In the age of COVID-19, the word ‘travel’ tends to only apply to trips to the store for basic needs or walking from the bed to the couch and back. With almost the entire globe shut down, businesses that took years to build were brought to a standstill in just weeks.
The sudden stop in commerce hit the tourism industry particularly severely. Sonder, a San Francisco based hospitality firm that manages and leases short term property, saw bookings plummet and cancellations soar.
“This is the most dramatic drop of travel demand that we've seen in history,” said Sonder CEO Francis Davidson. “It's the most sudden peak to trough, the biggest drop that we've seen ever.” The company recently laid off 22 percent of their staff, furloughed other employees, instituted salary cuts, and renegotiated contracts with property owners.
How much do you need to save? See how to accurately calculate a plan to fit your needs.
Kam Bain, director of strategy for analytics firm Beyond Pricing, looked at over 175,000 anonymous U.S. short term rental listings and noted that from the end of February to the end of March, popular U.S. travel destinations like Chicago and Austin saw reservations fall roughly 80 percent. Bain told FOX Business that with so much lingering uncertainty, today’s travelers are almost exclusively booking same-day reservations.
New bans on short term rentals by local governments aimed at stopping the spread of coronavirus adversely impact companies like Marriott, which furloughed tens of thousands of employees, or Airbnb, which slashed executive pay and raised another $1 billion in debt and equity to counter the loss in revenue.
|MAR||MARRIOTT INTERNATIONAL INC.||81.31||-1.22||-1.48%|
“This is really an existential threat to a lot of companies in this space. And so it's been critical for us to move extremely, extremely rapidly,” said Davidson. Like Airbnb, Sonder recently shifted towards longer-term rentals to earn as much as possible during the pandemic.
Though optimistic business will pick up in the coming months. Davidson remained conservative about the future outlook. “We are preparing that it will take years to get back to the 2019 levels. And we accept that reality.”