Tourism revival: Optimism and worries

There is optimism and confidence in the air for tourism and hospitality sector, both locally and globally. The revival process is undoubtedly gathering pace with international arrivals having increased 182 per cent year-on-year in Q1 2022 to an estimated 117 million international arrivals. Such strong rebound notwithstanding international tourism still remained 61 per cent below the pre-pandemic level.

The good news, however, is the apparent return of confidence in travel. The latest UNWTO Confidence Index survey indicates that 81 per cent of tourism professionals see better prospects for 2022 and that a higher number of experts (48 per cent) now see a potential return of international arrivals to 2019 levels in 2023.

However, as expected domestic tourism has been the main driver of tourism growth in 2022. The estimated domestic passenger’s load factor is reported to be around 85 per cent as against 49 per cent in May 2021 and 90 per cent in May 2019. This implies that domestic tourism is almost back to pre-pandemic level. As the economy gathers steam, the threat of Covid19 recedes and confidence returns, domestic tourism is sure to surge ahead.

The favourable trends are showing average occupancy in the hotels as well as in average revenue per room. In brief, industry analysts have considered that the recovery of the hotel sector is back on course with all the parameters like occupancy, ADR and RevPAR higher than their pre-pandemic levels. There are, however, regional variations, western and southern regions showing better results in general than the rest. These figures again are subject to seasonal variations and local conditions.

As optimism returns and the tourism and hospitality sector recovers, it is a time to think of major policy initiatives on two fronts. First, learning lessons from the pandemic, to prepare against future shocks – like economic safety net for the vulnerable sections, greater coordination among the states on health and travel protocols as well as on relief measures. 

Second urgent action needed to meet the future challenges, of sustainability, of creating accommodation by according incentives like infrastructure status, expanding access to destinations and spreading destinations to ease carrying capacity and so on. For example, the distribution of tourists, domestic and international, is rather skewed so far. The top 10 states/ UTs get 87.2 per cent of foreign tourists and 87 per cent of domestic visits. The other 26 states/ UTs receive on an average 0.5 per cent of arrivals.

While the signs of recovery are very optimistic, there are worries and uncertainties  too. Occasional recurrence of the virus in different parts of the world, still uncertain behaviour of the monkey pox, the volatile global geo-political situation and looming threat of recession in major economies like USA always keep the industry on its toes. It is also necessary to abreast of the emerging trends in the world and their likely impact on India. With the festival season approaching the demand is expected to surge and the tendency to relax on health and safety protocols may be strong. The hospitality sector should set an example in not relaxing at all on the health precautions and insisting on observance of the protocols by the travellers.

Airbnb is reportedly introducing a new concept of “live and work anywhere”. It combines the changed work process “unfettered to office” with the desire and requirement of leisure. According to Airbnb the scheme is working well in non-metro areas where local communities drive down to nearby locations for work and long stay. It is also happening in India too. If it gains momentum, it may change the complexion of tourism in the country and spread tourism to hitherto unexplored destinations and locations.

The new trend of working brought in by the pandemic, facilitated by rapid advances in technology, making it possible to combine leisure with pleasure and work, is defining travel in more than one way. The workstation idea perhaps will change business travel considerably. Accor CEO has said that while their business is booming and Paris is in “fire”, 20-25 per cent of business travellers are not coming back and perhaps will never come back. Staycation and leisure tourism rule the roost now.

In many countries, hotels are facing shortage of staff to service the customers. In Europe and elsewhere, the most disturbing post-Covid19 experience has been labour shortage, caused by people who moved due to closure or decline of business or people moving jobs looking for better options. Accor, for example, reported a loss of about 15 per cent labour. The severe impact of labour shortage on the civil aviation services in Europe has been widely reported. In hospitality, some industry stalwarts have termed it a “wakeup” call to look at working pattern, pay, nature of staffing and management structures. 

It has been mentioned that the younger generation are neither attached to fixed jobs nor are enthused by traditional concept of loyalty and look for flexibility. Some of the reported figures are indeed worrying. One report says that Spain where tourism accounts for 13 per cent of economic activity and Portugal with 15 per cent are experiencing shortage of 200,000 and 15,000 workers respectively. Similar reports say that to overcome such problems Europe’s largest hotel chain, Accor is experimenting with recruitment of people without any past experience.

As the future unfolds there will perhaps be continuous experimentation to find solutions to emerging challenges. As Friedrich Nietzsche said “the future influences the present just as much as the past”.