Morning Brew - ☕️ Prepare for takeoff

Don't call it a comeback...
Morning Brew
The New Normal: Travel
Magic Spoon

Good Saturday morning. Did we catch you at home? Thought so. Memorial Day Weekend, typically one of the busiest travel periods in the U.S., is almost unrecognizable this year. Highways are open, airports are mostly empty...even the line at Seacrets in Ocean City isn't looking too bad. 

None of this is surprising to travel execs, who say the pandemic is the worst crisis the sector has ever faced. In this week’s edition of the Brew’s New Normal series, we explore the world of pandemic-era travel. Tl;dr: It may involve a lot more bubbles.

MARKETS

NASDAQ

9,014.56

+ 0.79%

S&P

2,863.70

+ 0.39%

DJIA

23,685.42

+ 0.25%

GOLD

1,754.20

+ 0.76%

10-YR

0.647%

+ 2.70 bps

OIL

29.76

+ 7.98%

*As of market close

  • Economic data: U.S. retail sales fell a record 16.4% in April as lockdown measures pummeled consumer spending. Clothing store sales fell 79% from March and even grocery purchases dropped 13%. Online sales grew 21.6% year-over-year.
  • More economic data: Industrial production declined 11.2% in April. That drop is—wait for it—a record.
  • Stimulus: The Democratic-controlled House passed a $3 trillion economic relief bill last night, but it's pretty much DOA in the Republican-controlled Senate. 

MARKETS

NASDAQ

9,324.59

+ 0.43%

S&P

2,955.45

+ 0.24%

DJIA

24,465.16

- 0.04%

GOLD

1,735.90

+ 0.81%

10-YR

0.661%

- 1.20 bps

OIL

33.61

- 0.91%

*As of market close

  • Jobs: No state has escaped the jobs crisis. Unemployment rates rose in all 50 states and D.C. in April, according to the Labor Department. 43 states reported their highest unemployment rates ever.
  • International: Hong Kong’s Hang Sang Index had its worst daily drop since 2015 following news that China would pass a bill giving it more control over Hong Kong. 
  • U.S. markets: Coming off a week of gains, the stock market will be closed on Monday to observe Memorial Day. 

LOCAL

When a State Park Is As Exciting As the Alps

Lakeside chilling

Richard Bord/Getty Images

In the world of travel, the coronavirus pandemic has set us back 700 years. Leaving our little village now feels like seeing the world for the first time—WOW, did you know about that Walgreens on Route 9? Incredible! And what’s with these strange-looking people from the town over? They have short hair!

As lockdowns ease, our radius of travel will widen, but it will remain much tighter than before. Here’s why regional travel will be popular in our “new normal.” 

  • Travelers may perceive it to be a safer alternative to long-distance travel.
  • It’s cheaper (U.S. unemployment sits at 14.7%).
  • Traveling internationally will be a logistical nightmare. Why go to Paris, France, when you’ve got Paris, TX? 

In fact, regional travel is already starting to pop up around the world in pockets known as “travel bubbles.” These bubbles form when adjacent countries call each other up, say “hey neighbor, looks like we’ve got this virus thing under control,” and open up borders to promote tourism and trade. 

  • On May 15, Estonia, Latvia, and Lithuania formed the first “travel bubble” of the coronavirus era. 
  • Australia and New Zealand have also floated the idea, but nothing has materialized yet.

Regional travel in the U.S.

Many analysts expect summer 2020 to herald the return of the Great American Road Trip, as travelers explore destinations closer to home in the comfort of their own cars. According to a GasBuddy survey

  • 36% of respondents are canceling trips that require flying, and 24% plan to make shorter trips by distance. 
  • 31% are planning to take a road trip (still down from 44% last year). 

Not to mention, gas prices around Memorial Day are the cheapest they’ve been in almost 20 years, AAA says.  

Bottom line: With your Machu Picchu trip replaced by Motel 6 hopping, all players in the travel industry—from airlines to hotels to booking sites and more—will need to adapt to the increasing popularity of more localized travel. 

        

AVIATION

Meet International Businessman Alex Lébrewman

Lego businessman

Giphy/Lego

Morning Brew’s CEO has urgent newsletter business to attend to in Hong Kong and doesn't feel like taking a boat to get there. This is what Alex’s international travel experience might look like:

Booking the flight: A little more expensive than Alex would’ve hoped. Prices have made a steady recovery since they hit rock bottom in March. 

Arriving at the airport: Thermal cameras determine whether he has an elevated body temperature. And there’s no wait at Starbucks? Huge.

Going through security: Airports are still struggling to find the balance between screening passengers more thoroughly but not creating huge lines. Alex steps up to a CLEAR biometric scanner to verify his digital ID and his health status. 

On the plane: Alex is instructed by the gate agent to don his mask. His seat is in the back row, so he gets to board first. 

Deplaning: Alex and the other passengers are instructed by flight attendants to deboard in small groups to maintain social distancing. Before clearing customs, Alex is required to download a contact tracking app.

Clearing customs: Once he makes it through immigration, Alex is herded onto a bus and transported to a makeshift facility where he is given a testing kit to use on himself. After a 7-hour wait, he’s told he tested negative and is cleared to go about his important newsletter business.

        

HOSPITALITY

Hotels or Home Rentals: Pick Your Poison

For the last decade, hoteliers have glared at Airbnb’s success like a dog leaving an unwelcome souvenir on their lawn. But COVID-19 doesn't care whether you’re the disruptor or the disrupted. 

Travel is resuming to a hospitality industry changed. Hotels are considering ending turndown service and ditching in-person check-in desks. Airbnb wants to focus more on part-time hosts and longer-term rentals for escaping city residents.

Who will win customers back in this new normal? Let’s break it down, Rory Gilmore-style. 

Hotels

  • Pros: More generous cancellation policies. Professional cleaning services. More consistency across locations. Marketing budgets.
  • Cons: Lobbies and elevators with more people bumping into each other. All of the fun perks (like bars, spas, pools) may be limited. 

Rentals

  • Pros: More units outside cities, which travelers may avoid. Fewer people sharing the building. Many offer self check-in. 
  • Cons: Variability in cleaning. For rented rooms, less privacy and social distancing. 

The new differentiator 

“Cleanliness and hygiene will be the new five-star restaurant or 800-thread-count sheets,” industry analyst Henry Harteveldt told the NYT. 

Airbnb has less hygiene standardization compared to a hotel chain with trained staff and industrial-grade cleaners. But it did introduce new cleaning protocols and will highlight hosts who comply. 

Bottom line: As was the case before the pandemic, there are tradeoffs to both hotels and short-term rentals. What may matter most is transparency around hygiene and flexibility in cancellations/refunds.

        

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Join us in the fantasy that is Magic Spoon’s magical cereal today. Don’t forget the code “BREW” at checkout for free shipping.

BUSINESS TRAVEL

Will Delta Sky Club Lounges Ever Fill Up Again?

Sperrys have become an endangered species at Scottsdale’s finest Hiltons. 92% of corporate travel managers say their employers have canceled or suspended all or most domestic travel, while sales for business travel booking service AmEx Global Business Travel reportedly fell 70% year-over-year in March. 

  • Most Fortune 500 CEOs said they don’t expect business travel to ever return to pre-pandemic levels.
  • And according to Sanofi's CEO, "the one-meeting trip will disappear forever." (It may never have been necessary in the first place.)

Then there's the growing WFH movement. Large tech companies including Facebook, Twitter, Spotify, and others have all signaled they'll allow a large chunk of their workforce to work from home...permanently. If these companies don't think it's worth it for employees to commute 30 min. to the office, why would they pay to fly in consultants from other cities?  

Still, not all business travel will disappear, especially at the highest rungs of the corporate ladder. You need to look someone in the eye when you propose a $100 billion takeover—you just might not shake their hand when you seal the deal.

Bottom line: Former Spirit Airlines CEO Ben Baldanza estimates business travel will permanently fall 5%–10% as a result of the coronavirus. 

        

VIRTUAL REALITY

Virtual Travel: Can’t Lose Your Bags If You Don’t Leave Home

So the pandemic has knocked out traditional travel. But it’s 2020—why actually go somewhere when you could metaverse-go somewhere?  

The value prop: Virtual reality (VR) travel advocates were touting its environmental benefits even before the pandemic. And now we’ve all seen those photos of Venice’s crystal-clear canals.

  • Some VR travel firms like Ascape are fielding growing interest in their products; Ascape's app downloads were up 60% over December, per NatGeo. 

But virtual reality can’t (yet) capture the real joys of travel

...like the taste of tiramisu, the smell of crisp Andean air, or the sensation of 32 strangers’ bodies huddled next to you on the Paris Métro. But VR can support the travel biz in other ways, like marketing and planning

  • Most of the fun of a trip is preparing the itinerary, anyway. And with a VR headset and software, you can better scope out where you’d be going.

Bottom line: VR hasn’t yet lived up to Oculus founder Palmer Luckey’s prediction that it will “change the world.” However, while the pandemic won't lead to all of us taking vacations in headsets, virtual experiences could eventually become a useful tool for travel companies.

        

AVIATION

Don't Call It a Comeback

flight

flightradar24

This week, the total number of flights tracked by Flightradar24 topped 100,000 for the first time since March 22. 

  • Yes, that dark blue line is 2020. 
        

WHAT ELSE IS BREWING

  • Antimalaria drugs hydroxychloroquine and chloroquine did not benefit patients with coronavirus, a new study concluded. They are instead linked to greater health risk. 
  • Alibaba’s e-commerce sales surged last quarter during the lockdowns. Cloud revenue also grew about 58%.
  • A Pakistani jet—an Airbus A320—crashed into a crowded neighborhood in the port city of Karachi yesterday. It was carrying 98 people.
  • Deere’s upbeat earnings signaled a recovery in the agricultural sector is underway.

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Weekend conversation starters...for all your virtual and socially distanced MDW celebrations:

*This is sponsored advertising content

SATURDAY HEADLINES

Some odd stories from Asia have made the trip from East to West recently. To test your news acumen we included three real headlines, and one not-so-real one. See if you can find the fake.

  1. "Hong Kong shop offers ‘tear gas' flavored ice cream"
  2. "China still committed to getting rid of ‘big, foreign, and weird’ place names"
  3. "'Darth Vader' enforces lockdown in Philippine village"
  4. "Surfers irate after Vietnam beach reopens for boogie boarders only"

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SATURDAY HEADLINES ANSWER

Boogie boarders and surfers should all get along peacefully.

              

Written by Neal Freyman, Jamie Wilde, Eliza Carter, Toby Howell, and Alex Hickey

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