Adam Sacks

President

Tourism Economics

adam@tourismeconomics.com

March 2021

PLANNING FOR THE RECOVERY

Dismal but improving situation

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3/1 4/1 5/1 6/1 7/1 8/1 9/1 10/1 11/1 12/1 1/1 2/1

HospitalizedDeaths

US COVID Deaths and Hospitalizations

Deaths (7-day MA)

Hospitalized (right)

“It is said that the darkest hour of the

night comes just before the dawn.”

Thomas Fuller, 1608-1661

English churchman and historian

Died at age 53 of epidemic infectious disease

Penned within a travelogue of the Holy Land

The dawn is in sight

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January February March April May June

Vaccinations (doses)

Optimistic case (%)

Base case (%)

Pessimistic case (%)

US: Estimated vaccine distribution

Source: Oxford Economics/CDC

Millions of doses % of population vaccinated

Three snapshots of the US travel landscape

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Travel performanceYear-over-year % change

Source: TSA, Arrivalist, STR

Air pax (-64%)

Auto trips (- 7%)

Hotel room demand (-32%)

Travel confidence remains low

How will the economy influence the travel recovery?

After recovering about half of losses, jobs plateau

Unemployment rate still near recession peaks

7.1%

6.1%

9.0%

10.8%

7.8%

6.3%

10.0%

1960 1970 1980 1990 2000 2010 2020

0

2

4

6

8

10

12

14

16

Source: Oxford Economics/Haver Analytics

US: U3 unemployment rate%

Apr: 14.7%

Dec: 6.7%

Average of 7

prior recessions

Participation rate at its lowest since the 1970s

1949 1959 1969 1979 1989 1999 2009 2019

57

59

61

63

65

67

69

Source: Oxford Economics/Haver Analytics

US: Labor force participation rate

%

Lowest since 1977

Employment should pick up over spring/summer

Fed policy acting as wind in the sails

Large and rapid fiscal stimulus without precedent

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0 100 200 300 400 500

Since first reported US death from Covid-19 (Feb 28, 2020)

Since early signs of a financial crisis (Aug. 7th, 2007)

Source : Oxford Economics/CBO

US: Funds authorized by Congress

Trillions, $

$8bn: Preparedness bill$190bn: Stimulus bill

$2.4tn: CARES Act

$152bn: Stimulus bill$300 bn: Mortgage-guarantee bill

$700bn: TARP

$787bn: American Recovery and Reinvestment Act

(80 weeks after crisis began)

Days

$480bn: PPP & Healthcare Enhancement Act

$900bn: Covid relief bill

$1.9tn: American Rescue Plan* (proposed, not passed)

Policy upside risk shouldn’t be discounted

▪ Congress will likely pass, on a

bipartisan basis, additional

stimulus checks totaling $1,400/

person on top of the $600

checks passed at the end last

year.

▪ President Biden will attempt to

pass some of his spending and

tax proposals via the budget

reconciliation process requiring

only a simple majority.

❑ GDP lift of 0.7%

When will travel recover?

Assumptions: Baseline

• 2021 Q1

• Difficult start to year. Concerted efforts to get disease under control

• 2021 Q2-Q3

• Vaccination programs make a meaningful impact

• Leisure travel picks up headed into summer

• 2021 Q4

• Context for business travel and group events has normalized substantially.

• Group and business travel returns (but at 20%-30% below 2019 levels)

Will higher income households support recovery?

Households earning $100k+ account for 24% of households… but 59% of leisure spending on lodging

Unemployment rate (October):

• Bachelor’s or higher: 4.2%

• High school grad: 8.1%

40%

21%

14%13%

11%13% 14%

15%

20%

39%

Less than $40k $40k to $70k $70k to $100k $100k to $150k $150k andmore

Share of households Share of spending

Share of leisure lodging spending by

income

Note: Lodging spending is based on recent three-year average (2015 to 2018). Consumer

spending represents leisure trips. Pre-tax annual income, in thousands.

Source: BLS; Tourism Economics

A massive $1.6tn cash stash for households

Major reshuffling of the deck

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Domestic International

Domestic and international tripsIndex (2019=100)

Source: Tourism Economics

Domestic trips nearly back in 2022, international will take longer

Source: U.S. Travel Association, Tourism Economics

Leisure travel will fuel the recovery

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Business Leisure

Business and leisure tripsIndex (2019=100)

Note: Only domestic trips

Source: Tourism Economics

Leisure back to 2019 levels in 2022

Business nearly back in 2024

Source: U.S. Travel Association, Tourism Economics

Room demandQuarterly, relative to 2019

Source: STR; Tourism Economics

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-14%

-57%

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-13%

-7%-6%

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1% 1%

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Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2020 2021 2022 2023

2019 level

2023 Q3

The second half of the year will look very different

Strong recovery in

second half of 2021 to

demand levels about

15% below 2019.

Recovery after a pandemic: 14-17 months

400

500

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Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06

12 Month Average

Lost Arrivals

2003 SARS outbreak in Singapore International arrivals (thousands)

Source: Tourism Economics

17 months from crisis to recovery

1,472,000 lost arrivals

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Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06

12 Month Average

Lost Arrivals

2003 SARS outbreak in Hong Kong International arrivals (thousands)

Source: Tourism Economics

14 months from crisis to recovery

1,362,000 lost arrivals

80% of travellers indicate return within six months of virus containment according to recent IATA survey

Intentions to travel are already rising

How do we advocate for the industry during this

crisis?

Reminder: the travel sector was a leader of Oregon job growth

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OR L&H

OR

US

+32%

+16%

+21%

L&H employment in OregonIndex (2010=100)

Source: BLS

Industry in crisis: no sector has been hit as hard at travel

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9%

37%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Trade, transportation, and utilities

Professional & business services

Construction

Financial activities

Education & health services

Manufacturing

Mining & logging

Government

Information

Other services

Leisure & hospitality

Oregon employment loss by industry% of industry lost since February

Source: BLS

Travel must be our focus for an economic recovery

8%

17%

53%

0% 10% 20% 30% 40% 50% 60%

Mining & logging

Trade, transportation, and…

Construction

Information

Financial activities

Professional & business…

Other services

Education & health services

Manufacturing

Government

Leisure & hospitality

Share of total OR employment loss by industry% of all jobs lost since February

Source: BLS

Considerations for recovery

All indicators point to a strong leisure travel rebound This will drive a recovery in the labor market

Oregon’s domestic market mix is encouragingHigh shares of leisure and drive visitors will boost the recovery

Oregon’s international market mix is encouragingCanada and China will rebound faster than most other markets

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Will there be an enduring legacy of this crisis?

Gratitude.

Adam Sacks

President

Tourism Economics

adam@tourismeconomics.com

March 2021

THANK YOU!

Sources: Tourism Economics; STR

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Idaho

New York

Oregon

United States

Y/Y change Added for perspective of states recovering quickly and slowly

ScenarioVirus-related inhibitions on travel in the first

half of 2021Key economic indicators(forecast current as of January 24th, 2020)

Economic

dragVirus drag

Combined

impact to

travel

• Virus moderately contained, travel restrictions continue to

ease• National unemployment rate in Q4 2021 - 4.8%

Upside • Traveler risk aversion remains moderate to high through

2021• National GDP grows 7.3% in 2021

• GDP returns to 2019 Q4 level in 2021 Q2

• Virus contained in some regions, however many restrictions

and containment measures remain through 2021• National unemployment rate in Q4 2021 - 5.7%

Baseline • In some areas, groups permitted to meet with modifications,

but risk aversion reduces attendance• National GDP grows 4.2% in 2021

• GDP returns to 2019 Q4 level in 2021 Q3

• Virus not well contained, many restrictions and many

containment measures remain in place until the summer• National unemployment rate in Q4 2021 - 6.9%

Downside • Very limited group travel, greater risk aversion, many public

places closed/limited, restaurants more limited• National GDP grows 0.2% in 2021

• GDP returns to 2019 Q4 level in 2022 Q1

Sources: Tourism Economics; STR

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Sources: Tourism Economics; STR

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J F MAM J J A S ON D J F MAM J J A S ON D J F MAM J J A S ON D J F M

2020 2021 2022 2023

Upside

Baseline

Downside

Percent losses compared to 2019

Sources: Tourism Economics; STR

TLT revenue growth in three scenariosFY2019 FY2020 FY2021 FY2022 FY2023

Revenue (millions)

Upside $41.6 $40.3 $21.4 $31.0 $33.9

Baseline $41.6 $40.3 $21.1 $29.1 $32.5

Downside $41.6 $40.3 $20.9 $25.9 $29.6

Percent of FY2019

Upside -- 96.9% 51.5% 74.6% 81.7%

Baseline -- 96.9% 50.8% 70.0% 78.3%

Downside -- 96.9% 50.3% 62.4% 71.2%

Sources: Tourism Economics; STR; Oregon DoR

Sources: Tourism Economics; STR

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