How travel ad spending and revenue tumbled more than 60% in 2020, and why industry sees recovery on the horizon

Travel advertising plunged in 2020 as consumers locked down and business travel ground to a halt. There are hopeful signs for travel this year, including an increase in airline traffic and rising bookings at major theme parks. Stocks have rebounded as investors bet on a recovery in travel. A recovery in travel advertising and revenue will vary by company depending on sector, reliance on business vs. leisure and geographic exposure in U.S. and international markets. Worldwide ad spending for 23 travel companies analyzed by Ad Age Datacenter tumbled 60.2% in 2020. The drop in ad spending tracked closely with revenue, which sank 61.5%. Airlines, car rental, casinos, cruise lines, hotels, theme parks and travel services Worldwide ad spending and revenue for 23 travel companies. Dollars in millions. Ad spending Revenue Ad spending as percent of revenue 2020 2019 Percent change 2020 2019 Percent change 2020 2019 Total (sum of companies shown below1) $6,639 $16,688 -60.2% $121,433 $315,520 -61.5% 5.5% 5.3% Source: Ad Age Datacenter analysis of company filings. Numbers rounded. Select companies shown. 1. Figures on this row exclude Disney and Universal; see theme parks section. The U.S. Travel Association this week said travel spending fell 42% to $680 billion in 2020. That reflected a 70% drop in business travel spending and a 30% decline in leisure travel spending, the trade group said. Industry executives and analysts expect leisure travel to rebound first, with a slower recovery in business travel. A January 2021 analysis by consultancy McKinsey & Co. said: “History shows that, after a recession, business travel takes longer than leisure travel to bounce back. … Leisure travel is driven by the very human desire to explore and to enjoy, and that has not changed.” Prospects for business travel are up in the air. McKinsey’s report said: “During and after the pandemic … there is a question about business travel: Exactly when is it necessary? The answer is almost certain to be not as much as before. Video calls and collaboration tools that enable remote working, for example, could replace some onsite meetings and conferences. … The effective use of technology during the pandemic—and the economic constraints that many companies will face for years after it—could augur the beginning of a long-term structural change in business travel.” A travelogue of what’s up and (mostly) down by sector: Worldwide ad spending for the four biggest U.S.-based airlines—American Airlines Group, Delta Air Lines, Southwest Airlines Co., United Airlines Holdings—fell 51.0% in 2020 as revenue plummeted 62.9%. Airline traffic is growing again, but the industry still faces turbulence. The number of travelers passing through Transportation Security Administration checkpoints on March 12 reached 1.36 million, the highest count since the early days of the pandemic. But that’s little more than half the number of TSA screenings done on the same day two years ago (2.50 million), before COVID. The Dow Jones U.S. Airlines Index this week scored a 52-week high, but the index remains below its pre-pandemic level. Airlines are cautious. In a March 2021 investor presentation, American Airlines forecast a “non-linear recovery with an accelerating pace once we see widespread vaccination and government restrictions ease.” The airline expects domestic leisure travel to lead its recovery. Southwest, in its annual regulatory filing last month, said: “It is difficult to predict the timing of … a rebound, especially with respect to business travel.” Airlines Worldwide ad spending and revenue. Dollars in millions. Ad spending Revenue Ad spending as percent of revenue 2020 2019 Percent change 2020 2019 Percent change 2020 2019 American Airlines Group $50 $129 -61.2% $17,335 $45,761 -62.1% 0.3% 0.3% Delta Air Lines 119 288 -58.7 17,095 47,007 -63.6 0.7 0.6 Southwest Airlines Co.1 156 212 -26.4 9,048 22,428 -59.7 1.7 0.9 United Airlines Holdings 87 212 -59.0 15,355 43,259 -64.5 0.6 0.5 Total $412 $841 -51.0% $58,833 $158,455 -62.9% 0.7% 0.5% Source: Ad Age Datacenter analysis of company filings. Numbers rounded. Select companies shown. 1. Advertising and promotion. Avis Budget Group and Hertz Global Holdings slashed worldwide ad spending 62.2% last year as revenue skidded 43.7%. COVID sent Hertz over a cliff and into Chapter 11 bankruptcy last May. Hertz cut its U.S. staff by 41% to 17,000 people at year-end 2020 from 29,000 at year-end 2019. The company this month reached a deal, subject to bankruptcy court approval, to sell a majority stake (representing up to 100% of Hertz) to two investment firms, Knighthead Capital Management and Certares Opportunities. In a statement announcing the deal, Hertz President-CEO Paul Stone said: “We’ve been making excellent progress on our financial and operational initiatives and repositioning our business as we prepare for increased travel demand as the pandemic subsides.” A strong rebound for Hertz is tied to air travel. Hertz in 2019, before the pandemic, generated nearly two-thirds of its U.S. vehicle rental revenue from airport locations. Hertz airport rentals plunged in 2020, but the company’s non-airport business fared better. U.S. rental volume dropped 58% at airports and 30% at non-airport locations. Non-airport locations cater to leisure and business customers who want to rent closer to home or work, as well as rentals paid by insurance companies after an accident. Car rental Worldwide ad spending and revenue. Dollars in millions. Ad spending Revenue Ad spending as percent of revenue 2020 2019 Percent change 2020 2019 Percent change 2020 2019 Avis Budget Group $54 $121 -55.4% $5,402 $9,172 -41.1% 1.0% 1.3% Hertz Global Holdings 112 318 -64.8 5,258 9,779 -46.2 2.1 3.3 Total $166 $439 -62.2% $10,660 $18,951 -43.7% 1.6% 2.3% Source: Ad Age Datacenter analysis of company filings. Numbers rounded. Select companies shown. The house always wins. Except during COVID. The Las Vegas Strip shut down last March after Nevada suspended casino and non-essential operations. Casinos reopened at reduced capacity last June, but recovery has been slow. The number of people visiting Las Vegas fell 55.2% in 2020, according to the Las Vegas Convention and Visitors Authority. Convention attendance in Las Vegas last year tumbled 74.0%. The year-over-year visitor count for Las Vegas has improved over time as casinos reopened: Visitor volume fell 97.0% in April 2020 vs. a year earlier; visits in January 2021 were down 63.5% vs. a year earlier. Worldwide ad spending for three major casino operators—Las Vegas Sands Corp., MGM Resorts International, Wynn Resorts—dropped 58.3% in 2020, a bit less severe than the trio’s 67.3% decline in revenue. For casinos, the sands are shifting. Las Vegas Sands this month announced it is leaving Las Vegas, selling its prized Strip properties including the Venetian Resort to real estate investment trust Vici Properties and buyout firm Apollo Global Management. The deal came two months after the death of founder, chairman and CEO Sheldon Adelson. The sale will allow Sands to focus on its Macao (China) and Singapore operations, which last year accounted for about 80% of its net revenue. During the pandemic, casino operators have continued a push into online gaming. Caesars Entertainment last September signed a deal to buy William Hill, a U.K.-based betting and gambling company, in a move to expand Caesars’ sports betting and online gaming. The deal builds on an existing joint venture between the two companies. Last October, Wynn merged its U.S. online sports betting and gaming business with BetBull, a Europe-based digital sports betting operator, to form Wynn Interactive. “This transaction positions Wynn Resorts to capitalize on developing opportunities in digital and interactive sports betting and gaming throughout the U.S.,” Wynn said in its annual filing, “by combining Wynn Resorts’ nationally recognized brand with BetBull’s digital sports betting operational capabilities and technology.” Wynn Interactive, 72% owned by Wynn, operates WynnBet, a sports and casino betting app. MGM and joint venture partner Entain, a sports betting and gaming company based in the Isle of Man, are rolling out a U.S. online sports betting and gaming play, BetMGM. MGM expects BetMGM to be available in about 20 U.S. markets by year-end 2021 with access to about 40% of the U.S. adult population. BetMGM operations scored 2020 net revenue of $178 million, and BetMGM expects 2021 net revenue to more than double. A February 2021 MGM investor presentation said: “BetMGM also expects marketing expenditures to correspond with such acceleration in revenues.” To be sure, the big casino companies face growing competition from digital sports entertainment and gaming ventures such as DraftKings and Flutter Entertainment’s FanDuel Group. DraftKings’ worldwide ad spending nearly tripled to $430 million in 2020 from $152 million in 2019. That’s almost the reverse of Las Vegas Sands, MGM and Wynn, which last year cut their combined ad spending to $158 million from $379 million. Casinos Worldwide ad spending and revenue. Dollars in millions. Ad spending Revenue Ad spending as percent of revenue 2020 2019 Percent change 2020 2019 Percent change 2020 2019 Las Vegas Sands Corp. $42 $123 -65.9% $3,612 $13,739 -73.7% 1.2% 0.9% MGM Resorts International 88 195 -54.9 5,162 12,900 -60.0 1.7 1.5 Wynn Resorts 28 61 -53.8 2,096 6,611 -68.3 1.4 0.9 Total $158 $379 -58.3% $10,870 $33,250 -67.3% 1.5% 1.1% Source: Ad Age Datacenter analysis of company filings. Numbers rounded. Select companies shown. Cruise ships were swept by a titanic storm in 2020 as the industry went from sail to no sale. Worldwide ad spending for the top three cruise lines—Carnival Corp., Norwegian Cruise Line Holdings, Royal Caribbean Group—declined 51.6% in 2020 as revenue sank 76.2%. Short-term prospects are bleak. “We believe U.S. cruising will largely remain suspended through at least the first half of 2021, and other markets may experience additional delays in the resumption of operations,” S&P Global Ratings warned this month after it downgraded credit ratings for NCL Corp., part of Norwegian Cruise Line. “Until there is a clearer path toward the resumption of sailings, we believe [NCL’s] marketing spending will remain limited,” S&P said. S&P made similar comments last month in a downgrade of Royal Caribbean. In its earnings release last month, Norwegian Cruise Line noted “the shift of limited marketing investments to 2022 sailings,” a reflection of challenges the industry continues to face this year. “While still early in the booking cycle,” Norwegian Cruise Line said, “2022 booking trends are very positive, driven by strong pent up demand. The company is experiencing robust future demand across all brands.” Investors are betting on a return to the seas, with cruise line shares surging in 2021. Stocks, though, remain far below their pre-pandemic level. Cruise lines Worldwide ad spending and revenue. Dollars in millions. Ad spending Revenue Ad spending as percent of revenue 2020 2019 Percent change 2020 2019 Percent change 2020 2019 Carnival Corp.1 $348 $728 -52.2% $5,595 $20,825 -73.1% 6.2% 3.5% Norwegian Cruise Line Holdings 217 401 -46.0 1,280 6,462 -80.2 16.9 6.2 Royal Caribbean Group 207 465 -55.5 2,209 10,951 -79.8 9.4 4.2 Total $772 $1,594 -51.6% $9,084 $38,238 -76.2% 8.5% 4.2% Source: Ad Age Datacenter analysis of company filings. Numbers rounded. Select companies shown. 1. Years ended Nov. 30. Selling expenses including advertising, marketing and promotion. The Dow Jones U.S. Hotels Index in February reached an all-time high, an indicator of investor optimism about recovery. Inns were on the outs last year. Worldwide spending for four major players—Choice Hotels International, InterContinental Hotels Group, Marriott International, Wyndham Hotels & Resorts—and lodging rival Airbnb dropped by 63.0% last year as revenue fell 45.1%. Near-term prospects are not so bright. “Hotels were one of the first industries affected by the pandemic after travel was forced to a virtual halt in early 2020, and it will be one of the last to recover,” the American Hotel & Lodging Association said in a January report on the state of the hotel industry. “Leisure travel is expected to return first, with consumers optimistic about national distribution of a vaccine and their ability to travel again this year,” the report said. “Business travel, which comprises the largest source of hotel revenue, remains nearly nonexistent, though it is expected to begin its slow return in the second half of the year,” the report said. The trade group doesn’t expect business travel revenue to return to 2019 levels until 2024. Marriott, the world’s largest hotel company, warned in its annual filing last month: “The spread of COVID-19 has constrained and continues to constrain the speed of recovery and will continue to have a dampening impact on demand. Demand is still being primarily driven by leisure travelers, and we have not seen meaningful demand return from business and group travelers.” Marriott’s filing said the company doesn’t expect “a significant rebound in travel and lodging demand until there is widespread distribution of effective vaccines.” Marriott’s brands include Marriott, Ritz-Carlton and Sheraton. Choice Hotels, franchisor of such chains as Comfort Inn and Econo Lodge, said in its annual filing last month: “Given the uncertainty as to the potential duration of the crisis, including a potential resurgence of the virus, and its severity, the company does not expect material improvement in the industry until there is a sense that the spread of the virus has been contained, shelter-in-place orders have been lifted, and economic forecasts begin to improve.” Choice added: “As the industry continues to recover, the company believes it will continue to benefit from the expected faster rebound of leisure demand as a result of its higher share of leisure travel mix relative to competitors.” Choice noted about 90% of its domestic hotels “are in suburban, small town and interstate locations and have experienced less severe occupancy declines related to COVID-19 than hotels in urban centers or resorts.” Hotels Worldwide ad spending and revenue. Dollars in millions. Ad spending Revenue Ad spending as percent of revenue 2020 2019 Percent change 2020 2019 Percent change 2020 2019 Airbnb1 $479 $1,140 -58.0% $3,378 $4,805 -29.7% 14.2% 23.7% Choice Hotels International 89 158 -44.1 774 1,115 -30.6 11.4 14.2 InterContinental Hotels Group2 109 461 -76.4 2,394 4,627 -48.3 4.6 10.0 Marriott International 276 851 -67.6 10,571 20,972 -49.6 2.6 4.1 Wyndham Hotels & Resorts 57 115 -50.4 1,300 2,053 -36.7 4.4 5.6 Total $1,009 $2,726 -63.0% $18,417 $33,572 -45.1% 5.5% 8.1% Source: Ad Age Datacenter analysis of company filings. Numbers rounded. Select companies shown.1. Brand and performance marketing.2. Marketing expenses. Ad spending for three U.S. theme park players—Cedar Fair, SeaWorld Entertainment, Six Flags Entertainment Corp.—tumbled 71.6% in 2020 as revenue crashed a stunning 77.8%. But that was last year. Theme parks stand to benefit from a general rebound in leisure travel, including day trips. How that plays out in ad spending is to be determined. SeaWorld noted in its annual filing last month that it had “eliminated substantially all advertising and marketing spend while the parks were closed and [was] strategically managing marketing spend as parks reopened.” “We continuously monitor factors impacting our attendance, making strategic marketing and sales adjustments as necessary,” SeaWorld said in the filing. Theme park stocks have been on a rollercoaster, but shares have surged this year in anticipation of recovery. SeaWorld’s shares this month reached an all-time high. A press release this month proclaimed: “All SeaWorld parks now open and operating with enhanced safety measures for the 2021 season.” Walt Disney Co., the biggest theme park operator, plans to reopen California’s Disneyland on April 30 with limited capacity. Disney’s Florida parks are open and showing good bookings, though they are operating at reduced capacity. Theme parks Worldwide ad spending and revenue. Dollars in millions. Ad spending Revenue Ad spending as percent of revenue 2020 2019 Percent change 2020 2019 Percent change 2020 2019 Cedar Fair $11 $68 -84.5% $182 $1,475 -87.7% 5.8% 4.6% SeaWorld Entertainment 48 138 -65.2 432 1,398 -69.1 11.1 9.9 Six Flags Entertainment Corp.1 20 70 -71.8 357 1,488 -76.0 5.5 4.7 Total $78 $276 -71.6% $970 $4,361 -77.8% 8.1% 6.3% Above table excludes Walt Disney Co. and Universal (Comcast Corp.) because the companies don’t break out ad spending for the Disney Parks, Experiences and Products segment and Comcast’s Theme Parks segment, respectively. Disney and Universal revenue shown below. Disney theme parks, hotels, cruise ships2 NA NA NA $8,296 $22,093 -62.4% NA NA Universal theme parks NA NA NA 1,846 5,933 -68.9 NA NA Source: Ad Age Datacenter analysis of company filings. Numbers rounded. Select companies shown.1. Advertising and promotion.2. Four quarters ended Jan. 2, 2021, and Dec. 28, 2019. Revenue from theme park admissions, Parks & Experiences merchandise, food and beverage, resorts and vacations, parks licensing and other. Worldwide spending for three online travel services—Booking Holdings, Expedia Group and smaller player Tripadvisor—cratered 61.2% in 2020 as revenue fell 56.1%. Travel services offer a cautious outlook for 2021, but bullish investors have no reservations. Shares in Booking (Booking.com, Priceline, Kayak) and Expedia (Expedia, Hotels.com, Vrbo) in recent weeks climbed to all-time highs. “The trends are generally good … going in the right direction,” Expedia Vice Chairman and CEO Peter Kern said last month on the company’s earnings call. “But I would caution everybody that we continue to expect it to be bumpy as this is a story of a thousand different geographies and a thousand different fact sets around the virus and, of course, vaccine rollouts, et cetera.” Kern said Expedia is investing money in longer-term brand marketing, particularly for its Vrbo brand. He said the company continues to be “relatively conservative” in spending on performance marketing tactics, which he views as “more of a quick twitch muscle.” “We are optimistic that when consumer confidence comes back, when people feel confident that the vaccine rollout is going well, that they will be able to travel,” Kern said. “We clearly see demand, and I think we’re just going to power through it. And when consumers are ready to travel, we’re going to be there.” Travel services Worldwide ad spending and revenue. Dollars in millions. Ad spending Revenue Ad spending as percent of revenue 2020 2019 Percent change 2020 2019 Percent change 2020 2019 Booking Holdings1 $2,179 $4,967 -56.1% $6,796 $15,066 -54.9% 32.1% 33.0% Expedia Group2 1,747 5,043 -65.4 5,199 12,067 -56.9 33.6 41.8 Tripadvisor 118 423 -72.1 604 1,560 -61.3 19.5 27.1 Total $4,044 $10,433 -61.2% $12,599 $28,693 -56.1% 32.1% 36.4% Source: Ad Age Datacenter analysis of company filings. Numbers rounded. Select companies shown.1. Marketing expenses.2. Selling and marketing expense (direct costs).

How travel ad spending and revenue tumbled more than 60% in 2020, and why industry sees recovery on the horizon

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