Age of Adaptability
Due to exceptional circumstances in which the world finds itself as we move through the second half of 2020, we are living in a world where adaptability has never been so important. No matter where you are in the world, the tourism and hospitality industry has been severely impacted by Covid-19 and it has had a profound effect on consumer behaviour. In the following pages RLI takes a look at the tourism market, how it has been affected by Covid-19, some key examples of major projects in the sector and what the future of the industry might look like.
WHERE ARE WE AT RIGHT NOW?
While tourism at its simplest level is travel for pleasure or business, it is also the theory and practice of touring, the business of attracting, accommodating, and entertaining tourists, and the business of operating tours. On the other hand, the World Tourism Organisation defines tourism in a more general way, stating that it goes “beyond the common perception of tourism as being limited to holiday activity only”, as people “travelling
to and staying in places outside their usual environment for not more than one consecutive year for leisure and not less than 24 hours, business and other purposes”.
Before the start of the pandemic which brought the tourism industry to a grinding halt, one must remember that before this, it was a sector that was extremely healthy and breaking records. If the past has taught us anything though it is that this is a very adaptive industry and it will come back again, it just may look different from our regular perception of what ‘normal’ is.
This is not the first challenge that the travel and hospitality industry has had to overcome, in years gone by it has encountered and emerged better from many catastrophic events, such as 9/11, the Great Recession and many more. On every occasion, the sector has always found a way back and always flourished once again.
As companies within the sector begin to broach the development of recovery strategies and start the long and arduous task of working their way through these unchartered economic times, the industry needs to continue to engage customers in order for them to stay relevant in guests’ thinking. In this day and age, marketing is perhaps more important than ever. Travel brands and companies need to learn from businesses that invested in and prioritised marketing during previous recessions and challenging periods. Researchers have found that brands that build brand value and awareness up during lockdown will recover faster post-Covid-19. An example of this could well be the Visit Las Vegas’ marketing campaign ‘#OnlyYouCampaign’, which showcased a video that focused on an empty Las Vegas strip to remind people that the city would still be there when people felt safe enough to travel again.
In time, global competition will once again see a surge of importance, and when this happens every destination will need to once again constantly reinvent itself in order to maintain its relevance in the view of the global traveller, along with its sustainability and its dynamism. What will remain post-Covid-19 is a constant, ongoing need to identify and explore growing outbound markets and tap into emerging opportunities the world over. For now, what Covid-19 does seem to have changed is the behaviour of people; we seem to be more conscious of the world around us and more interested in wildlife and the outdoors. We need to embrace this change and instead of seeing the negative in change, is to instead look for opportunities to reimagine our existing cities and towns around the world by reinvigorating them for a new audience.
Brands need to take this chance to re-evaluate their position and take into account what this new competitive landscape may look like post-recovery and take the necessary steps now to gain market share, enter new markets and offer new products. Once these new and exciting markets have been identified, companies can then streamline their marketing technology and processes to be able to get the right messages to the right customers at the right time. Setting up dynamic segmentation and lining up the right offers and promotions will help brands bounce back more quickly.
The changing competitive landscape is going to make it more necessary than ever for brands in invest in direct-to-customer digital channels, where direct hospitality bookings are likely to strengthen. Moving forward, travellers will expect higher standards to ensure their well-being at all times, and they will expect digital tools that enable and expand the current “no touch” options on offer. What is to be expected is the increase in mobile usage throughout the travel journey, from passports and boarding passes, to keyless hotel entry and digital checkout at hotels. The world of tourism as we have known it will never be the same again, but this doesn’t mean it cannot rebound and once again reach the levels it did previously.
THE EFFECTS OF COVID-19 ON THE INDUSTRY
For The effect of the Covid-19 outbreak has had a massive impact on the travel industry. Globally, the pandemic has grounded major airline services and as people were advised to stay home to prevent the spread of the virus, the lack of passengers’ demand of air travel also hit the industry. According to a report, nearly 90 per cent of the world’s population now lives in countries with travel restrictions. However, the outbreak also caused several jobs at risk as airlines, travel companies and the tourism sector as a whole are among the most affected businesses.
For now, the effects of the coronavirus on the tourism industry have been monumental. Global passenger traffic is expected to see a decrease of 4.6 billion travellers in 2020. While the loss in total global airport revenue is a quite staggering amount, set to come in at $97bn, according to trade association Airports Council International (ACI) world.
Research from the ‘Tourism and Covid-19’ report from the World Tourism Organisation (UNWTO) shows that the tourism sector has been one of the hardest-hit by the outbreak of Covid-19, with impacts on both travel supply and demand. Considering the evolving nature of the situation, it is too early to estimate the full impact of the Covid-19 on international tourism. For its initial assessment, UNWTO takes the SARS scenario of 2003 as a benchmark, factoring in the size and dynamics of global travel and current disruptions, the geographic spread of Covid-19 and its potential economic impact.
In its ‘World Tourism Barometer: Volume 18 – Issue 4 – July 2020 Update, the UNWTO revealed that the pandemic has caused an unprecedented level of disruption to travel and tourism, which is reflected in the collapse of global travel since mid-March. International tourist arrivals (overnight visitors) saw a decrease of 56 per cent in the first five months of 2020 over the same period of last year, according to data reported so far by destinations.
In the month of May international arrivals were down an unprecedented 98 per cent, reflecting widespread travel restrictions in nearly all destinations worldwide, amid measures to contain the spread of the Covid-19 pandemic. This followed an already massive 97 per cent drop in international tourist arrivals in the month of April.
All world regions and sub-regions saw a decrease in international arrivals in May for the second consecutive month, in the range of 90 per cent to 100 per cent. The decline amounts to 120 million fewer international arrivals in May, after a drop of 113 million in April.
By regions, Asia Pacific, the first region to suffer the impact of the pandemic, saw a 60 per cent decrease in arrivals in January-May 2020. Europe recorded the second strongest decline with 58 per cent fewer arrivals, followed by the Middle East with a 51 per cent decline, then the Americas and Africa both 47 per cent decline.
At the sub-regional level, Southern-Mediterranean Europe with a 66 per cent drop and North-East Asia region with a 65 per cent decline suffered the largest drop. Arrivals in South-East Asia, Oceania, the Caribbean, Northern Europe, Western Europe, Central and Eastern Europe were down 50 per cent or more.
The UNWTO update continues, saying that Tourism is showing signs of a gradual but still cautious change in trend in the Northern Hemisphere peak summer season, particularly in Europe. As of 15 June 2020, 22 per cent of all destinations worldwide (48 destinations including seven Small Island Developing States) had started to ease restrictions, with Europe leading the way. However, most destinations worldwide continued to have their borders completely closed to international tourism. The Canada-US-Mexico border, one of the busiest borders in the world, has remained closed to non-essential travel since March. The closure has been extended at least until 21 August.
However, the outlook is still highly uncertain as new cases of Covid-19 continue to be reported worldwide. Some countries have returned to partial lockdowns and curfews, and borders remain closed in the majority of countries, all in a context of deep economic recession in 2020.
SO WHERE DO WE GO FROM HERE?
According to a World Travel and Tourism Council report, figures emerge that the Covid-19 pandemic could affect 50 million jobs worldwide in the travel and tourism industry, but it is not all doom and gloom for the sector.
Industry experts now believe that the use of digital technologies such as digital identity and biometrics technologies could ensure a seamless journey during and post-pandemic scenario. However, these tools will only be effective if users’ data is protected, privacy, consent and transparent data governance must be in place while leveraging any technical solution.
There are several travel tech companies and start-ups providing effective solutions to assist travellers amid the crisis. For instance, WishTrip, a SaaS-based tourism experience management platform, is helping its clients through this difficult time. The company’s customer success team went to work thinking of new and revolutionary ways to support destinations stay connected with their visitors and potential visitors, create income during shutdown and plan for the future.
Because of Covid-19, new innovations in travel technology are appearing as the clamour for people wanting to travel again only increases. To this end, PriestmanGoode have designed a new concept for aircraft cabin interiors that features dirt trap-free surfaces and “colour psychology” to alleviate passenger anxiety. The project, called Pure Skies, saw the London studio redesign business-and economy-class cabins to be “future-proof” against potential new pandemics. Colour-changing ink on the seat fabric could inform passengers that the cabin has just been cleaned, and unhygienic elements such as pockets would be removed from seatbacks.
Prior to the outbreak, it was Millennials that were driving growth in the travel and tourism industry. At the beginning of the pandemic it was Millennials that kept travelling to the very last moment, and it is likely to be Millennials that will lead the way in reclaiming the skies, seas and highways as soon as the opportunity is fully presented.
For travel providers, it is now more important than ever to use technology that resonates with this key generation, because these digital natives are not just an important group in their own right.
As one would probably expect, Millennials’ swift adoption of travel tech and natural use of digital platforms is already visible in in their younger Generation Z counterparts. But once this pandemic is over, we’re also likely to see a swathe of newly tech-savvy Baby Boomers and Generation X following in Millennials’ digital footsteps.
With the arrival of the coronavirus, technology usage amongst Baby Boomers and Generation X has taken a huge and necessary leap forward. Now that they have experienced just how easy it is to shop, communicate and find entertainment online, these two groups are just as likely to embrace digital options when it comes to post-pandemic travel.
By having a social media presence, utilising travel and hospitality apps and providing digital options that really connect with Millennials, you’ll also have the bonus of putting your company in great stead to connect and stay relevant with tech-savvy Generation Z, Generation X and Baby Boomer travellers as well.
Social media sits at the very heart of the Millennial’s travel experience. Sharing images and videos helps the Millennials traveller to document and preserve memories of their adventures – and serves to inspire others to document and share their own adventures in turn. But the joy in sharing and the inspiration it provokes relies upon those adventures being different, something which is even more important in the wake of the coronavirus.
Across the world, the tourism sector is beginning its ascent back to where it was, and there is no better example of this than Saudi Arabia, whose 2030 vision is nothing if not ambitious. Vision 2030 sets out sweeping regulatory, budget and social reforms that will be implemented over the coming decade as the nation sets about curbing its reliance on crude oil production and export and instead plans to transform its tourism industry as it opens its doors to the world.
The Saudi Arabian General Investment Authority (SAGIA) will become the Ministry of Investment, led by former Energy Minister Khalid Al-Falih, the new Minister of Investment. SAGIA Governor Ibrahim Al-Omar has been relieved of his post.
The Saudi Commission for Tourism and National Heritage will become the Ministry of Tourism, under new minister Ahmed Al-Khatib. And the General Sports Authority is to become the Ministry of Sports, with Prince Abdul Aziz bin Turki Al-Faisal as its minister.
One of the major projects at the head of this tourism drive is The Red Sea Project, one of the landmark Kingdom’s landmark “giga” projects that will focus solely on its nascent tourism sector. By the time it’s completion in 2030, The Red Sea Project will deliver up to 8,000 hotel room keys across 22 islands and six inland sites in a project of approximately 28,000sq km – an area roughly equivalent to the size of Belgium.
One of the projects being backed by the Public Investment Fund of Saudi Arabia and developed by Qiddiya Investment Company, Qiddiya is set to be an entertainment megaproject that will be established in Riyadh and commenced construction at the beginning of last year. Composed of five primary projects, these projects include resorts, parks, and city centre. Phase one will be opened in 2023 and will feature “Six Flags Qiddiya” as a family attraction. Located 40km from Riyadh, Qiddiya will be more than twice the size of Walt Disney World Orlando in Florida, US.
Another key project in this revitalisation of tourism in the Kingdom will be the Arabian Dream KSA project, which will see the development of the world’s largest mixed-use entertainment and shopping centre of its kind at Akaria’s Al Widyan site in Riyadh. Estimated at $5bn to develop, this new destination will comprise theme parks, water parks, recreational and sports facilities, retail dining, shopping centres and hospitality components, coupled with the latest artificial intelligence (AI) technology to create a truly different visiting experience for all its visitors when it is completed.
It may be hard to imagine an end to the current crisis, but it will come. So as we ahead to brighter days, travel providers will need to ensure they have the technology and understanding to help them stay relevant across all the generations of people who are adapting to this new normal.
In just a matter of months, we’ve all had to adapt to a world of isolation, separation and distancing. But once we’re past this current crisis, millions of people will seize the opportunity to visit loved ones and simply enjoy the freedom of travel once again.