Why was the travel business on the edge?
The pandemic has taken its toll on every industry and perhaps the whole world economy has gone into a contingency model. But the immediate and most affected is the travel industry. The impact was abrupt and an alternative was non-existent. However, if we look deeply, the travel business was already on the edge. It was a decaying tree waiting for the first storm to uproot it.
I want to sound hopeful and say that “this too shall pass” but unfortunately, looking at the graphs, we have to deduce that while other industries will come back to life as the pandemic fades away, the travel industry will have to wait for a longer period. And we hope we are wrong in our deduction.
Looking at the countermeasures that will be imposed in the hopes of keeping a similar catastrophe at bay in the future, who knows the whole dynamics of the concept of travel might change. That would mean something else altogether. Global tourism in reality, even if the pandemic subsides by December 2020, will be hard hit beyond 2020. Travel as a whole and tourism, in particular, was the first to go down when measures to contain the virus was put in place.
World Travel and Tourism Council (WTTC)’s managing director Virginia Messina projects that of the 50 million travel jobs that could be lost, 30 million would be in Asia, 7 million in Europe, 5 million in the Americas, and the rest in other continents.
Hotel Industry Impact — The hotel industry although not entirely dependent on the leisure tourist, has been hard hit with vacant rooms. With new social distancing norms in place, meetings will be cut down and regional events will have a smaller guest list. Hotels will eventually have to device smarter cost mechanisms. The most impacted will be the small units like homestays and boutique accommodations whose operations are entirely dependent on the leisure tourist.
Aviation Industry Impact — The aviation industry which was already reeling under financial insecurity has been impacted massively. An estimated loss of $63 billion in revenue is predicted for this industry. Although the cargo operations might not see a long term impact for those flights dedicated to freight but the passenger business of flights is heading for a major dent. And passenger airline revenue since the last few years has not entirely been calculated based on the number of seats sold but also on the cargo that is being shipped simultaneously.
The Consequences of a failed business model: When the entire value chain crumbles, a lot of allied beneficiaries get impacted. The car rental industry is growing through its lowest volume months and with the automobile industry. The car rental industry, incidentally supports a lot of people in the lower end of the food chain.
In any business, transparency is good, ethical too, and speaks of long term focus. But such transparency needs active real-time monitoring. Perhaps the sheer lack of a module to monitor and gauge the transparency in the travel business has eventually made the whole industry shaky. I will elaborate on the details briefly, segregating into different heads, but I hope that this post has a viewership, or else the whole purpose of education would be defeated.
Low Barriers of Entry — The business of tourism suffers from low barriers to entry. Unlike other industries, it does not require you to hold an inventory of products. Moreover, regulations are not uniform and different countries or regions have varying standards. The lack of a retail business model makes it everyone’s game. Anybody can open shop and become a service provider.
Lack of uniform data — Any business in the modern world is data-driven for growth as well as for performance indicators. The problem with the travel industry is that the existent data is loosely placed and not centralized. The sources are many and the end purpose is very theoretical. For instance, the calculation of tourist footfall in Northeast India. The end of the year tourist footfall data in Northeast India would calculate the sum of the footfalls of the 7 states. If a tourist arrives in Northeast India for a 10-day trip, planning to do 4 states, the yearly data will show 3 extra footfalls. Now that is the problem across different zones of the world.
The Boon and Bane of Online Travel Agents — While OTAs or online travel agent platforms have created never before like volumes for the travel industry, the flipside has been that it has created a consumer base so much consumed by ‘deals’. OTAs have single-handedly been responsible for creating end-users who have become addicted to the gratification of cheap travel options. A price control mechanism needs to be in place. Most of the OTAs do not own any travel products, but they have a substantial say on how the pricing works. The result is always a fight to the finish over pricing it low and occasionally compromising on quality.
Fading focus on Destination marketing — There is no point sending a Northeast India itinerary to someone in Mongolia who has never heard of eastern India. Period! The whole process of marketing tourism is shifting to selling individually packaged tours. That doesn’t help anyone in the long run. There is a serious need to examine the relationship between consumer-focused selling, customer’s destination choices, and decision of purchasing. And all this can only be achieved by focusing on the destination rather than hard-selling travel packages.
Lobbyist Travel Organizations — Across continents and countries, the business of travel is seemingly regulated by trade bodies and organizations. And although the calling card of this organization is to promote destinations and seek welfare for its members, but somehow the need to control the business has amplified the process of lobbying. Most of these organizations have to report to the country’s tourism authority and in the process benefits from state-sponsored events, roadshows, and fairs so the need to have continuous control on the organization needs constant lobbying. The scenario becomes more complicated in countries like India where there is so much at the stalk. Of late the very purpose of such organizations has shifted to politics rather than improving the business of travel.
Cost-cutting on Business Travel — Various industries depend on travel for business. That has always been the way since ages. The very concept of business expansion relied on traveling to far destinations. However, whenever an individual, a trade or a business house needs to streamline expenditures, the first component to be axed is business travel. And with new social distancing norms in place, the restrain in business travel will be more. Advancement in digital meeting facilities has decreased the need to travel. And with further advancement physical travel, for business, will decrease further.
Myopic on long term consequences — The travel industry behaves in a very nonchalant way when it comes to dealing with long term consequences. Certain terms like Sustainability, Experiential, Bespoke, Unique, Eco-Friendly, Sensitive, Authentic, Diversity, Bio-diverse, and a lot of others have been used extensively without giving too much importance to its meaning and usage. To a lot many in the business, these are mere words that enhance their SEO (Search Engine Optimization). The travel industry needs to understand that nature, wildlife, environment, people, architecture, and all the wares we use in the travel industry are perishable goods. We have to control the volume so that these components continue to provide us.
The Road Ahead after the pandemic: The immediate future of the travel industry might look bleak, but if we deep-dive into the situation every industry has taken a hit. Business owners in the travel industry are not the only ones who have to pay bank loans and feed their children. Job cuts are not confined to the travel industry alone.
The business of travel cannot stop. And so will tourism. This is the time to focus on creating meaningful products, focus on quality rather than on quantity. We also need to re-evaluate regulations. The leaders of travel organizations have to communicate and create a think tank that prepares us for any future perils. A robust data analysis mechanism has to be put in place, so that any future threats in any form can be mitigated.
A censorship in travel is never advised, is wanted, or is a healthy notion. But adequate restrains needs to be in place. This is going to be a hard decision and might even take time. The Do-it-Yourself travel model should be discouraged. It is still in a way controlled but certain stronger measures need to be implemented at regional levels. Eventually, the whole world will understand and appreciate the control on the flexibility of travel.
This is an opinion article by the writer and is open for debate. Please do drop your comments, however critical it is in the comments section. The writer can be reached at beardedtsoul@gmail.com
