2009financial crisis combined. The worst quarter wehad in those earlier crises saw a roughly 25%decline in hotel revenues on average across theglobe. ... In most markets our businesses arealready running 75% below normal levels.” Thecorporation has been forced to furlough 10,000 employeesalong with other chains such as Hyatt

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

Taken along with revenues per room available (RevPAR), globalizedoccupancies have plummeted. Skift Research data by the revenue management company Atomize indicates a significant decrease inoccupancy since the beginning of March. Atomize Atomize covers aworldwide range but its product line is predominantly Europeans,which partially explains the rather late drop-off, however, asAlexander Edström, CEO of Atomize, explained during a recentwebinar in a further explanation, several hotel rooms have beenpre-paid without a cancelation clause.

-70%2- Jan 9- Jan 16- Jan 23- Jan 30- Jan 6- Feb 13- Feb 20- Feb 27- Feb 5- Mar 12- Mar 19- Mar 26- Mar

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

Share Price Growth of Largest Hotel Chains

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

Revenue per available room saw similar declines according to STR.Regional data indicate that in Asia-Pacific in February the effect ismainly felt. The effect on RevPAR results in major European cities is shown below. Europe and North America are currently in the center of the effect. STR said that the RevPAR results in the USA andCanada decreased by about %70 for the week ended March 21,which indicates that these regions now have maximum pandemicpressure.

0%

1- Jan

6- Jan

11- J

an

16- J

an

21- J

an

26- J

an

31- J

an

5- Fe

b

10- F

eb

15- F

eb

20- F

eb

25- F

eb

1- Mar

6- Mar

11- M

ar

16- M

ar

21- M

ar

26- M

ar

10%20%30%40%50%60%70%80%90%

Realized Occupancy for Atomize PortfolioJanuary - March 2020

Occ

upan

cy R

ate

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

According to data from 38,000 software propertiesobtained by HotelRunner, forward reservation values havehit, and reservations made during the week starting on16 March compared to the year 2019 would be down. It is nosurprise, because no one knows when it's safeto go out. March has been a write-off of both present andprospective bookings for Christmas holiday reservations.Whether lost profits at the moment can be recovered afterlimitations are lifted is unclear.

-100%

-75%

-50%

-25%

0%

RevPAR Change in Major European Cities28 Day up to March 22

-80%

-68%

Rome

Athens

Prague

Barcelona

Vienna

Brussels

Zurich

Paris

Amsterdam

Madrid

Copenhagen

Dublin

Stockholm

Berlin

London

Istanbul

-60% -59% -56% -55% -52% -50% -49% -48% -48% -47% -46% -44% -41%-32%

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

-63%

-91%-100%

-75%

-50%

-25%

-0%

Confirmed Gross Booking Value ChangeYoY % Change

Mar

-20

Apr-2

0

May

-20

Jun-

20

Jul-2

0

Aug-

20

Sep-

20

Oct

-20

Nov

-20

Dec

-20

-84% -84% -81%-75%

-49%

-14%

-15%

-29%

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

Sources: CAPA - Centre for Aviation

IATAKoddi - Advertising Technology for Travel

STR

WO

RLD

TO

URI

SM F

ORU

M IN

STU

TITE

111 Buckingham Palace Road, Victoria, Westminster, London,SW1W 0SR, United Kingdom

Centre Number: UK1611Landline : +442039953381

Registered in the United KingdomLicense Number 12383347

April 10, 2020