2020 is a catastrophe for the travel industry - what’s next?
When will the cruise industry recover? Princess Cruises ship at Sydney’s White Bay Photo ©Mark Bowyer
The new decade got off to a bad start for the travel industry - then it got worse. It’s only April but it seems reasonable to write-off 2020 as a catastrophe to be survived, and consider what lies ahead for our industry. Mark Bowyer, thinks aloud about the crisis and beyond.
As New Year's Eve 2020 approached, Sydney's city government was faced with an unprecedented dilemma. Should the city proceed with annual fireworks over its iconic harbour, while large parts of the country burned? The city’s reputation as an international tourism destination would have weighed on officials when they took the decision to go ahead with the celebrations.
The fires didn't stop for the celebrations or the new decade. They ravaged homes and beach towns, destroyed National Parks and native habitat. Sydney, Melbourne and the capital Canberra were smothered in smoke. Australia's travel industry was shaken by a sense of vulnerability.
While the fires raged in Australia, a new threat to the global travel industry began to spread, faster than a raging fire, from Wuhan, China. By late January, the novel coronavirus had demolished outbound tourism from the world's biggest source market. The global travel industry scrambled to manage the idea of a year without Chinese tourists.
By late February, the epicentre of the coronavirus shifted from China to Europe and then to the US.
With this shift came the unthinkable - the closure of much of global tourism and aviation.
Nobody in our industry could have imagined, less prepared, for a disaster of this scale. And there are so many unimaginable things happening globally right now that, like me, you're probably wondering about the future of your business, your job, your industry and the people and the values that make it happen?
It may seem early, but we all need to start thinking seriously about the travel industry that will follow this crisis. Will it snap back to December 2019? Has it changed forever? How quick will the recovery be? Is there a future in it for us?
I think we should assume that the travel industry as we have known it has gone forever. Whenever global tourism makes its tentative return, and that may still be more than six months away (and I did say tentative), many businesses large and small will no longer exist. And travellers as we understood them in 2019 will be changed forever too. There will be fewer of them. And their interests and preferences will be different.
Nobody in our industry has any experience of a crisis like this. When SARS hit in 2003, I was running an inbound operation in Vietnam, Travel Indochina. Like most travel businesses at the time, we were wiped out for a few months. But the recovery was swift and durable. This is different. SARS was a limited crisis. It was quickly contained, it only impacted a handful of countries. It barely touched the global economy. In 2003, the world was a far less globalised place and global tourism was far smaller in scale than it was before COVID 19.
Consider for a moment some of the massive changes that lie ahead.
How will the budget airlines survive the crisis? Photo © Mark Bowyer
Aviation
It seems likely that some, perhaps many airlines will collapse in the coming months. No day passes without talk of a bail-out. Governments are already big players in aviation. They will become bigger players as they step in to support what they believe to be essential transport infrastructure.
Available capacity will shrink and when demand slowly ramps back up, with less capacity and less competition, seats will likely be more expensive. Of particular interest will be how budget airlines will survive the crisis and what position they'll hold in a post-coronavirus aviation market? They are less likely to be viewed as essential infrastructure.
The only positive thing on the aviation horizon is the low oil price. But you need revenue to realise that benefit.
How will consumer preferences look in the aviation space post-coronavirus? Will the appetite for long haul travel bounce back? Will travellers look closer to home? Will they be more or less inclined to favour budget options?
The cruise industry
The future of cruising looks even more tenuous. The major cruise companies first have to get through the immediate crisis. It has already stretched many to breaking point. Then they have to consider the likelihood that the appetite for cruising as it has boomed during the past decade, may never return.
Even if the wider travel industry can begin to reopen in some modest fashion in the coming months, the coronavirus risks will remain real across the globe until a vaccine or an effective treatment is found. That may take years. The now well-earned reputation of cruise ships as hyper-incubators of viruses and other bugs will be hard to change.
The cruise industry has earned many critics - especially the operators of monstrous, polluting ships that disgorge their human cargo for brief high-impact raids on the world's great tourism sites before moving on.
Some will welcome a forced rethink of this industry.
Sihanoukville Cambodia - overtourism excess without the tourists. Photo: © Mark Bowyer
A smaller industry and the end of overtourism - for now
The relentless growth of the budget airline and cruise businesses has been a big driver of another tourism industry malady over the past decade - overtourism. The cruise industry has been a special target for those concerned about tourism excesses. But there have been others. Budget Airlines and Airbnb have also received special attention in conversations about how too much tourism can wreck destinations and the lives of the local people who live in them.
“The key criticism has been that huge corporations with their high-impact tourism models treat places, people and culture like fast food for rapid consumption and disposal, maximising environmental and social harm and leaving little for local communities.”
The key criticism has been that huge corporations with their high-impact tourism models treat places, people and culture like fast food for rapid consumption and disposal, maximising environmental and social harm and leaving little for local communities.
Overtourism is not likely to be a concern for some time. Undertourism will become a thing in places with big tourist infrastructure, an economy dependent on tourism, and no tourists. The inclination to travel will be blunted while the risks of virus remain. The capacity to travel will be reduced by global economic uncertainty , unemployment and economic insecurity.
Traveller tastes will change on the back of the crisis too.
A travel industry built for the scale and preferences of 2019, will need shrink and adapt. That will be a challenge for all of us in the industry, as well as governments and travellers.
There is likely to be a drift to quality in the short term as travel becomes a privilege again - rather than a commodity.
If we're lucky, the industry that emerges from the crisis might be more aware of its environmental, economic, community and cultural responsibilities.
A smaller industry means fewer tourism jobs
The first defence of any industry in crisis is to point out the number of jobs it supports. The tourism industry has a better case to make here than most. We've heard a lot about aviation jobs and cruise industry jobs in recent weeks.
They're a small part of the story.
Millions of small businesses are the real heart of the tourism industry. They've had less attention in discussions about tourism job losses.
The World Travel and Tourism Council estimates that tourism produces more than 1 in 10 jobs globally. That's a staggering number of lives, families and micro economies. I can't think of an industry that supports so many small businesses.
Just as important as the global network of small tourism businesses is how they are distributed across the globe, delivering economic benefits to some of the most disadvantaged and remote communities in the developing world. Those millions of small businesses will already be facing disaster.
When you hear about airlines and cruise ships lining up for government money, spare a thought for the family owned restaurants, homestays, tour operators and guides, stallholders and drivers in some of the most beautiful, remote and disadvantaged places you've visited. And how every cent spent in those communities makes a measurable difference to some of the most disadvantaged people on the planet.
Our industry does a lot of good worldwide. And there's plenty we can do better. It's gonna be tough for at least 12 months for most of us working in travel and tourism. Let's work towards a better, more accountable, more sustainable industry on the other side.