WILL TRAVEL & TOURISM BE COVID-19’S BIGGEST CASUALTY?

By Aradhana Khowala, CEO & Founder, Aptamind Partners

While the far-reaching impact of coronavirus on the travel, tourism and hospitality sector is not fully clear, the pause on travel and the disruption on the movement of billions of people, their associated expenditure and its sudden displacement has had massive ramifications on national, regional and local economies and employment across the world.

If the listed stocks are indicators, Airline stocks are down 40%; hotel stocks are down 30% and OTA’s are facing a massive hit to revenues with global booking decline of 10%. The Aviation sector is in a crisis zone as plummeting demand has meant cancelled or reduced routes, voluntary unpaid leave to staff, hiring freeze and delayed or cancelled aircraft orders and now weaker carriers going out of business. The situation is no different for hotels and extended value chain in the sector and the base case assumption is that businesses would be impacted for the whole year and beyond.

What was not a problem two weeks ago because it was not my problem is today everyone’s problem. Businesses across the value chain are moving to survival mode which means preserving cash reserves, stepping up emergency cost-saving measures, reducing costs, negotiating and seeking extensions or capital cost reductions and the banal task of trying to survive and remain in business till the crisis unfolds so when demand and consumer confidence returns you are in a position to take advantage of it.

A WORLD OF UNKNOWNS

What we know from recent events, market and consumer behaviour over the last two weeks is we are dealing with a potentially proliferating, multi- dimensional risk landscape with long term consequences and more questions than answers. The biggest anxiety is being confined into any space – cruises, airlines, hotels and worse being quarantined. Even the most rational amongst us tend to experience a complete lack of ability to shut the panic button off. It is a frustrating situation which is exacerbated in the case of Coronavirus as we are wading in a world of unknowns including if business interruption with COVID-19 can be covered under “Force majeure” clause.

HOW PREPARED ARE YOU WITH A CONTINGENCY PLAN?

We in the travel, tourism and hospitality sector need to plan and be ready to implement contingency plans based on what we know. Then we need to think about how we will make adjustments for the whole year because when it does, travel rebounds really quickly once the headlines change. And we are all hoping and praying for those headlines to change in the next 30 days. History shows outbreaks tend to have a noticeable effect on consumption and recovery can be slow and painful but below are a few easy to implement steps both operational and strategic which organisations might find useful to brace through the hard times. 

Beyond this, learn from the experience and build contingency plans to prepare for future crisis. There will be others! Ask yourself how prepared are you if an employee tests positive in your organisation? What if a guest turns symptomatic or if your hotel needs to be quarantined? As we stare into the crystal ball for answers, prepare for the worst while hoping for the best, wash your hands and sing happy birthday while at it!