Friday, September 17

Covid-19 and tourism: Is there a future for business travel?


Coronavirus dealt a body blow to the global travel industry, but there are signs that a recovery is under way. While tourism seems likely to pick up in coming months – particularly in emerging markets – business travel will take longer to recuperate, and may struggle to reach pre-pandemic levels.

Worldwide, tourism has been one of the sectors worst hit by the effects of Covid-19. Travel restrictions and lockdown measures have effectively shut down the industry, which is both labour-intensive and entirely dependent on the physical presence of guests.

International travel fell by 80 per cent year-on-year in April, according to the International Air Transport Association, while the OECD anticipates that international tourist arrivals will decline by between 60 per cent and 80 per cent this year.

However, it would seem that potential demand remains robust: travel website Tripadvisor recently announced that its platform has seen steady, week-on-week increases in search activity since early April.

Countries around the world are exploring what the post-coronavirus travel industry might look like.

Tentative reopening

Tourism is a key industry in many emerging economies. A majority of stimulus packages either directly targeted the sector, or put in place measures from which it benefitted, such as providing economic assistance for small and medium-sized businesses.

Egypt – where tourism is a significant contributor to GDP – is a representative example.

After lockdowns were introduced, the government suspended the payment of all dues from tourism-related establishments. Alongside this, the Central Bank of Egypt offered low-interest loans to tourism facilities, principally in order to pay the salaries of employees, and also launched a financing initiative to support the sector.

Having helped them weather the worst of the storm, a number of countries have begun implementing measures to reboot their tourist industries.

As OBG has outlined, the initial stages of this progressive re-opening were focused on domestic tourism. Now, following successes in containing the virus and flattening the curve, more and more countries are looking to bring back international travellers.

In parallel to this, airports and airlines are working on processes to make flying risk-free. These include extended use of contactless technology, more self-service kiosks and protective barriers, and ‘touchless’ screening processes.

Hygiene standards will be a top priority for travellers going forward, both in transit and at their final destination.

The provision of hand sanitisers, obligatory use of masks, frequent disinfection of public spaces, and temperature checks for guests and workers are just some of the measures that will be demanded by both travellers and authorities. The swift implementation of health and safety protocols will enable businesses to benefit from the coming resumption of international travel.

At the same time, there is scope to expand the training of hospitality workers. Building digital skills, for example, will make them better equipped to respond to transformations in the market.

Emerging economies to lead leisure travel recovery

Industry commentators expect that there will be a surge in demand for international travel as lockdowns are eased, with consumers eager to enjoy their newfound liberty.

But established economies, with higher costs and more stringent restrictions, may not see much benefit from this, as travellers opt instead for destinations in those emerging economies where labour laws are more flexible, and tourism’s importance to GDP has prompted a faster loosening of restrictions.

There have been some encouraging signs. For example, the Radisson hotel chain recently announced it had no plans to slow down expansion in Africa, and is targeting Morocco, Egypt, Nigeria and South Africa in particular. At present the chain has just under 100 hotels in the region, a figure it aims to boost to 150 within five years.

In addition, some emerging markets are well placed to leverage an anticipated shift in consumer preferences. In the aftermath of the pandemic, more tourists will look for options that enable them to maintain social distance. City breaks, a traditionally popular travel option, are likely to lose ground to rural settings and outdoor attractions.

Open-air cultural sites are also set to become more popular. Egypt is again representative in seeking to take advantage of this: the country has been promoting travel to archaeological sites in Upper Egypt, offering discounts on tickets and a reduction in visa fees for travellers who fly into the region directly.

Business travel slower to reboot

One major area of the global industry unlikely to see a short-term recovery is business travel.

Many businesses will look to formalise shifts in approach prompted by the pandemic, and turn temporary measures into established strategies.

A major aspect of this is the move to doing business online. Many have learned that business can be conducted efficiently on a remote basis, and the cost of travel might come to seem an unnecessary expense.

Conferences and other business-oriented events will likewise be difficult to organise for the foreseeable future, given the ongoing necessity of social distancing.

Indeed, as early as the end of March, the Global Association of the Exhibition Industry estimated that some 500 trade shows had been cancelled as a result of Covid-19, resulting in an estimated 23 billion euros in lost orders.


This piece was produced by the Oxford Business Group.