A quick glance at the global economic trends show that the travel & hospitality sector has been among the worst impacted by Covid-19. From large airlines and multinational hospitality chains to local tour operators and small restaurants, the stress has been severe.
A recent IMF report states that by May 2020, airline traffic globally declined by about 80 percent, restaurant bookings by 90 percent, and hotel reservations by more than 70 percent vs previous year. Unemployment has been widespread. A Wall Street Journal research shows that between February and September, more than 3 million jobs were lost in accommodation, and restaurants businesses in the US. This was the highest unemployment rise among all sectors. Further, WTTC estimates that 2.4 million jobs could be lost in the UK Travel & Tourism sector in 2020 given more lockdowns. It is estimated that a 75 percent disruption of accommodation services together with a 90 percent disruption to restaurants and a 40 percent disruption to travel for six months could reduce GDP growth in 2020 between 2.5 to 3.5 percentage points in G20 countries. This, leaving aside the cascading impact on other sectors.
Amidst this stress, glimmers of hope started to appear worldwide, including in India. Many parameters reflecting performance of the infrastructure, manufacturing, and services sector have shown a tremendous uptick, September onwards. Consumer spending has increased, from automotive to online commerce.
This reversal, even if patchy, has come at the right time for the travel & hospitality industry.
Like many other industries, customer preferences have rapidly reshaped and the industry, impacted by the situation, has responded with new business models and opportunities.
Some of the recent leisure travel is fuelled by pent up demand, in what is termed as revenge travel due to pandemic fatigue. But many of these trends, though emerging rapidly, will be here to stay.
Domestic holidays: Given the uncertainties and strict travel regulations worldwide, it is almost entirely domestic travel now.
Driving holidays: Shorter distance, in own cars or sanitised vehicles provided by hotels for pick up & drop, is a growth segment for the affluent.
Isolated destinations: Again, social distancing means isolated off beat locations with interconnect access, yet appealing to travellers.
Live Anywhere: With WFH & Work from Anywhere far more acceptable now, travel now blends with living and working. This trend, visible earlier with affluent gig workers is extending to white collar segments where private accommodation is preferred over standard hotels.
Create Space anywhere: Many independent homeowners, especially in offbeat but scenic locations are creating accommodation especially for longer-term travellers.
Try before Buy: In some countries like the US, home purchase in suburban locations has seen high growth, unprecedented since 2006. Sometimes potential buyers are choosing to first spend time through longer stays in a location, prior to buying there.
Sustainable travel: aligned with the other trends, travellers are preferring to connect with nature and locals for newer experiences in a controlled way. Safer isolated locations facilitate that. Food & beverages sector has shown signs of revival, with takeaway & delivery being the preferred modes. Many five star properties have shed their inhibitions and offered their menu via food delivery apps.
The inequality in the F & B segment has been very severe though. For example, large chains like Domino’s, McDonald’s, Chipotle actually expanded stores in the United States. Small single outlet restaurants, meantime, have either closed down or suffered miserably.
The recovery though will take a very long time to reach 2019 levels. The changes in customer choices and business model innovations are likely to continue longer, some permanently. This will create a new shape and identify for the travel industry.
Contributed by: Jaideep Ghosh, COO
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