What awaits the travel industry as the world reopens? Allianz Partners, a world leader in insurance and assistance services, has looked at customers’ behaviour, changes in expectations, and the impact on travel insurance during a Travel Recovery Deep-Dive webinar attended by travel players.
2021 – A year of opportunities
Although COVID-19 has been the most wide-reaching travel crisis in history, the global economy is already back above pre-crisis output, as some markets have started to see gradual domestic travel recovery, showing positive signals.
The new emerging travel customer is increasingly cost conscious and a digital native, familiar with using digital solutions and technology. The new traveller is looking for flexibility as well as a seamless experience based on transparency and trust. Technology is also boosting travel confidence, with over 4 in 5 travellers saying that technology would increase their confidence to travel in the next 12 months.
STAYCATIONS ARE THE NEW NORMAL
With the UK restrictions being lifted at a different pace compared to other countries and government advice for travel abroad subject to change at short notice, staycations have catapulted to a whole new level, a trend that should remain solid as the world exits a four-year downturn in 2025. Millennials are leading this trend globally as well as in the UK, with 45% of Millennials taking two staycations in 2021, compared with 43% of GenZ and 31% of GenX. According to Allianz Partners’ Customer Lab research, Millennials are also becoming increasingly interested in travel insurance since the COVID-19 outbreak, with young Millennials who usually do not take out trip protection showing a 15% increase in intention to purchase an international travel insurance policy.
Another emerging trend reveals the search for privacy; experiences that offer privacy along with personalized services and high cleanliness standards are becoming the new luxury.
TRAVEL INSURANCE MAY BE A CONDITION OF ENTRY
The crisis has raised awareness and understanding of travel insurance. Amid the pandemic, the global travel insurance market, estimated at US$21.5 billion in 2020, is projected to reach $33.7 billion by 2027, growing at an annual rate of 6.7% between 2020 and 2027.
According to Allianz Partners’ data, the recovery of leisure travel bookings from its business partners is currently driving higher insurance purchases compared to 2019. The travel insurance market is outperforming the whole travel industry, not just in the UK, but also in North America and elsewhere in Europe.
As additional destinations open up to tourism, more countries are expected to require travel insurance for entry, which should influence the travel insurance conversion rate. Allianz Partners foresees conversion rates remaining elevated throughout 2021 and probably the most part of 2022, as the pandemic continues to be top of mind for people around the world.
“As the industry begins to recover, we are closely monitoring consumers’ preferences when it comes to travel and travel insurance to ensure that our products meet the requirements of our clients and customers. With many still uncertain, our protection solutions can offer peace of mind and reassurance as travellers set off on their holidays this summer,” comments Rachel Temperton, Head of Travel & Tourism at Allianz Partners UK.
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