COVID-19 Impacts

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COVID-19 Impacts on Family Travel

After an exhaustive search through credible sources, it appears that there is insufficient information available concerning how COVID-19 is expected to impact family travel in the United States. However, one such area that could be severely impacted is the cruise industry, following recommendations from the CDC and State Department suggesting widespread cruise travel avoidance.

Precautionary Measures Taken by Theme Parks Amid COVID 19

  • In an interview, International Theme Park Services Inc's president Dennis Speigel said that theme parks and tourist attractions may endure "a lot of fumigation, disinfection, right now, not only in the front of the house, but the back of the house."
  • Disney officials are keeping extra hand sanitizes in its many hotel locations and four parks.
  • Disney is also educating its staff members about illness prevention and increasing their normal cleaning schedules due to COVID-19.
  • Theme park officials noted that they are receiving recommendations from the CDC and are implementing certain precautions to protect visitors.

Cruise Ship Travel Concerns

  • The CDC advised that all travelers avoid traveling by cruise ship to both domestic and international areas. According to the entity, "Cruise ship passengers are at increased risk of person-to-person spread of infectious diseases, including COVID-19." Illnesses can spread rapidly between individuals confined to close quarters on cruise ships, a fact that could scare many families away from traveling on the vessels.
  • Moreover, the U.S. State Department advised the same precautions concerning cruise vacations, recommending that citizens and families with plans in place to board cruise ships contact the cruise line agency they are booked with and obtain additional details. There is also the concern that efforts may be taken by the U.S. government to restrict cruising.
  • Recently, around 329 Americans had to be evacuated from the Diamond Princess that has remained in quarantine since February 4, 2019. The Americans themselves were later subjected to a quarantine at Lackland Air Force Base (San Antonio, California) and Travis Air Reserve Base (Southern California).
  • The CDC also states that older travelers, particularly those suffering from underlying ailments, should bypass crowded areas, including cruise ships and long flights on planes, which could hinder their ability to take part in certain trips with their families.
  • Many major U.S. and global cruise lines are already feeling the effect of the pandemic, as their stocks have fallen over 50% since mid-January. Another potential concern are the occupations associated with the U.S. cruise industry, with more than 300,000 positions in South Florida.

Travel Industry Insights

  • As of March 2020, no travel restrictions have been implemented for the United States amid the coronavirus outbreak. However, advisories have been issued for international travel, which has harmed the travel plans of several people.
  • According to the U.S. Travel Association, there will be a 6% reduction in international tourists traveling to the U.S. from March to June (next three months) due to the coronavirus.
  • The U.S. Travel Association is in consultation with authorities representing the CDC, White House, Health and Human Services, and others at the nation's airports about the ongoing situations developing in the travel sector because of COVID-19.
  • Safe Harbors Business Travel's (Maryland) president Jay Ellenby, who also an ASTA board chairman, claimed that his travel company's sales have been reduced by about 20% from 2019, while international travel has decreased by around 37% as a result of the coronavirus.

Research Strategy:

During our research, we were unable to locate detailed insights surrounding how COVID-19 is expected to impact family travel in the United States. Below is an overview of the research strategy we employed to find this information.

Our research began by searching for information on travel industry association sites like the U.S. Travel Association, USTOA, Hospitality Net, among others. With this strategy, we found information on the emergency preparedness of COVID-19, among other topics, but there was no information on the possible impact on family travel in the United States. We believed this strategy would work as these sites serve as advocate components of the travel industry and could have published information surrounding how COVID-19 is expected to impact family travel in the country.

Next, we searched for articles on travel-related sites such as Travel Weekly, Travel and Leisure, Trip Advisor, US Travel Online, etc. This strategy did not yield the results we were seeking as there was no information available on the expected to impact family travel because of COVID-19. Instead, we found information on threats to travel agencies, how travel agencies are responding to the coronavirus, etc. We believed this strategy would work as these sites tend to publish detailed reports and articles on travel industry guides and could have published relevant information.

Finally, we looked for interviews from executives and owners of theme parks, family resorts, amusement parks, etc. in the United States. We wanted to see if any of the executives of theme parks like Disneyland, Six Flags, etc. have mentioned how the outbreak has impacted family travelers attending their theme parks. The idea here was to use such comments to present as related insights. We came across interviews on sites such as Syracuse, the LA Times, among others. However, there was no relevant information available. At most, we merely located information on the precautionary measures taken by theme parks and resorts amid COVID-19.

Since the COVID-19 outbreak is relatively new, travel industry associations, experts, executives of theme parks, etc. have yet to ascertain how it could impact family travel.
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COVID-19 Impacts on Advertising

Insights surrounding the impact of COVID-19 on the advertising industry in the U.S. include the expectation that experiential advertising will decline, the projection that radio and out-of-home advertising may decline, the prediction that television advertising will climb, the imposition of travel restrictions for advertising agencies, and the belief that advertising spend may not actually decrease at all, but instead will be delayed for later in the year.

Experiential Advertising Will Decline

  • Large events that are ideal channels for experiential advertising have already been canceled due to the COVID-19 threat, including South by Southwest, Facebook's F8 Developer Congress, and Mobile World Conference.
  • Many companies have already invested advertising dollars into these events and are now faced with losing that money.
  • Additionally, the threat of cancellations is causing more companies to choose not to attend large-scale events in case they can't get a refund or credit.
  • Experiential advertising often involves close contact with hundreds and even thousands of people, which seems "ill-advised under such rapidly evolving circumstances.
  • Advertising companies will need to figure out how to turn planned experiential events into other types of branded content.
  • An example of this is the advertising company, Fake Love, which is "proactively thinking about how [its] approach to branded experiences may need to evolve in the short term... more specifically, how physical activations could be experienced virtually and then shared virally."
  • Another advertising company, Optimist, which has clients in Asia, is already proactively considering how to replace experiences and productions. However, Optimist is also "working to ensure it doesn’t bear the financial brunt of a brand putting the brakes on projects."

Radio and Out-of-Home Advertising Could Decline

  • Experts predict that long-term restrictions on large gatherings and travel could decrease out-of-home (OOH) and radio advertising spend.
  • The reason for these decreases lies in the fact that people will be less likely to visit movie theaters, restaurants, and sporting events where OOH advertising is abundant. Moreover, they won't be driving as much, which will impact radio advertising.
  • Radio and billboard advertising will further decline if companies allow their employees to work remotely rather than have them drive into the office.
  • Digital advertising may also see a decline because it's easier to cancel those campaigns than it is with other channels.
  • Companies that may be decreasing their advertising spend in these channels include consumer packaged goods (CPG) companies, especially if they are experiencing "inventory issues due to constraints on the supply chain."
  • Analysts at Wells Fargo believe that "big-box players like Target and Walmart could be the first to experience out-of-stock issues, as they are more heavily dependent on a shorter-lead-time replenishment model," so companies like these would likely also be the first to cut back on advertising spend as well.
  • Proctor & Gamble and Unilever, two of the largest CPG companies in the world, have already "made cuts to sales forecasts for the year," which will likely translate to cuts in advertising budgets.

Television Advertising Will Climb

  • As more people choose to stay home instead of venturing out where COVID-19 may be a risk, television is expected to become an important advertising vehicle.
  • Ad sales experts predict that although it is early, "a ratings increase between the 2020 elections and coronavirus coverage should translate to an increase in ad revenue."
  • The only real downturn in television ad spending is from travel-related companies that are scaling back their investments
  • However, Nielsen believes that the actual impact of COVID-19 may be difficult to measure because viewership is fragmented among live, delayed, VOD and streaming options.
  • According to Steve Nason, a research director at Parks Associate, though, "any time people are at home, there’s a chance their video consumption is going to go up," which should also translate to higher television advertising spend.
  • Additionally, companies continue to buy television advertising space for the 2020 Summer Olympics, with NBCUniversal surpassing "$1.25 billion in ad sales, a new Olympics record."
  • Digiday also noted that it's much harder for advertisers to cut back on television ad spending because they have to pay for it many months in advance to reserve their spots.
  • Other advertising channels that could see increases as more people stay home include mobile gaming and streaming.
  • Companies that may boost their advertising spend include food delivery services like GrubHub and Uber Eats, since more people may be willing to pay for these services if they don't want to risk leaving their homes.

Advertising Agency Travel

  • Amid travel restrictions put in place due to the threat of COVID-19, advertising agencies have been forced to find alternative methods of communication with agency offices and clients.
  • Agencies are finding creative ways to solve travel issues, including one company that replaced a U.S. creative leader who couldn't travel with a "peer from the network’s local office, creating an opportunity for a collaboration that otherwise might never have happened."
  • Other staff members are choosing to hold digital discussions or video conferences rather than in-person meetings.
  • Agencies with cloud functionality can also elect to have their employees work remotely, minimizing contact and lowering the risk of contracting COVID-19.
  • In fact, AdWeek suggested that "the current outbreak could... encourage companies to take better advantage of remote working tools and video conferencing rather than putting so much effort into office staffing and global in-person gatherings."
  • Examples of advertising agencies that are encouraging remote work and have put in travel restrictions for its employees include WPP, IPG, and Omnicom.

Advertising Spend May be Delayed, but Not Decreased

  • Advertising industry experts predict that the amount spent on advertising overall for 2020 will likely not change, but will be displaced and "reallocated for later in the year."
  • For instance, The World Advertising Research Center stated in its report, "a slowdown in economic output as a result of the virus will not necessarily translate into reduced advertising investment."
  • Digiday agrees, saying: "advertisers are more likely to postpone campaigns and run the ads later in the year. This way, the media owner gets to keep the investment and the advertiser avoids a fine."
  • However, these predictions are based on the expectation that major global events like the Olympics are not canceled.
  • An example of a company that is delaying its advertising campaign is Gap, which "in the midst of a global media review involving at least two holding company-owned agencies when the process was put on pause March 6 due to mounting concerns over the coronavirus pandemic."
Sources
Sources