Key Points
  • As losses continue to mount in the face of COVID-19, the travel industry can take a few measures while waiting for the situation to stabilize

  • Until things normalize, companies can focus on retaining customers and improving brand experience

  • Internal initiatives that are often side-tracked can also be prioritized

As the world buckles down to tackle the COVID-19 outbreak, for the travel and hospitality sector, the worst is yet to come.

During terrorist strikes, natural disasters or war, the impact is generally localized and demand for travel shifts from one market / region to another. In the current situation however, travelers are not looking for alternatives. They are simply not traveling, be it for business or leisure.

When I spoke with leaders from airlines, hotels and Online Travel Agencies (OTAs) across geographies, one message clearly stood out: uncertainty. As global markets continue to plunge, the impact of the outbreak on travel and hospitality businesses is increasing on a weekly basis.

Here is an outline of what is to come.

The steep drop in demand in the next few months will see small and mid-sized airlines struggle significantly, with some of them potentially shutting down.

The International Air Transport Association (IATA) estimates the global air transport industry’s passenger business losses to be anywhere between USD 63 Billion and USD 113 Billion, depending on the further spread of the virus.

The hotel industry is dealing with mass cancellations, especially as a number of marquee business, sport and entertainment events are being cancelled. The direct economic loss from the cancellation of major tech conferences such as the World Mobile Congress is estimated to be more than USD 1.1 Billion.

OTAs are reeling under cancellations and refund requests that are putting a strain on their business model.

The three largest cruise operators in the world have suspended operations amidst growing concerns and advisory against cruise travel. These operators have seen a 60 percent fall in stock value since January 1, 2020.

The hope remains that we will start to see things normalize for the industry in Q3 of FY 20-21. Until then, businesses are re-orienting themselves to accept the uncertainty, and focus on retaining customers and brand experience. From introducing flexible cancellation policies, extending validity of loyalty points and offers, and looking at ways to leverage their assets towards community and government initiatives, travel and hospitality businesses are looking at ways to engage with customers.

Internally, businesses can look at prioritizing important, but often sidelined initiatives to improve processes, systems and resources that can make them fitter to compete once the economy bounces back.

I will be sharing more suggestions in the days to come as video bytes.

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