Covid-19 and tourism: what is the future of business travel?

Tourism

Economic News

7 Jul 2020
Text size +-
Recommend

Covid-19 dealt a body blow to the global travel industry, but there are signs that a recovery is slowly under way as policymakers make concerted efforts to meet pent-up demand for leisure tourism. However, business travel will take longer to recuperate, and may struggle to return to pre-pandemic levels.

Worldwide, tourism has been one of the sectors worst hit by the coronavirus pandemic. 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% 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% and 80% in 2020.

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.

As conditions slowly improve, a number of emerging market governments have begun implementing measures to reboot their tourism industries.

As OBG has outlined, the initial stages of this progressive re-opening were focused on domestic tourism. Now, those countries who have been more successful at containing the virus and flattening the curve are looking to bring back international travellers.

In parallel to this, airports and airlines are working on processes to reduce the health risks associated with plane travel. 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

Increased demand for international travel is anticipated as lockdowns are eased, with consumers eager to enjoy their newfound liberty.

As they seek affordable and accessible options, many travellers may opt for destinations in those emerging economies where labour laws are more flexible, and where tourism’s importance to GDP has prompted comprehensive efforts to make destinations safe and welcoming to foreign visitors.  

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 in Europe, 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 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 operational shifts prompted by the pandemic, and turn temporary measures into permanent strategies.

For example, those companies that have found they can conduct operations efficiently on a remote basis may come to see the cost of travel as 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 late 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 €23bn in lost orders.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In Asia

Despite Covid-19, why is M&A booming in these regions?

While the coronavirus pandemic has had a negative impact on many businesses throughout 2020, a recent rebound in mergers and acquisitions (M&A) has pointed towards a partial recovery in...

In Tourism

The underwater theme park spearheading Bahrain’s tourism boost

In a bid to further incentivise growth in the tourism sector, Bahrain has unveiled a new scuba diving attraction.

Latest

Covid-19 and Myanmar: can the fledgling insurance sector adapt to the...

Prior to the outbreak of Covid-19, Myanmar's insurance sector was going through a period of rapid change following the entry of foreign insurers in 2019.  Amid the disruptive environment of the...