Global Business

Knockback to global industry severe, but recovery possible soon

Rohma Sadaqat /Dubai Filed on November 10, 2020
World tourism arrivals are set to drop 50 per cent by the end of 2020. Photo by M. Sajjad.

The knockback effect on the global travel industry, as a result of the Covid-19 pandemic, has been severe, experts at WTM London Virtual 2020 said.

However, recovery could be on the cards as soon as Q1 of 2021. Speaking on a panel session titled ‘A glimmer of hope: Insights into the recovery of global travel’ on the first day of the event, experts said that the recovery would be driven by pent up demand as well as several other factors.

“There are some positives,” said James Clarke, general manager, UK, Travelzoo. “From our perspective, 2021 will definitely be better than 2020. There is pent up travel demand. Price is not going to be a factor; the discussion will be centered around refundability and flexibility when making bookings. We are looking at a new booking era which is highly customer-centric; so great customer service is going to be key along with business loyalty. Customers will be remembering who they booked with, how they were treated, and what their experience was like.”

Where people travel to, is also going to be very important, he added. “People have expressed an interest in making a booking as soon as January and February of 2021, with travel scheduled for the month of September most commonly, followed by the months of June and May. This is a positive sign for the market. Certain destinations such as the Maldives have seen a surge in popularity when the corridor opened, especially when prices have come down and become more affordable.”

Rachel Read, head of Communication, ETOA, noted that the global travel industry has always been resilient when it comes to motivation. People, she said, still want to travel, but their main concern is about having to quarantine. “People want to travel and go on holiday because it means a change of scenery and a chance to relax.”

Stephanie Boyle, group head of Industry and Partner Communications, Skyscanner, stressed that price will still be a very important driver, given that there is still a lot of uncertainty regarding jobs and the economy. “It will be important to return confidence to travellers. Flexibility is going to be the new keyword moving forward.”

She also noted that air travel has become much more complicated over the past few years. “A big shift that we have seen is towards a much shorter booking window. People are making bookings for travel in as little as seven days. Searches for a destination increase as soon as a corridor is open, especially if the destinations say that they are easing up on travel restrictions. There will always be certain travellers that are less risk averse and their intent to travel will convert very quickly. Another trend that we are seeing is a shift towards domestic travel.”

“There is going to be a great need for innovation and speed because travel is changing, and if business as usual is not coming back, then it is up to us to see what business unusual is going to be like,” she added. “There is going to be a lot of collaboration that is going to be happening in the industry between different players, and we have already seen it happening now as businesses work on their recovery plans. This will have to continue in the future so that we can rebuild sustainably.”

Digitalisation and sustainability has to be on the cards

Businesses that remain out of touch about what travellers are looking for when they make their next travel plans are going to end up in a very challenging situation, said Caroline Bremner, head of Travel Research at Euromonitor.

Speaking in another session at WTM London Virtual 2020, she said that the scene for the global travel industry is going to get very competitive with world tourism arrivals dropping 50 per cent by the end of 2020. Bremner painted a very grim reality, saying that global tourism recovery is expected to take three to five years. This prediction is based on the Covid-19 pandemic being contained within a year and demand starting to rebound in 2021.

“Our research is showing us a 57 per cent drop in global tourism arrivals,” Bremner said. “We know that every single sector has been heavily affected. Airlines will take at least four years to recover, while OTAs, travel agencies, and hotels could take at least five years. Hotels and airlines could potentially be operating at below 50 per cent of former capacity levels for the next three to four years. In the short to mid-term, we will see a 75 per cent reduction in international travel over the first six months of 2021.”

One silver lining is that travel businesses which offer a mobile app will be the fastest to recover. “We definitely see a strong shift towards online travel and mobile travel."

However, more worrying is the fact that 21 per cent of global consumers planned to move away permanently from international travel. In addition, 64 per cent of consumers said that they were worried about climate change.

Euromonitor’s research showed that 76 per cent of consumers are expected to be more concerned about sustainability after Covid-19, but that 42 per cent of the tourism industry planned to postpone or cancel the development of sustainable products or services due to the pandemic.


Rohma Sadaqat

I am a reporter and sub-editor on the Business desk at Khaleej Times. I mainly cover and write articles on the UAE's retail, hospitality, travel, and tourism sectors.Originally from Lahore, I have been living in the UAE for more than 20 years. I graduated with a BA in Mass Communication, with a concentration in Journalism, and a double minor in History and International Studies from the American University of Sharjah.If you see me out and about on assignment in Dubai, feel free to stop me, say hello, and we can chat about the latest kitten videos on YouTube.

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