How Ozempic and GLP-1s Are Changing the Business of Travel



A growing number of consumers are turning to a class of drugs known as GLP-1’s, including Ozempic, in large part to help them lose weight. Editor-in-Chief Sarah Kopit and Head of Research Seth Borko discuss the impact of Ozempic and GLP-1s on the travel industry in this episode of the Skift Travel Podcast.

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Transcript

Sarah Kopit: Hello and welcome to the Skift Travel Podcast. I’m Sarah Kopit, Skift’s editor-in-chief, here with our Head of Research, as always, Seth Borko. Hi, Seth.

Seth Borko: Hey, Sarah. How’s it going?

Kopit: Great. So by now, you’ve likely heard about the new, wildly effective weight loss medications on the market. Going by the brand names Ozempic, Wegovy and Zepbound, these drugs are part of a class of new medications that were originally formulated to treat diabetes. But like so many leaps in medicine, including that famous little blue pill, it’s the side effects that really got doctors talking because most people who took these drugs lost a considerable amount of weight.

Fast forward to now, and it’s difficult to understate what sort of impact these drugs could have on society.

Borko: So Sara worked on this incredible feature piece, looking at the impacts of GLP-1s and weight loss on the travel industry, and the Skift Research Team was able to support her. This was a great piece that took a really detailed look at how sustained, meaningful weight loss could impact the travel industry. And the results were really fascinating. So Sara, first, the set up, this is your story. Who did you talk to you for this article?

An Avenue to More Opportunities

Kopit: So I talked to a whole bunch of people. But I think that the users of these GLP-1 drugs themselves were the most interesting folks for me to kind of mine what they were thinking. I talked to one woman who I think was a very typical user. She was about 80 pounds overweight — always had been her whole adult life.

She was a teacher. She lived in Arkansas. And she was telling me about how about a decade ago, she went to Spain with her students — high school students — and they all went on a camel ride. And she just was … for any of you who have actually been on a camel, they’re very, very tall — taller than you think they might be for those of us who do not grow up around them.

And she told me she’s like, “Sarah, I was just looking at that camel and watching all the kids get up. And I was just like, I can’t do it like I am. I’m too heavy. Like, my weight is going to keep me from this experience.”

And she said that was devastating to her. Fast forward until you know just a few years ago, these drugs came out. Her doctor put them on or put her on them. And she lost 80 pounds. She had just retired from teaching. And she said that she really felt like these drugs were giving her the retirement that she always wanted.

Like she loved to travel and she felt like it gave her a whole new life and a whole new ability just to do a whole bunch of these things that she always had dreamed of doing. And some of them were really these big, extraordinary experiences. She was telling me she flew in a small plane in Alaska.

She never in a million years would have done that. She sent me a picture of her crossing her legs in the plane. She’s like, “This was like an epic non-scale victory for me. Being able to do that,” she said. They went on top of a glacier, but then there were also like little things.

She said her and her husband went back to Spain and were just walking around all day.

Borko: I think that just walking piece is huge. We always forget, like I go on vacation and I come back and you come back despite no matter what you’re like, “I feel great. Why do I feel so great?” It’s like I walked 10 miles a day, every day. But you got the cobblestones. I think it’s easy to forget. It’s not just the big adventure stuff.

Even just a tour of Venice on foot all day is exhausting.

Kopit: We’re not talking about people who want to look better in a bathing suit on the beach. Although surely that’s a part of it for some people. But I guess the really big thing that I took away from this is just the kind of epic scale of what might be or what could be.

And I actually talked to one doctor. I was like, “Wow, it kind of seems like these might change the world.” And she’s like, “They already have.”

So and we’re only a few years in, and I would say even though kind of awareness is growing, we’re not in a situation where even close to the amount of people who could benefit from these drugs are taking them for a lot of reasons.

They’re incredibly expensive. Insurance doesn’t usually cover them, and they’re incredibly expensive. They’re over $1,000 a month if you just buy them retail without insurance. So that is going to be prohibitive for most people.

Borko: But you know, that will change, right? I mean, you gave the example of a little bill pill, which was expensive at first. And now you can find (it) readily available in many places. And so like ultimately over time, there’s been new generations of these drugs (that are) cheaper to manufacturer. You look at generics and and you’ll see a huge impact.

Kopit: And right now, they’re in a few countries around the world, but not very many. The United States is really kind of leading the way for these. So we’re not going to get into the failings of our …

Borko: That’s a different podcast.

Kopit: That’s a different podcast — a super interesting podcast. So when these drugs get out of the American health care industrial complex, they will also get cheaper. So we are in the infancy of (seeing) what these drugs are going to do.

What Skift Research Found

Borko: And I just want to highlight — double click on this … is that we did a survey of U.S. travelers. We do this quarterly travel trends report and we did it. We worked with your team on this. And we asked people, we said, “Look, if you are able to achieve your weight loss goals, would it have an impact and a positive impact on your vacation?”

And nearly a quarter of American travelers told us that it would have a major positive impact on their travel behavior. So not everyone is going to be taking these drugs. But what we’re hearing is — it’s kind of sometimes a sensitive subject — but what we’re hearing is people are conscious about sometimes their weight, and it impacts the kind of places they go, where they choose to a giant amount — like a quarter of all U.S. travelers feel like this is some sort of impact for them.

And if you can unlock that, it has huge — as you wrote in the piece — huge ramifications for many, many different sectors across the travel.

Kopit: Yeah. And that’s one of the most interesting things that I kind of took away from writing this piece. When we think about weight loss and at least perhaps this is my own bias, but when I originally was thinking about weight loss, I think of the beach and almost vanity. But when I started kind of digging around and thinking about it more like on a more broad … for one thing, I guess I want to back up a little bit.

We always used to think about weight loss as such a vanity thing because it was a lot of the people that wanted to lose like 5 to 10 pounds or whatever. That’s vanity. That’s a vanity thing, right? Or if you just want to look a little bit better in your bathing suit. That is a vanity play.

What we’re talking about here is incredibly different. So these medications are these are hard core drugs — like they affect almost like almost everything in your body. The doctors are going to write in and say, “No, no, no, they don’t.” But they have these this massive impact across your system over many different ways that both your body physically and your brain operates.

And the studies have said depending upon which drug, they will help people lose anywhere up to, I think, 24% of their body weight. That is for like for a 250-pound person like that, you’re taking them from an overweight or obese classification into normal weight easily. And so these drugs are really not just for losing 5 to 10 pounds.

As a matter of fact, they’re not indicated for that. They are indicated for people who need to lose a whole lot more weight than that. And a lot of people say that or not people — scientists, doctors.

Borko: They are people, but they’re very smart people.

Kopit: Yeah, they’re very smart people who study these things. These are long-term drugs. Like, you never come off them. They’re like blood pressure medications. Or if you do come off them, you will regain the weight.

Borko: So I think the Wall Street Journal did a piece about off-ramp for GLP-1s and Ozempic — GLP-1 being that broader class. So this is a serious conversation. One of the big things is how do they work again. So they kind of curb your appetite. Is that the big kind of …

Kopit: So yeah, they do. So one of the other really interesting things is not only do they curb your appetite, we know the results — like what the impact is. But doctors don’t really know all of the reasons why they do. This is where the side effect part comes in, right?

It’s like they weren’t designed for this. They were designed to treat diabetes. And because people that have diabetes often are overweight as a symptom of diabetes. At first, it was like, “OK, you could lose a few pounds here or there.” But they started to notice just a statistically significant amount of people, even people who maybe weren’t obese were losing so much weight when they took these drugs.

So what the scientific way that scientists refer to it is they delay gastric emptying. So that means that you feel fuller longer because it physically takes longer for food to go through your GI tract, so it stays in your stomach longer. But it also impacts your brain. And this I think probably is one of the other …

There (are) so many fascinating things about this. But the fact that they are studying these drugs (will) impact other — maybe vice-related behaviors because of the reason, because of the way it impacts your brain, which they don’t really know. So it somehow impacts your brain to say, “I don’t want to eat as much or I’m full, I’m not going to eat any more food. I don’t want to, right.”

It also is being studied for looking at cigarettes and gambling and alcohol. All of these things that can be used in a negative way that if you use them (in) excess. It is not good for your body. It is not good for your wallet. It is not good for you.

There are anecdotal reports from a lot of patients — especially with the alcohol — that I thought was one of the most interesting and also has an impact on the travel industry. I joined a bunch of these Facebook groups where people were talking about support groups and people would chat about their experiences and it’s very common to see people post who are new to taking the medications.

Like, “Has anyone just completely lost the urge to drink?” And then, you’ll see like literally hundreds of people chime in and say, “I used to drink a couple of glasses of wine a night. And now I just don’t even think about it. Like, I don’t even want to. I just simply don’t.”

Borko: So you were saying … I like how you say they’re they’re not necessarily good for people — some of these vices or habits — but many of them are good for the travel industry. Like food and beverage, alcohol, cigarettes to an extent. Certainly gambling.

I thought one of the fascinating things was tying this back to the travel industry was, “OK, this is a whole scale change in (the) American population really that affects millions of people.” How many people are on GLP-1s today? Do we know? I think it’s like five, 10 million, isn’t it? The numbers.

Kopit: Yeah, it was something like I believe only 1.7%. And I will have to check the research if only 1.7% of the population who would benefit from being on GLP-1s are on them.

Borko: So we’re talking about a population of tens of millions of people that are potentially going to be taking this weight loss drug have transformative impacts on where they’re able to travel, the kind of foods they can and want to eat, how they want to drink, how they want to participate. So there’s going to be massive implications for travel industry, (which) provides services to these customers.

Winners and Losers

Kopit: Yeah, let’s talk about the winners and losers. So one of the interesting ones that we looked at together was the all-inclusive resorts.

So if you think about it this way … like at first, it might be well the all-inclusive resorts. You would think maybe people … they would be losers, but I don’t think so. That’s not my take. I think people go to all-inclusive resorts and correct me if I’m wrong — maybe you research this more. But I go with my kids and we go because it’s easy.

That’s why I like it. Like I’m at the stage in my life right now where … if I want to send them to the restaurant to get some fries and an ice cream cone, I want them to be able to do that. I don’t want to have to track everything.

I don’t necessarily go because we can eat as much as we want. I go because it’s easy. So if you’re a family of four … I don’t think that you would necessarily stop going. But you know what you might do? You might eat a whole lot less. You’re still going to go to breakfast. You’re still going to go to dinner. I don’t know. Maybe, you might skip lunch though. Maybe, you just won’t go to that meal.

Borko: And by the way, the booze. Don’t forget about the booze, right?

Kopit: It could be a huge cost savings for anyone who buys that stuff wholesale or it’s all included. And then basically, for every drink you have, they’re losing a little bit or they’re not making as much money, I guess.

Borko: I tend to agree with you on this one, right? The all-inclusives … although they do a huge amount of marketing around the all-inclusive — the food and drink aspect. I think you’re probably right that the reality is for many consumers, those are ancillary benefits — but not the core purpose of travel, which the core purposes are probably convenience, safety, just the kind of turnkey approach. And also, like you were saying, travel with family and friends.

So then the food, if it’s not a major selling point, it’s a cost. And then if you can cut back on that cost, that’s a huge amount of savings. So yeah, we had a really fun conversation. I kind of went down a rabbit hole, right?

I remember looking up the price of like wholesale eggs and that was too much. But I looked into Playa Resorts. They’re a publicly traded company on the Nasdaq. They operate 25 all-inclusive beachfront resorts. So they’re not representing the entire industry, but they’re pretty good sample for this kind of thing.

And they mainly operate like Hyatt’s, Hilton’s and Wyndham hotels, their second highest expense. Labor’s number one, of course. But their second highest expense at these resorts is food and beverage. It’s 15% of all their expenses. Salaries are 22%. So eight points is a lot, but it’s hundreds of millions and it’s $100 million food and beverage cost item for these resort operators.

And (for) a per room price, I estimated that, like, maybe 10% of the price of the room comes from (food and beverage). And so if you can drop that down by some fraction, it translates into … millions of dollars of savings. And then you scale it up.

This is just 25 resorts. How many all-inclusive resorts are there all around the world? It really does add up to a significant amount of savings. And many resorts — especially the all-inclusive resorts, are facing inflation. One of the biggest sectors where hotels and travel operators have seen cost inflation has been in food.

If you think about it, the omelette station eggs have been one of the highest inflated prices. The omelette station is probably going to (be) 20% more expensive to run or the price of your omelettes (is) probably (going) on 20% more. Your labor has gotten more expensive. If you can have fewer people staff in your omelette station and serve fewer omelettes, but still the same amount of customers … it’s substantial and adds up for sure.

Kopit: I love the omelette station.

Borko: Me too.

Kopit: Yeah, it’s my favorite. I get vegetables with the cheese. That’s my go to. Anyway, so I was actually at Hershey Park this weekend for for Memorial Day weekend. And here I was at an amusement park that’s based entirely around food and consumption in Hershey, Pennsylvania.

And … (as) I was sitting there waiting for the kids to come down on the waterslide, I was looking around and I was like, “This park could be possibly one of the losers.” Because I was thinking about all of the ways that that park makes money.

Yes, there were the tickets. But I mean obviously, it’s just food. Like stand after stand after stand after stand — just with not only food, but bad for you food. It’s an amusement park. It’s probably very delicious. But if you’re not buying that $10 ice cream cone or even one less …

Anybody who really relies on concessions strongly — I mean, even movie theaters … they might really have some suffering there or have to figure out a way to add another revenue stream in there that isn’t concessions if they’ve completely built their business model around that …

Borko: So at the all-inclusives, food is an expense item, right?

Kopit: Exactly.

Borko: But here it’s foods are a revenue item and it’s a revenue driver and a main driver of revenue. I think anyone with a food as a revenue driver is potentially in real danger. I would very much agree.

Kopit: And I was looking around, it was so busy — hugely busy. I was seeing a lot of people that I think probably could benefit from one of these drugs. There you go, I said it. So we’re just not there yet.

Like, we’re not even close to there yet. And so it’s interesting to watch how the world may change in these next 10 to 15 years.

Borko: Yeah. Can I throw a stat out there? You know I love to throw out a number.

Kopit: Yeah.

Borko: I’ve done some research and I think we estimate that American leisure travelers are spending more than $100 billion every single year on food and beverage while on holiday. It’s a huge number. And in fact, people tend to be more extravagant when they’re on vacation. So how many of those Hershey Park travelers were not from …

Many of them were not natives of Hershey, Pennsylvania. I would suspect they’re on vacation … it’s a long weekend from holiday weekend. I’m taking the trip, and I’m going to treat myself. I’m going to splurge a little bit. We estimate that somewhere between a quarter to a fifth. So somewhere around 20% to 25% of the average Americans typical eating out restaurant budget happens on vacation is an estimate.

And so really, it’s a conversation for the restaurant industry in general. But so much of traveling revenue comes from people either shopping, in restaurants, in destinations at theme parks and even on hotels (when) on vacation. So it’s a $100 billion travel food and beverage expenditure opportunity that is potentially being, to use the cliched word, disrupted — or at least, under pressure.

Kopit: And one of the women that I talked to for the article, she told me that she was like, “That plane ride I took in Alaska, it was expensive.” She said it was pricey to take that plane up on top of the glacier. But my husband and I, when we would go out to eat, I wasn’t really very hungry. So we just used to split an entree and all that money that I used to spend on food, we use that to go on this plane ride. She actually told me that. So there’s your case stud. There’s probably the thing that all aspects of the travel industry are going to have to think about.

Borko: I think that’s another winner — like we talked in the story about like adventure travel or more exotic, not exotic, but more active vacations is another growing category. So you literally have a case study of restaurants losing market share effectively to more experiential travel activities. So as a winner, that’s a fascinating example.

Kopit: How can all of us who love to read earnings reports and listen to conference calls and do all that kind of good stuff, how can we track to see if there really is any movement, if this is moving the needle, how can we know?

Borko: I think you’re right. You can track certainly track earnings reports and earnings calls. Yeah I think I gave an example of that Playa Hotels earnings call. They’re talking about food costs. And we’ll see if that lines up and hey, if we have any listeners in high places, ask those questions on the call.

I don’t know if we have any research analysts, but we’d love to get that on an official earnings call question. I think you can also look for it on some of these line items. We can see how food and beverage costs are evolving. And of course, we have surveys and trackers that run here at Skift Research.

So we’re going to keep asking about these sort of trends. And I would even just encourage people to do a little bit of what I would call a channel check. You can ask your friends and family. I think we are increasingly as things pick up, you’re going to probably know people who are on GLP-1s, and you can ask them if their travel habits have changed and see if we’re on trend.

Kopit: I also was reading some really interesting studies that are separate from the vice category, where these drugs are beneficial — but they have other health-related benefits. So the thing that I think is really interesting about that is that it brings in Medicare and Medicaid.

Borko: A simple topic. I think we can cover everything you need to know about Medicare in the next five minutes.

Kopit: So basically, Wegovy, which is the weight loss branded version of Ozempic, was studied for heart disease. And it reduced heart disease by a statistically significant amount. There’s also been studies on kidney function. So much so I was just reading this just either yesterday or the day before. They actually stopped the study early because it was so effective.

They didn’t want to prevent people who could benefit from the drugs from having them because it was just so beneficial. So basically what this means because for those of you who don’t know, there is a ban on government-funded, reimbursement or payment for weight loss or like vanity-related medications. So you can’t get the government to pay for your elective plastic surgery, for example.

And so that was always kind of the way that weight loss drugs were thought of is because they didn’t work very well. So the people who are taking them, maybe this is where that losing 5 to 10 pounds, you couldn’t get the government to pay for them. But it’s going to be much harder to make that argument when these medications not only help people with weight loss, but they help cardiovascular function, they help kidney function.

And so all of these new … they’re being studied for, Alzheimer’s and dementia. And so if you think about all of these things put together, if you take it to the nth degree, might these be medications where it’s just healthier for humans to take them, to be on them. So if they get approved on the US government-funded medication schemes, it also makes it harder for insurance companies, private insurance companies to say no. And so then, all of a sudden, the floodgates open.

Borko: Well I think that’s a really great point. I think it’s very possible that we have a listener listening to us do that first segment with the pros and the cons. We’re talking about billions of dollars of opportunities. I think it can be easy to be dismissive and be like, “Yeah, but this is never going to be more than a niche drug for a certain segment.”

But your point is that like Alzheimer’s, heart disease, kidney disease, diabetes — between those four drugs, you could probably prescribe this medication to 80, 90% of the U.S. population. And then the weight loss just becomes a happy side effect, and then the appetite curb becomes a side effect. And then, even unintentionally, you could wind up with this huge uptake and transformation of many industries.

Borko: It’s a fascinating time. I think it’s exciting, and it ties into a lot of other stuff. I think there is … I don’t know if we have time to discuss it, but I think there’s more beyond this to include things like medical tourism, which talk about where to get drugs cheaper overseas and procedures.

And there’s a lot of interesting implications for what comes next.

Kopit: One of the things that is holding, I know because I asked the last time I was in Mexico — one of the things that is holding these drugs back from that is they are injections. So they’re weekly injections. Most of them, they do have oral pill forms of them. But they don’t work as well.

And not only are they injections, but they have to be refrigerated. So we went through this with Covid a lot to where one of the hard things about getting these medications to a mass amount of human beings is that you can’t stock them on a shelf. They have to be kept in a special way.

When I was in Mexico, I asked if they had any. In some places did, but they would have to go in the back and pull them out of the special refrigerator. They did have the pill forms, but they’re just as expensive right now and don’t work as well.

Our advancement in drug science and medical science is just astronomical right now. So I’m sure that the drug companies can’t wait to get these out of the pen-refrigerated, needle-based situation because humans don’t like needles very much. I think most people would rather take a pill.

So when that happens, then you’ve got a whole nother wave of potential consumers.

Borko: And the impacts I feel certain will be felt across the travel industry. And I can’t wait to see what happens. It can be really exciting to see how these business models and marketing strategies evolve.



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