Is there a decline in travel interest because of the omicron variant?

The emergence of the omicron variant coincided with an inconvenient moment for travel: right at the start of the bustling winter holiday season.

It's understood that the variant might spread more easily than others and has multiple spike protein mutations that could reduce its effectiveness against COVID-19 vaccines. Additionally, there are indications that it could be more aggressive than previous variants. These elements contributed to its classification as a "variant of concern" — the highest level — by the World Health Organization.

In anticipation of a return to the situation seen in March 2020, countries around the globe implemented travel bans and restrictions, particularly targeting southern Africa, where the variant was first identified. The U.S., which has reported the variant in over a dozen states, prohibited non-citizen travelers from several African nations and introduced a new and somewhat perplexing COVID-19 testing requirement.

On a more optimistic note, the U.S.'s leading infectious disease expert indicated that omicron seems to be less severe compared to last summer's delta variant, and Pfizer announced that three doses of its vaccine have been shown to effectively "neutralize" this variant.

However, the groundwork of anxiety and concern may already be laid. Are travelers delaying their plans, even during the holiday season, because of the new variant? Here’s what the experts and available data reveal.

Is there a drop in travel interest due to the omicron variant?

If you check the social media accounts (or mentions) of any major airline or hotel, you might believe that the holiday travel season is off to a smooth start.

Alaska Airlines recently launched a buy one, get one free offer, while various major airlines are currently engaged in fare wars, with flights to sunny Florida available for $100 or even less. On the hotel side, several chains are moving forward with plans to extend elite status for loyal members into 2023 due to the ongoing pandemic. Moreover, Hyatt has just unveiled a new Bonus Journeys promotion, which is highly sought after by World of Hyatt members, offering 2,022 bonus points for every two qualifying nights stayed.

Given all these promotions and the buzz surrounding them, is travel demand truly decreasing, or are commentators, travel bloggers, and experts perhaps overreacting?

Here’s what we’ve gathered so far. A request for Cirium data revealed that airlines aren’t facing major schedule adjustments due to the variant. Airlines are hesitant to disclose whether travel demand has dropped, as the Department of Justice might interpret this as a signal, potentially breaching antitrust laws. Meanwhile, U.S. hotel occupancy for the week ending December 4 rose by nearly 2% from the prior week (which was 53.0%), according to research firm STR.

With a busy holiday travel season just around the corner, it appears that omicron won’t significantly affect holiday travel ... at least, not at this moment. A survey conducted by travel deals site Scott's Cheap Flights revealed that while travelers have concerns about omicron, these worries aren’t strong enough to lead them to cancel their trips.

According to Misty Belles, vice president of global public relations at Virtuoso (a luxury travel network), travelers have displayed no "typical" behavior during the pandemic.

"Everyone has their own risk tolerance, and this becomes apparent each time a new COVID variant appears, whether it’s delta or omicron," Belles shared with Dinogo via email. "Those who are more cautious tend to delay their travel plans. In contrast, those eager to travel are often less influenced by the news and are generally more adaptable to this new reality."

Belles observed that the majority of cancellations or postponements are related to destinations that have closed their borders due to the omicron variant. However, holiday travel that has already been booked largely remains intact. She also pointed out that "close-in bookings," or trips scheduled for the upcoming week, are more susceptible to disruption. This suggests that travelers prefer to solidify their plans (and confirm if their destination is open) rather than embark on spontaneous trips.

Tori Emerson Barnes, executive vice president at the U.S. Travel Association, reported that 45% of Americans have tentative holiday travel plans, an increase from 28% in 2020.

"Initial signs indicate that the omicron variant isn't significantly impacting holiday travel arrangements," Emerson Barnes stated to TPG, "but the public remains very much in a cautious mindset."

Despite U.S. airlines continuing to promote their holiday deals and schedules, there are hints that they are wary of the omicron variant's potential threat.

Scott Kirby, CEO of United Airlines, shared with the Financial Times his belief that "we'll see a reduction in flights to Europe compared to what we would have seen in January" because of the new variant. The U.S.-to-Europe travel route, which had just been reestablished following the U.S. reopening in November, is crucial for airlines ... a route they can't afford to lose.

In an interview with CNBC, Kirby remarked that his airline always anticipated the emergence of new COVID-19 variants and acknowledged that "recovery would never follow a straight path."

"We remain optimistic about the long term. Our outlook for the next 12 months hasn’t changed," he stated.

What was the outcome after the delta variant?

Joe Leader, CEO of the Airline Passenger Experience Association, noted that while airline demand in the U.S. has shown resilience, this doesn’t provide the complete picture.

"The global effects have varied significantly," Leader shared with TPG via email. He also pointed out that travel restrictions might be causing more harm than benefit.

"Countries that have enacted strict new regulations before fully understanding omicron are witnessing a sharp decline in air travel demand," Leader stated, noting that nations with high travel volumes, such as the United Kingdom, have experienced a drop in forward bookings of "around 40%."

Kirby told CNBC that the omicron variant "will undoubtedly have a short-term impact on bookings. ... We expect a temporary revenue dip, but it will be less severe than the drop we saw with delta."

There is some historical evidence suggesting we might see similar patterns with the new omicron variant, as data indicates that travel decreased slightly during the delta variant. The Wall Street Journal reported that online travel agencies like Priceline and Kayak saw fewer bookings last summer because of delta. Additionally, several airlines, including Southwest Airlines, raised concerns about the delta variant, indicating they "noted a slowdown in close-in bookings" in a filing with the Securities and Exchange Commission last August.

Last summer, YouGov conducted a survey on behalf of TPG with nearly 2,400 adults, revealing that many individuals—especially those fully vaccinated—felt less comfortable with certain activities amid the spread of the delta variant. Among those who traveled at least occasionally, half of fully vaccinated respondents reported feeling "less comfortable" taking domestic flights, while 53% felt less comfortable flying internationally.

Travelers were quick to halt their plans because of delta; however, we haven't seen a similar reaction with omicron yet.

In summary

In the end, it's still too early to determine how omicron will affect travelers and their attitudes, as it did with delta.

Some early data indicates that the omicron variant is not as severe as delta, although it is approximately twice as contagious as previous COVID-19 variants. Additionally, a larger percentage of the global population is now fully vaccinated against COVID-19, with over 55% of people being fully vaccinated.

These elements, coupled with the impending arrival of one of the busiest travel seasons, may not pose as significant a risk to the travel industry as delta did.