The coronavirus pandemic has decimated the travel industry. Through business shutdowns and quarantining to limit the spread of the virus, air travel has dramatically declined as people stay home and push off family vacations and business trips. Millions of tourism and airline jobs have been lost as the industry awaits further government fiscal support. The International Air Transport Association estimated that it will be at least 2024 before air traffic reaches pre-pandemic levels.
“The recovery for travel is not going to be in quarters. It’s going to be in years,” said Booking Holdings (BKNG) CEO and President Glenn Fogel at Yahoo Finance’s All Markets Summit on Monday. Fogel oversees travel giant Booking as well as several other sites including Priceline.com, OpenTable, and Kayak.
In the second quarter, Booking Holdings experienced a loss of $376 million compared to adjusted earnings of $1.4 billion during the same period in 2019. Gross travel bookings plunged 91% in the second quarter of 2020, while revenue dropped 84%, and the company laid off roughly 4,000 employees globally.
Booking.com relies on a robust air travel industry which has been “traumatized,” Fogel wrote in a recent Yahoo Finance op-ed. According to recent TSA data, 983,745 travelers took to the skies on Oct. 25, compared to 2,478,287 on the same day a year ago.
The travel industry’s recovery will depend on three key players, Fogel said: pharmaceutical companies, the airline industry, and government.
Dealing with the public health crisis first is paramount. “We do read news about how more and more progress is being made on the vaccines which...is without doubt the most important thing in recovery for travel...the feeling that you can travel safely,” said Fogel. “So as soon as that comes around, I believe we will get recovery.”
The U.S. airline industry needs to maintain appropriate safety measures for passengers if it has any hopes of reigniting demand, Fogel said.
“Air in the plane, it’s really safe because of the amount of filtration that is done there. A lot of people don’t know that, but you’re pretty safe with that air in the plane,” said Fogel. “But it’s perception, and people...think, hey, I don’t want to get on a plane and have a lot of other people in this long tube. It’s unfortunate for the industry, but that’s how human beings are.”
Tax breaks for travel
In his recent op-ed, Fogel wrote, “We cannot let the fight against this virus become political.” America needs “a targeted program that makes it cheaper to travel, give [Americans] that incentive, that tax break to go travel,” he said.
He explained that government financial relief, in the form of tax credits and subsidies for consumers and businesses, would boost demand by making travel cheaper.
“Where the government can really help [is] by offering up tax credits or incentives to get people traveling. We’re doing that right now in Japan, for example, where the government in Japan is providing money to help stimulate travel. Thailand, same thing, doing that, and other parts of the world,” said Fogel.
Using tax credits as a means of stimulating the travel industry has found some support in Washington.
Sen. Catherine Cortez Masto (D-Nev.) and Sen. Kevin Cramer (R-N. Dak.) introduced the bipartisan Hospitality and Commerce Job Recovery Act on Oct. 15, which would provide tax credits for the cost of attending or hosting a business meeting, trade show, or convention, between Jan. 1, 2021 and Dec. 31, 2023.
The legislation would improve the employee retention tax credit, provide tax credits for restaurants bearing the costs of reopening, restore the entertainment business expense deduction, and offer Americans tax credits for domestic travel costs such as meals and hotel stays.
According to Masto, the legislation should be included as a part of Washington’s new coronavirus financial stimulus package.
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