GLOBAL TRAVEL
AND TOURISM
INDUSTRY
13 Signals of a
Post-COVID-19
‘New Normal’
June 2020
An
Insights Brief Series
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
Produced by
1
ACKNOWLEDGEMENTS
Authors
DinarStandard™ is a growth strategy
research and advisory firm empowering
organizations for profitable and
responsible global impact. We provide
fact-based insights and experiencebased strategic advice to help our
clients reach their full potential.
It is registered in the USA as Strategy
Insights Inc., D.B.A. DinarStandard.
New York – Dubai – Jakarta
www.dinarstandard.com
DinarStandard
dinarstandard
DinarStandard
info@dinarstandard.com
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
Sapta Nirwandar
Chairman of Indonesia Halal
Lifestyle Center & Indonesia
Tourism Forum
Rafi-uddin Shikoh
Managing Partner
DinarStandard
Reem El Shafaki
Director, Growth Strategies
DinarStandard
Nahla Mesbah
Senior Associate
DinarStandard
Report design by ÁM
Photos: Unsplash
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PURPOSE
AND
APPROACH
PURPOSE
Amidst the ensuing mayhem in which the tourism sector globally is in
a crisis management mode, a key strategic question many are asking is
what will the post-COVID-19 ‘new normal’ look like?
How can the tourism industry thrive, not just survive?
This is the focus of this Insights Briefing.
APPROACH
This briefing is not looking at the immediate crisis response but is focused
squarely on post-COVID-19 scenarios. Our assumption on the timing of
a post-COVID-19 environment globally is summer or fall of 2021 and is
based on the majority of health experts’ views of realizing an effective
vaccine deployment or major populations reaching sufficient immunity.
As such, our “New normal” timeframe is 1-3 years.
This Insights Brief is structured to flow as follows:
Pre-COVID-19
baseline
TARGET AUDIENCE
Industry
Government
Investors
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
Current crisis
impact
13 Signals of
Post-COVID-19
An action
plan
This Insights Brief leverages DinarStandard’s global research
and expert reviews, and its global trade, investment and consumer
spend data analysis.
3
Pre-COVID-19 Global
Travel and Tourism
$8.8 trillion
industry value
319 million
jobs supported
10.4%
of global
GDP 1
10%
of global
employment 1
The travel and tourism
sector, one of the
biggest global employers
and industry, was
already going through
significant changes
and challenges preCOVID-19.
Tourism-specific
challenges
Sustainability issues
Overtourism
Highly fragmented
Needs regulation
International Tourism Receipts - Top Countries by Region3
US$ MILLION
EUROPE
1
2
RANK
3
GLOBAL RISKS
IN TERMS OF2
5
NORTH-EAST ASIA
Transportation
• Fluctuating oil prices
• Overcapacity
• Competition from low cost
carriers
Accommodation
• High OTA commissions
• Too many hotel brands
Likelihood
1. Extreme weather
2. Climate action failure
3. Natural disasters
4. Biodiversity loss
5. Human-made environmental
disasters
6. Data fraud or theft
7. Cyberattacks
8. Water crises
9. Global governance failure
10. Asset bubbles
Impact
1. Climate action failure
2. Weapons of mass destruction
3. Biodiversity loss
4. Extreme weather
5. Water crises
6. Information infrastructure
breakdown
7. Natural disasters
8. Cyberattacks
9. Human-made environmental
disasters
10. Infectious diseases
CHALLENGES BY SECTOR*
73,765
Spain
67,370
France
51,882
UK
41,115
Japan
40,386
China
40,187
Macao
(China)
4
NORTH
AMERICA
214,468
USA
22,510
Mexico
21,936
Canada
SOUTH-EAST
ASIA
MIDDLE EAST AND NORTH AFRICA
21,375
UAE
12,038
KSA
11,615
Egypt
7,775
Morocco
63,042 20,528 19,143
Thailand Singapore Malaysia
SOUTH
ASIA
SUBSAHARAN
AFRICA
8,939
South
Africa
2,449
Tanzania
1,962
Nigeria
28,568
India
Activities
• Crowd management
• Security
Food Services
• Stiff competition
• Food sourcing
Travel Services
• Dominance of top OTAs
• Limited management authority
(DMOs)
OCEANIA
Consumer trends
4,381
3,028
Sri Lanka Maldives
Sustainable Travel
45,035
Australia
11,004
New
Zealand
Immersive Travel
Wellness Tourism
Bleisure travel
*Source: DinarStandard analysis; 1 World Travel & Tourism Council. 2017 International
Comparison Program; 2 World Economic Forum Global Risks Perception Survey 2019-2020; 3 UNWTO
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Impact of COVID-19 on Consumer Behavior
Four Biggest Impact Areas on Consumer Behavior
1
Health/Safety
Concerns
2
Domestic travel & less popular
destinations preferred
8,993,659
Confirmed Covid-19
cases
Americas
4,437,946
Europe
Eastern
Mediterranean
4
Intent to travel varies
across generations
Substitutes to
travel
SENTIMENTS ABOUT TRAVEL HAVE BEEN AFFECTED
Survey of 4000 respondents by Bloom Consulting shows.
75%
of total tourism
economy in OECD
countries is forecasted
from domestic
tourism5
89% of
millenials plan
to travel
35-45%
of respondents will not
travel again unless the
virus is fully eradicated.6
2,562,642
64%
cited feeling unsafe
traveling
75% of baby
boomers will
book a trip
Only 11% of millennials will not
book a trip during the pandemic
compared to 25% of baby
boomers according to Fuel
Travel, a hotel software provider
933,052
South-East
Asia
336,577
Western
Pacific
206,948
Africa
3
232,215
INCREASE IN ACTIVITIES THAT REPLACE TOURISM AND OTHER FORMS
OF RECREATION
75%
increase in video
game traffic in the
US according to
Verizon
1,000%
increase in Facebook
group calls since
March 24, 2020
according to
Facebook
50%
increase in Snapchat
video calls between
February and March
2020.7
101%
increase in Zoom’s
stock since January.8
It is now valued at
$50 billion, more
than 7 biggest
airlines combined!9
28%
increase in Netflix
revenue compared
to same period last
year10
425%
increase in online
course enrollment
in Udemy, an online
learning platform
Source: DinarStandard analysis; 4 World Health Organization, June 23, 2020: 5 Organisation for Economic Co-operation and Development, “Tourism Policy Responses to the coronavirus (COVID-19),” OECD, last modified June 2, 2020, https://bit.ly/OECD_
Covid; 6 Bloom Consulting and D2-Analytics, “COVID-19 The impact on Tourist Behaviours,” Bloom Consulting, accessed June 22, 2020, https://bit.ly/Bloom_consulting; 7 Wunderman Thompson Intelligence, “Wunderman Thompson. The Future 100 (2.0.20),”
Wunderman Thompson, 2020; 8 Louis Navellier, “Zoom Turns the Corner After Privacy Missteps,” Nasdaq, last modified June 5, 2020, https://bit.ly/nasdaq_zoom; 9 Nickie Louise, “Zoom Video conferencing app is now worth more than the world’s 7 biggest
airlines combined; now valued around $50 billion,” Tech Startups, last modified May 17, 2020, https://bit.ly/techs_zoom; 10 Wendy Lee, “Record high Netflix subscriptions in coronavirus crisis,” LA Times, last modified April 21, 2020, https://bit.ly/netflix-sub
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Impact of COVID-19 on Industry
Five Biggest Impact Areas for Industry
1
Aviation & Hospitality sectors
most impacted by crisis
2
SMEs in
crisis
3
Innovation in touchless travel,
hygiene & health screening protocols
4
Pivots & aggressive promotions
to maintain revenue streams
Over
50%
80%
airline industry losses in
2020 (IATA)
$112 billion
what SMEs
account for of the
travel & tourism
sector12
50%
INVESTMENTS SECURED
$400 million
Norwegian
Cruise Line
50%
drop in airline revenues
compared to 2019 (IATA)
drop in leisure sector investments in Asia
compared to same time last year14
of SMEs will not
survive the next
few months
which will
impact national
economies.13
in hotel losses
revenue decline in 2020 for
the hotel industry (STR and
Oxford Economics)11
Financial viability &
investment implications
42%
Aviation & hospitality sectors face
heavy losses
$84 billion
5
CERTIFICATIONS
WTTC, hotels & travel industry players released hygiene & safety
certifications
$80 million
Thayer
Ventures
1.6 million
hotel employees out of work
Safe Travels
by World Travel &
Tourism Council
Sansee
Hilton
Clean Stay
ALLSAFE
by Accor
$43.7 million
Fly Now Pay
Later
$100 million
Traveloka
$350,000
Hotel Data
Cloud
Source: DinarStandard analysis; 11 American Hotel and Lodging Association, “COVID-19 Devastating Hotel Industry,” AHLA, last modified April 22, 2020, https://bit.ly/AHLA_Covid19;
12 World Travel & Tourism Council, “Coronavirus Brief - 15 June,” WTTC, 2020; 13 Organisation for Economic Co-operation and Development, “Tourism Policy Responses to the coronavirus (COVID-19),” OECD,
last modified June 2, 2020, https://bit.ly/OECD_Covid; 14 Nikki Sun, “Asia’s travel startups battle for survival as investors pull back,” Nikkei Asian Review, last modified June 18, 2020, https://bit.ly/Nikkei
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Impact of COVID-19 on Government Policies
Five Biggest Impact Areas for Governments
1
Economic losses / supporting the industry
to safeguard the economy & job impact
2
Travel restrictions &
regulations
3
4
Travel bubbles
Medical needs
5
Sustainability
regulation
$910 bn to $1.2 trn
loss in export revenues from tourism15
319 million
jobs are supported by Travel
& Tourism16
This represents 10% of global employment17
197.5
million
jobs at risk18
$9 trillion
global fiscal
support to fight
COVID-1919
156
Intensive care units and
ventilators close to tourism
resorts in Turkey 25
TRAVEL BUBBLES
SDGs THAT TOURISM
IMPACTS
countries have completely closed
borders as of June 1st 22
144
countries have
adopted fiscal policies
to support the
industry, mostly in
the form of stimulus
packages20
100
countries have adopted
policies to support jobs
and training21
Australia and New Zealand first to
publicize a “corona corridor”
Singapore in talks
with Australia,
South Korea, New
Zealand, Malaysia
to establish
corridors23
Indonesia in
talks with China,
South Korea,
Japan, Australia
to create travel
bubbles24
Source: DinarStandard analysis; 15 World Tourism Organization, “World Tourism Barometer May 2020 - Special focus on the Impact of COVID-19,” UNWTO, last modified May, 2020, https://bit.ly/WTO_b; 16 WTTC Travel and Tourism Economic Report 2019 World; 17 World Travel & Tourism Council, Travel and Tourism Economic Impact 2019 - World (London: WTTC, 2019); 18 World Travel & Tourism Council, “Coronavirus Brief - 15 June,” WTTC, 2020; 19 Organisation for Economic Co-operation and Development,
“Annex 1.B. International Organisations and industry associations’ COVID-19 dedicated information,” OECD, last modified June 2, 2020, https://bit.ly/OECD_COVID-19_Annex; 20 World Tourism Organization, How are countries supporting tourism recovery?
Briefing Note – Tourism And COVID-19, Issue 2 (Madrid: UNWTO, 2020; 21 Ibid; 22 Organisation for Economic Co-operation and Development, “Forecasting the impact of the COVID-19 crisis on tourism in selected OECD countries,” OECD, last modified June 2,
2020, https://bit.ly/OECD_COVID-19_Box1; 23 Outlook Traveller., “These lanes will ensure smoother health protocols for those undertaking official or essential travel,” Outlook India, last modified June 7, 2020, https://bit.ly/OT_India; 24 Dian Septiari, “Indonesia
eyes ‘travel bubble’ for four countries in Asia Pacific,” The Jakarta Post, last modified June 17, 2020, https://bit.ly/Jakarta_Post; 25 Daily News, “Turkey to ‘certificate’ tourism destinations,” Hürriyet, last modified April 19, 2020, https://bit.ly/HurriyetDN.
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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13 Signals of a Post-Covid-19
“New Normal” for the Global Travel and
Tourism Industry and for Governments
The 13 signals presented
here are based on our
analysis of travel data,
consumer trends and
industry actions in wake
of the COVID-19 crisis.
For Industry:
1
2
3
4
Hygiene as a criterion
Contactless travel
innovation
Rise in domestic
travel
Opportunity for
boutique travel agencies
5
6
7
8
Millennials & Gen Zs
an important segment
Sustainability
as a priority
Funding for travel
tech startups
Broadening Business
Models to hedge tourism risks
For Governments:
Source: DinarStandard
9
10
11
12
13
Crisis
preparedness
Regulate hygiene
& safety certification
Tourism
corridors
Destinations/attractions
will reconfigure for
safety
Incorporate
sustainability in
tourism plans
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Signals of a Post-COVID-19 “New Normal” for the Travel and Tourism Industry
Hygiene as a criterion
1
Safety and Hygiene will become an important criterion in travel and
tourism decision-making by consumers
The industry, led by the hospitality and aviation sectors, has already
started implementing strict hygiene and health cleaning protocols.
The World Travel & Tourism Council launched a global safety and
hygiene stamp of approval, and there are several other examples.
Contactless travel innovation
2
We are already witnessing an accelerated adoption of travel
innovations across the industry which could continue beyond the
crisis
Innovation is expected to continue for touchless travel, including
contactless payments, contactless kiosks at airports, in addition
to robotics in hotels as well as airports.
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Signals of a Post-COVID-19 “New Normal” for the Travel and Tourism Industry
Rise in domestic travel
3
The share of domestic travel will continue to rise beyond the
COVID-19 crisis
As a result of the travel restrictions coupled with health and safety
concerns, the COVID-19 crisis has sparked a demand for domestic
travel. This trend could continue as people discover destinations a
car ride away, and destinations continue to tailor their products and
marketing messaging to their local markets to manage their risk.
Opportunity for boutique travel agencies
4
Boutique travel agencies could provide personalized assistance
With travelers having to adhere to a myriad of expected new
regulations including providing proof of health, in addition to any
country-specific regulation, smaller travel agencies will have an
opportunity to gain loyal customers as travelers will prefer having
the reassurance of working with a specific person instead of a
faceless agent in a large call center. Smaller companies will also
be well positioned to assist travelers in obtaining proof of health
certification as required by destinations.
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Signals of a Post-COVID-19 “New Normal” for the Travel and Tourism Industry
Millennials & Gen Zs an important segment
5
Millennials and older Gen Zs could become an even more
important segment for the travel industry
Surveys showed millennials are more willing to travel once
restrictions are eased and they are more willing to take risks than
older generations.
Sustainability as a priority
6
The share of the sustainable travel segment will grow within
certain traveler segments
Witnessing the positive impacts on the environment during the
absence of travel (clearer skies, more wildlife, cleaner bodies of
water), certain travel segments are becoming more conscious
of the impact of travel on the environment and the communities
they visit and may choose more sustainably in the future.
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Signals of a Post-COVID-19 “New Normal” for the Travel and Tourism Industry
Funding opportunities for travel tech startups
7
Travel tech startups will be much more well positioned to raise
funding
UAE-based travel-tech startup Hotel Data Cloud (which will use
AI and machine learning to help hotels engage with customers)
secured $350 thousand in seed funding from local and
international investors.
Thayer Ventures, a venture capital firm focused specifically on
technology innovation in travel and transportation, raised $80
million to invest in technology companies disrupting the travel
and transportation industry.
Travel payment startup Fly Now Pay Later has raised $43.7
million to develop its flexible payment technology for use once
coronavirus-related travel restrictions ease.26
26 Jill Menze, “Fly Now Pay Later raises £35 million to bring travelers flexible payment options,” PhocusWire, last modified May 20, 2020, https://bit.ly/phocus_wire
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Signals of a Post-COVID-19 “New Normal” for the Travel and Tourism Industry
Broadening Business Models to hedge tourism risks
8
Tourism businesses will broaden their business models by adding
services that are not dependent on tourism
After witnessing tourism come to a standstill during the crisis,
some companies started offering services that are in line with
the activities people were doing while confined to their homes
(consuming media content, gaming and learning).
Air Canada just launched a free at-home streaming service for its
loyalty program members, which could eventually become a paid
service.
Airbnb and Viator, as well as several other tours and activities
companies started offering virtual experiences with local hosts
and guides.
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Signals of a Post-COVID-19 “New Normal” for Governments
Crisis preparedness
9
Governments have realized that they need to strengthen their crisis
preparedness plans especially in case of future pandemics
Governments need to invest in the aviation and hospitality sectors
to avoid their collapse in case of future crises. They also need to
be prepared to provide both financial assistance in addition to
technical and regulatory support to small businesses, as small and
medium enterprises are an important component of the global
economy, that otherwise risk collapsing. There is also a need to
retrain tourism workers who lost their jobs since not all jobs will be
coming back after the crisis.
Regulate hygiene & safety certification
10
With hygiene and safety stamps being offered by international
organizations (WTTC) as well as the private sector (Hilton,
Accor), governments are expected to step in to regulate these
certifications
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Signals of a Post-COVID-19 “New Normal” for Governments
Tourism corridors
11
New tourism corridors through regional cooperation among
countries will be created
Some countries are opening up to regional travel, allowing
travelers from select neighboring countries to enter without
quarantine restrictions – like Australia and New Zealand. This
paves the way for regional cooperation among countries including
the creation of tourism corridors.
Destinations/attractions will reconfigure for safety
12
Destinations will continue to make adjustments to ensure social
distancing and other safety measures
In preparation for reopening, several museums have invested in
technology to allow for mobile app booking and dynamic pricing.
In the meantime, several theme parks have adopted digital
queuing to avoid lines. We expect many of these and similar
measures to continue after the crisis.
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Signals of a Post-COVID-19 “New Normal” for Governments
Incorporate sustainability in tourism plans
13
The forced pause in tourism has allowed governments, especially
in cities previously suffering from over-tourism, to start planning
sustainability regulations to implement once tourism re-opens.
Greenpeace, for example, is demanding that airline bailouts come
with strict conditions on their future climate impact.27
27 Jane Dunford, “‘Things have to change’: tourism businesses look to a greener future,” The Guardian, last modified May 28, 2020, https://bit.ly/GuardianJD
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
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An Action Plan Towards the “New Normal”
For Industry:
MID-TERM STRATEGY 1-3 YEARS
A post-COVID-19 “new normal” action plan for the travel and tourism industry transitions from crisis
management mode through three phases of Return (transition to post-COVID-19), Reform (operational
setup) and Reinvent (new solutions, efficiencies, compliance).
REINVENT
Destinations
REFORM
RETURN
Incorporate health
and safety measures
within product
offerings, including
cleanliness protocols,
contactless
technology, and
social distancing
regulation, and
communicate this
in your promotional
material
6-12
MONTHS
Not part of this
briefings focus
Develop new business
models that expand
beyond current services.
For example, hotels can
offer at home catering,
restaurants can offer
frozen prepared meals,
groceries
Include domestic
travelers as one of your
target markets and
provide relevant products
and services
Re-configure the
MICE industry to be
prepared for a future
of possible outbreaks
Implement PPP
(public-private
partnerships) to
support destinations
Travel Agencies
& OTAs
Focus on AI and
machine learning
to tailor offerings
to customer
preferences
Hotels
Re-invent the
guest experience
and incorporate
touchless
technology
Implement strategies
to attract investment
1 – 1.5 YEARS
1.5 – 3 YEARS
Return – Reform – Initiate Reinvent
Expand Reinvention
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
Restaurants &
Food Services
Consider
incorporating the
cloud-kitchen
model (focusing on
food delivery and
using centralized
commercial food
production facilities
used by a group of
restaurants)
Source: DinarStandard
19
An Action Plan Towards the “New Normal”
For Government
MID-TERM STRATEGY 1-3 YEARS
A post-COVID-19 “new normal” action plan for government transitions from crisis management
mode through three phases of Return (transition to post-COVID-19), Reform (operational setup) and
Reinvent (new industry policies, stakeholder engagements)
REINVENT
Health
and Safety
REFORM
RETURN
Strong contingency
planning in place for
future pandemics
Develop strong
government-linked
travel industry and
related investment
strategy, including
enhanced PPPs for the
“new normal”
Enhance regulations
to prevent outbreaks,
working closely with
the private sector
Revise tourism action
plans to incorporate
crisis preparedness
plans in addition
to addressing
sustainability
issues (community,
environment, economic
sustainability)
Economic
Enablement
Invest in the aviation
and hospitality sectors
to avoid their collapse
in case of future crises
Focus on building
PPP (public-private
partnerships)
Support funding of
hygiene and safety
expenses for the sector
(e.g. hotels)
Social
Services
Work towards
implementing a
universal or targeted
basic income, as many
of the tourism jobs lost
during the pandemic
will not return given
accelerated automation
& cost cutting
measures
6-12 MONTHS
1 – 1.5 YEARS
1.5 – 3 YEARS
Not part of this
briefings focus
Return – Reform – Initiate Reinvent
Expand Reinvention
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
Source: DinarStandard
20
DISCLAIMER
The report’s data is believed to be correct at the time of
publication but this cannot be guaranteed. Please note
that the findings, conclusions and recommendations that
DinarStandard has delivered are based on information
gathered in good faith from both primary and secondary
sources, whose accuracy we are not always in a
position to guarantee. The findings, interpretations, and
conclusions expressed in this report do not necessarily
reflect the views of DinarStandard.
As such, the information contained in this report is
intended to provide general information only and should
not be considered as legal or professional advice or a
substitute for advice covering any specific situation.
DinarStandard specifically disclaims all liability arising out
of any reliance placed on this material. DinarStandard
makes no representations or warranties of any kind,
express or implied, about the completeness, accuracy,
reliability or suitability of this material for your purposes.
DinarStandard 2020 All Rights Reserved
Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020
21
GLOBAL TRAVEL
AND TOURISM
INDUSTRY
13 Signals of a
Post-COVID-19
‘New Normal’
An Insights Brief Series
Produced by