One need only walk into the lobby of the TWA Hotel at JFK Airport to be reminded of the Golden Age of air travel. This was a time when seats were delineated not by economy or economy plus, but rather smoking or non-smoking. Since that time, we have seen air travel transition from an experience in and of itself to a mere function of travel. And what may have been given up in terms of luxury, has been more than offset by access and affordability. U.S. air carriers now shuttle more passengers per month than they did in an entire year in the 1960s.
Many might attribute this shift to the airline industry’s focus on the business traveler at the expense of the leisure traveler. While it is true that corporate travel generates a significant percentage of an airline’s revenue and profitability, business travelers only account for 12 - 20 percent of passengers in any given year. The de-glamorization of air travel could be better explained by improved safety, operational efficiency, a maturing industry and increased consumer demand. But try explaining that to the passenger in 56B. And the pandemic did little to endear weary travelers seeking any loyalty status to avoid checked bag fees.
The economic impacts to the travel industry by COVID-19 have been well documented and its future broadly debated. There is little doubt that travel will return to pre-pandemic highs, which can be seen in surging passenger demand and increased ticket prices. Similar to previous black swan events, the recovery from industry disruptions have historically been driven by the leisure traveler with corporate travel signaling the return to normal. The question that remains to be answered is, will we see a return to normal or will the workplace impacts of the pandemic define a new normal? And more importantly, what does that mean for the extended services, such as parking, that are integral to the travel ecosystem?
Zoomy, Zoomy, Zoom.
For most of us, the jury is still out with regards to the permanence or sustainability of remote work. The list of companies that have adopted indefinite work-from-home (WFH) policies are almost exclusively technology companies. This workplace shift can probably be better explained by an extremely competitive market for engineers and developers than a corporate axiom for work life balance. For those that have not yet purchased commercial parcels in the Metaverse, the future points towards a hybrid model. Forbes predicts that 70 percent of the workforce will be working remotely at least five days per month. This may lead to the shrinkage of some organizational footprints and an uptick in urban flight, but not the end of the water cooler conversation as we know it.
The larger consequence of the pandemic, to be considered as travel service professionals, is the adoption of the virtual meeting. Be it, Zoom, Google, Teams or Webex, our calendars have become 30- and 60-minute blocks of digital digests patterned after the Brady Bunch credits. As the markets have discovered, a preponderance of originating, closing and servicing clients can be facilitated both effectively and efficiently through remote meetings. This may have profound impacts for the future of business travel. According to a Morning Consult survey, of the pre-pandemic business travelers who were asked when they next expect to take a business trip, 42 percent responded never.
Blended, not stirred
The near-term reality of the U.S. workplace can best be described as accommodative with flexible work arrangements. Aided by technology, this new-found worker mobility has manifested itself in the advent of the Workcation and Bleisure (business-leisure) traveler. “Blended” travel, or as Morning Consult purports, the new “business” travel, allows people to travel more often for longer periods of time.
Since people may no longer be tethered to a desk or corporate calendar, Southwest’s tagline - You Are Now Free to Move About the Country - takes on new meaning. Surveys by both Morning Consult and Trip Actions reinforce this sentiment with certain cohorts expecting to travel 3 - 4 times in 2022. This dynamic can provide a stabilizing effect to the travel industry and potentially more than offset any declines in corporate travel. But as a service provider to the industry, it is important to recognize that this is a consumer led (discretionary) initiative as opposed to a business requirement. You can’t put a price on freedom, but an expense account sure does help.
But Wait, What About Parking?
Parking has long been the proverbial “bookends” of travel. It is often quoted that, “parking is the first and last impression” of a trip. It is more apt to say that parking is both a factor in and derivative of the entire travel experience. With that in mind, here are some observations about airport parking in a post pandemic world:
Customer Reviews. No matter how high we set and execute against our stated service levels, extraneous factors such as flight delays, cancellations, and regulatory mandates, will influence our customers’ preference for our products and brands. To this point, our research indicates a wholesale downgrade of airport parking customer reviews by .50 - .75 stars over the past two years. While we have been challenged as an industry with reduced staffing and talent recruitment, this is more indicative of the volatility inherent in air travel during the pandemic.
Customer Expectations. Despite the prominent role parking plays in the travel experience, it is often treated as a commodity. While the majority of travelers will book and purchase airline tickets and hotel rooms weeks and months in advance, our research shows customers will generally book airport parking reservations less than 7 days in advance. Travelers assume and expect instant and accessible parking at any time.
Convenience vs Price. Many airports have continued to experience high occupancy rates in their short term lots even with the contraction of traditional business travelers. We believe this “convenience premium” can be attributed to residual fears of public spread and an aversion to shuttles and ride shares. As public immunity continues to increase, conventional market forces based on supply and demand will determine parking rates.
At this point in history, it is fairly easy to predict a robust recovery in the travel industry and the advent of another era, however that may be defined. But what may not be conventional wisdom is the recognition of the innovation and adaptation of the parking industry - the travel industry’s silent sherpa - that helps make this a reality.
Frank Pinero, President, On Air Parking can be reached at frank@noson.io
