1. Comment
December 4, 2020

Virtual VFR will not contribute to Zoom’s long-term revenue gains

By GlobalData Travel & Tourism

Zoom has been described as one of the ‘winners’ during Covid-19, but as VFR (visiting friends and relatives) travel resurges post 2020, its success may be limited.

265 million international departures in 2019 were solely for VFR purposes and it was the second most common cause for travel other than leisure. GlobalData’s latest global Covid-19 recovery survey (4th – 8th November 2020) found that 96% of respondents were ‘extremely’, ‘slightly’ or ‘quite’ concerned about restrictions on socializing with friends and family, suggesting many are likely to seize an opportunity for a VFR trip as soon as it is possible to do so.

Zoom’s expansive growth has been primarily led by its corporate clients, as businesses worldwide have looked to remain in contact during stringent restrictions on all travel and a surge in remote working. The likelihood that businesses will continue to invest in virtual platforms is significant, as they strive to cut costs to make up for lost revenues during 2020. However, Zoom’s role in virtual VFR is likely to be short-lived as travelers seek physical contact with family and friends after nearly a year of stringent restrictions.

US Thanksgiving demonstrates importance of VFR

November is typically one of the most popular times for domestic travel in the US due to the national holiday of Thanksgiving, a time for individuals to celebrate with loved ones. Even though 87% of US respondents remained concerned about the global outbreak of Covid-19 in GlobalData’s latest survey, more than three million traveled through US airports over the weekend of Thanksgiving, according to the BBC.

The US has the most infections – and deaths – globally from Covid-19, but this did not stop many domestic tourists from traveling for VFR purposes, demonstrating the importance of this type of tourism, for travelers and the sector.

Zoom’s considerable gains in VFR could be short-lived

On 30 November Zoom released its quarterly results and to no surprise, revenues displayed explosive growth – Q3 revenues were up 337% comparable to the same period last year from US$167m (Q32019) to US$777m (Q32020).

The role Zoom has played in connecting families and friends worldwide should not be forgotten. The conferencing service is likely to continue to benefit from a lack of business travel, as companies look to reduce costs and support employee welfare. However, its successes in virtual VFR is likely to be short-lived, therefore the company should be prepared for lesser growth post-pandemic.