The Corona Conundrum & What It Means For Travel Industry

IN THE wake of the Coronavirus pandemic, several industries have been hit including global travel and tourism. While the tourism industry has taken a double hit, of revenue as well as reputation, it is also amongst the first ones to be impacted by the crisis and is expected to perhaps take longer to recover.

The importance of tourism can be gauged from the fact that it accounts for around 10% of global gross domestic product (GDP) and is directly responsible for generating one in 10 of the world’s jobs. Thus, while any impact on tourism will have a snowball effect on the global economy, the industry is also in a unique spot to help put the global economy back on its feet, once the pandemic has passed.

Impact Assessment

Considering the evolving nature of the situation, it is too early to estimate the full impact of the Coronavirus pandemic (COVID-19) on international tourism. However, if numbers are to be believed, the World Travel & Tourism Council (WTTC) pegs the travel and tourism GDP loss to the world economy at USD 2.1 trillion in 2020.

In terms of international tourist arrivals, the World Tourism Organisation (UNWTO) expects it to decline by 20% to 30% year-on-year in 2020. This could translate into a loss of USD 30 billion to USD 50 billion in spending by international visitors.

Up to 75 million jobs are at immediate risk in global travel and tourism due to the coronavirus pandemic, according to WTTC.

Road to Recovery

Our past experiences prove that the travel and tourism industry is very resilient, and rebounds fairly quickly. Whenever the Coronavirus is contained, business travel may well be the first to pick up. MICE (Meetings, incentives, conferences and exhibitions), however, may take much longer to recover owing to the large numbers the sector draws.

On the leisure front, VFR (Visiting friends and relatives) may still recover earlier as families would have been kept apart for the entirety of the pandemic, but holiday demand could be slower to grow.

Experts do predict recovery of the travel and tourism industry perhaps by mid-2021 or even later. According to a March report by McKinsey, recovery pace will be faster for domestic travel, which can be around two to three quarters, and slower for the long-haul and international travel, which can be over six quarters.

New Avenues

If there is a silver lining in this crisis, it is that travel companies can think much more boldly and expansively about the future, and perhaps act on a once-in-a-generation idea.

As the world goes on a reset, centred and balanced lifestyle will become the new normal, thereby leading to a surge in wellness travel.

Health and hygiene will become more important in the post-COVID world. From a visa application centre, an aeroplane, to sightseeing at a destination, people would look for an assurance that all touchpoints during a journey have adopted the health and hygiene aspect.

Online transactions will accelerate, but personal advice by travel agents and taking care of a customer will become more important as well, especially when they specialize themselves.

Technology is set to become the biggest enabler for companies in the post-COVID world to ensure an enhanced customer experience. Companies should explore solutions that allow travellers to maintain social distancing norms as much as possible and at the same time, get a high level of service and personalized customer experience.

Thus, it is vital that travel firms redefine value and product to bring back the confidence of travellers.

Whatever demand looks like when the crisis passes, in the short-term, it will definitely be lower than what it was as in pre-COVID times. However, the tourism sector, with a proven track record for resilience during the 2008-2009 financial crisis and the 2003 SARS outbreak, is also well-placed to lead future recovery and remains an above-average growth driver for many economies.

Thus, we are confident that when the situation improves, the travel and tourism industry will rally and show a positive trend. However, it's important to carefully monitor the evolution of the crisis, especially its impact on our industry, and align ourselves to cater to any new demands in terms of our services, which will make the paradigm shift in travel a comfortable experience for travellers.