Beyond COVID-19: looking forward to recovery and innovation
The COVID-19 global pandemic is undoubtedly an unprecedented public health crisis of our time. Much remains to be done in terms of response and recovery, particularly as we count the humanitarian costs of the crisis and work toward the discovery of effective treatment and vaccine. While solving and alleviating the profound humanitarian impact of the virus remains a top priority, the economic aftershock and long-lasting effects on various industries is a growing concern to governments and businesses across the globe. Unfortunately, tourism and hospitality has been and will continue to be greatly impacted by the crisis.
Like many other countries to have been hit by the COVID-19 crisis, China has suffered greatly. The Chinese government has taken a very committed and thorough stance on the fight against the virus, however, like many other nations, the damage to the economy has been devastating. While the swift and effective 3 month-long lockdown has been considered effective in controlling the spread of the virus, the pause in economic activity nationwide has had a profound effect on livelihoods, businesses and productivity.
The tourism and hospitality Industries have been dealt a particularly hard blow due to the stringent lockdown measures enrolled in most nations, causing a crash in domestic and international tourism globally. According to a study conducted by McKinsey, international arrivals have reduced by a staggering 0.9 to 1.1 billion year-on-year and up to 120 million jobs are at risk.
Fortunately, with the easing of lockdown restrictions in China and abroad, early signs of recovery are visible. By June 28, total occupied airline seats had bounced back to 15 million showing a year-on-year drop of just 3 million, while nationwide hotel occupancy had surged back to 38% - just a 30% drop from its 68% high in 2019. Thanks to a variety of regional and national initiatives to restart the Chinese economy, it seems as though Chinese tourism is taking tentative steps towards recovery. For example, thanks to the innovative strategies put in place by the Shanghai government to reinvigorate the economy, on-theday bookings at The Peninsula Shanghai make up for 10% of room occupancy - a rate beyond imagination for hoteliers in other countries.
Despite these early signs, long-term recovery will definitely encounter difficulties that would have been previously unknown to the industry. It is expected that it will take at least 2 years to recover from the initial shock of COVID-19, with current studies showing that tourism will not reach its pre-2019 levels until 2022 at the earliest. Chinese travellers have already indicated a 32% drop in intent to travel internationally which, although promising for domestic tourism, presents greater challenges for businesses dealing with international travel. Interestingly, a 20% decrease in business travel is also a “ Fortunately, with the easing of lockdown restrictions in China and abroad, early signs of recovery are visible. By June 28, total occupied airline seats had bounced back to 15 million showing a year-on-year drop of just 3 million, while nationwide hotel occupancy had surged back to 38% - just a 30% drop from its 68% high in 2019. “ difficult sign of the times as businesses have adapted to remote working and the rise of conferencing apps such as Zoom and Tencent Conferencing.
A ‘new normal’ for the tourism and hospitality industries is on the horizon, however, with profound and lasting changes expected globally. ‘Travel bubbles’ with destination advice updated in real-time will guide domestic and international tourism. Risk-free tourism will be the gold standard for travellers moving forwards, with businesses accommodating new trends with policies and services such as free cancellation, flexible booking and rebooking, insurance coverage, rewards schemes and contactless service.
Businesses will need to rise to this challenge swiftly and effectively to meet the ever-evolving expectations of tourists. This must include the regular revisiting of policy and communications, as well as the acceleration of digital transformation, social media presence and customer-centric data-driven approaches. The adoption of the technologies promises enhanced safety and convenience which is proven to be most resilient and reliable communication tool of our time. Its importance both in personal and business fronts can only become most significant than ever. For example, PenChat, the instant messaging tool which has just been launched by The Peninsula Hotels, has been raved by many. Guests praise the timely introduction of this app which allows them to interact with hotel 24 hours at their fingertips on their own pace.
It is clear that tourism faces great challenges in the short- to medium-term yet preliminary recovery seems to be promising. The fundamentals of the travel market are still healthy and show great potential for future growth once tourism regains its strength. China tops nations in its optimistic view of its own recovery, with 53% of consumers polled by McKinsey in May expressing positive hopes for economic recovery. With this recovery and the productivity of the industry in meeting the needs of post-COVID travel, there is great hope on the horizon.
