COVID-19 proves tourism’s vital role in the world economy and Governments must work together to get people travelling again

Global travel leaders come together for mammoth five-hour virtual conference hosted by WTM London and ITIC

The COVID-19 global pandemic has underlined the vital role travel and tourism play in the world economy, a distinguished panel of from all corners of the globe have concluded.

The Future of Travel & Tourism: Financial Strategies for the Recovery was the second virtual conference organised by the International Tourism & Investment Conference (ITIC), and the first organised in partnership with WTM London, which used the event to re-emphasise its plan to welcome the world at its flagship three-day show in November at ExCel London.

ITIC’s ambitious five-hour video conference programme attracted 1,250 viewers from 103 countries who watched representatives from the world of government, industry, finance, hotels, airlines, tourism boards and global associations live on YouTube or Facebook.

WTM London Senior Exhibition Director Simon Press joined the event’s introductory session, saying the global event is more valid than ever and pledged that its November 2-4 2020 event would be about getting back to business.

“WTM will continue to pay a pivotal role,” he said.

Dr Taleb Rifai, Chairman ITIC and former Secretary-General UNWTO told The Future of Travel & Tourism: Financial Strategies for the Recovery’s opening session:

“Opportunity comes from all crisis and today is an opportunity to consider what the new world looks like. Investment is very important and we have not realised how important. Psychologically the effect of investment is important and you can not underestimate its impact and sign of confidence.”

Gloria Guevara, President and CEO of WTTC said she hopes COVID-19 will lead to governments working together and learning from each other.

She said: “Something like 9/11 took years to recover because each country worked in silos, with their own restriction – now 18 years later, protocols remain different. At some airports, do I take my shoes off or not?”

“Protocols for travel need to be the same, all hotels have to be the same.

“What’s important is a coordinated approach between the private sector and governments.”

Guevara said 80 countries have already agreed to the ‘Safe Stamp’ introduced by the WTTC so travellers will know and understand safety procedures.

She also said there was no better time to invest, because recovery will definitely happen and “when it recovers, it will grow fast,” she said.

Nicolas Mayer, PWC Industry Leader Hospitality and Tourism EMEA & Managing Partner Global Centre of Excellence Tourism & Hospitality said the pandemic was worse than any previous crisis as it had hit both the value chain and demand.  

“Demand will come back very strongly, there is no reduction in the desire for travel ad no evidence of a drop,” he told the summit. “Finance needs to help companies ramp up to survive the valley of death when they reopen. The valley of death is the time they must survive when there’s a need to see cash out and the wait for cash to come in. In the hotel business this can be up to 150 days.”  

Destination delegates included Hon Majd Mohammad Shweikeh, Minister Tourism and Antiquities, Jordan, who told the conference: “Initially all the tourism sector was in panic. But now we are having meetings to ensure survival and we will focus on niche tourism.  

“We have green zones in the south, unaffected by the virus and while she agreed with moderator Mr Datar that somewhere like Petra, which is normally crowded, will have to change the way it operates.  

“But we will enhance the infrastructure and revise and reshape the journey for the customer. “That means a focus on health: hygiene, social distancing and masks.”  

Emirates Airlines VP-Industry Change Rob Broere, who is also Chairman, IATA – Travel Standards Board, said: “Our programme is in place for the health and safety of staff and passengers in co-operation with the WTTC.  

“We disinfect the aircraft every journey but we still provide gloves, masks and wipes to travellers. We have screens at check-in desks, waiting passengers can use only one in every three seats and hand baggage must be small to allow speedy boarding.”  

Like many delegates, Broere expressed his strong opposition to quarantine. “It makes no sense. It will kill the business,” he said.  

“Consider a flight between Dubai and New Zealand. If there is no infection there is no point in imposing 14-day quarantine.”  

Gerald Lawless, WTTC Ambassador, Director ITIC & Advisory Board Member Dubai Expo 2020, took up the case for sustainable travel and tourism to be part of the solution.  

“We have to convince the environmentalist that our industry does so much good for developing countries and we must understand the threats of climate change,” said Mr Lawless.  

“Aviation gets a bad press but creates less than 3 per cent of the pollution.  

“Hotel groups did so well to get rid of single use plastics and Covid has brought them back.”  

Margaux Constantin, Partner at McKinsey Company, which has looked at travellers’ intentions and travel searches online, warned it may take until 2026 for a recovery.

She said travellers will spend money as soon as they are able this year, because they have the money, but as the recession bites in 2021 bookings will fall off and may not bounce back for five years.

Former UNWTO Secretary-General Dr Rifai concluded: “Things will get worse before they get better, but governments recognise travel and tourism is very important.

“Countries have been left on their own to make bilateral agreements towards a new world order.

“Domestic tourism keeps the sector open preserving jobs and I believe that by travelling within their country, they will love it more. I believe a country should be enjoyed by its people first.”

Ibrahim Ayoub, Group CEO & MD of ITIC and organiser of this virtual summit added:

“The primary goal of this conference was to bring together tourism ministers, health expert, tourism leaders and operators and investors in an open dialogue, under one roof to discuss and consider financial solutions and preparedness to reopen the tourism industry for a better future.”

He thanked everyone for their participation and stated: “We are continuing this conversation for sustainable investment in the travel and tourism industry post COVID-19 during the WTM week in November 2020”.

Other findings included:

• No-one supported quarantines. Most supported improved testing.
• Countries that have isolated themselves since the pandemic broke now need to co-operate
• Support differed over the idea of bubbles or corridors between nations
• Travel protocol and hygiene standards need to be the same worldwide
• Sustainability can be part of the post-pandemic sector

Click here to access the videos per panel: https://itic.uk/june-10-investment-summit-programme/

To watch the full summit: https://www.youtube.com/watch?v=Wb5C_KhUySE

Full Virtual Summit review: https://itic.uk/summit-review-trust-is-the-key-to/

ITIC is a leading conference producer whose previous events include the International Tourism Investment Conference 2018 and 2019 in London and Investing in Tourism Sustainability Conference 2019 in Bulgaria. ITIC is chaired by Dr Taleb Rifai, former Secretary-General of the United Nations World Tourism Organization. More details: www.itic.uk

WTM London, the leading global event for the travel industry, is the must-attend three-day exhibition for the worldwide travel and tourism industry. Around 50,000 senior travel industry professionals, government ministers and international media visit ExCeL London every November, generating over £3.71 billion in travel industry contracts. http://london.wtm.com/ Next event: Monday 2 to Wednesday 4 November 2020 – London #IdeasArriveHere

– COVID-19 has grounded airlines all over the world. These four charts show the industry’s main challenges now and in the near future.

– Quarantines, economic recession and health fears are likely to continue to weigh on passenger numbers.

– Record losses have already forced governments to step in – but continued support may be tied to conditions around financial soundness and environmental sustainability.

The COVID-19 crisis has grounded airlines and halted air travel all over the world, with economic consequences that are rippling far beyond the sector. Here are four charts that show the main challenges faced by airlines right now – and the dramatic changes we could see in this vital industry.

Airlines are facing record losses, not just this year

Airlines around the world are expected to lose a record $84 billion in 2020, more than three times the loss made during in the Global Financial Crisis, according to the International Air Transport Association (IATA).

The global economic recession and travellers’ fear of catching the virus are likely to continue to weigh on passenger numbers, even as travel restrictions are starting to ease. Business travel is also expected to remain sluggish, with companies noticing the cost-saving impact of video meetings and online conferences. Such savings will be all the more welcome in a difficult economic climate. Airlines are therefore still expected to lose $16 billion in 2021, and that’s assuming there won’t be a second wave of COVID-19 infections in the autumn and winter.

Quarantine measures have a similar industry impact to full travel bans

Countries are starting to admit foreign visitors again, but this is often coupled with the condition of quarantining for two weeks after arrival. For airlines, the change is unlikely to result in a recovery of passenger numbers. An IATA analysis shows similar drops in flights under full travel bans, and entry with quarantine. This makes sense: tourists are more likely to stay at home than spend their entire holiday in quarantine, and for the typical one- or two-day business trip, the set-up doesn’t work at all. This makes the sector’s recovery even more complicated in the longer term.

One alternative to quarantine measures are so-called travel bubbles or air bridges, meaning that countries with low infection numbers group together and allow quarantine-free travel between each other. Such agreements may somewhat help passenger numbers, but they don’t change the fact that global travel will remain limited for the foreseeable future. Also, the agreements are likely to change over time depending on whether certain countries experience second waves or even localised outbreaks.

Airlines are only part of the story – the whole travel industry is in deep trouble

Tourist arrivals could plunge by 1 billion this year, according to a projection by the UN World Tourism Organization. The knock-on effect on the wider economy would be disastrous. The travel and tourism sector contributed 330 million jobs or 1 in 10 jobs worldwide in 2019, and added $8.9 trillion to global Gross Domestic Product. If current travel restrictions only start to ease from September, that contribution could dive by 62% to $5.5 billion in 2020, and more than 197 million jobs worldwide could be lost.

A recovery of the tourism industry will only be possible if airlines are still there to welcome passengers once they are ready to fly again.

Given these catastrophic scenarios, coupled with the broader economic and strategic significance of airlines, governments will have to step in to support them through this crisis and in all probability, beyond.

Governments are bailing out airlines – but are they supporting the right ones?

Governments have spent $123 billion to support airlines, and will probably have to spend more as the sector’s problems drag on. However, rather than limiting their help to airlines that were financially sound before the crisis, governments have mostly handed out aid without taking into account the businesses’ long-term viability. This is worrying, because the current state aid (which is creating debt rather than equity) will add to airlines’ debt levels. Once the pandemic has passed, some airlines may fail anyway, crushed by debt and poor management.

An opportunity for the sector?

As governments funnel more state aid into airlines, they are likely to start demanding something in return. One possible scenario is that they will switch to supporting only airlines that were well-managed and financially sound before the crisis, and that are vital to national interests. Failing airlines may be forced to overhaul their business models and management. There have already been calls for governments to support only financially sound businesses across a range of sectors, as anything else would lead to an uncertain and unsustainable economic recovery.

There could also be a broader, positive change ahead: governments may ask airlines to consider the interests of a wide range of stakeholders, not just private shareholders. Environmental organizations and other groups have for example demanded that any airlines bailout be linked to conditions such as improved workers’ rights and more action to reduce emissions and tackle climate change. Some governments have already offered bailouts with climate-related conditions.

Stakeholders include the government and local authorities, but also airports, the travel and tourism community and other business sectors, relevant non-governmental organizations, and anyone else who feels their interests are affected. Their voices are likely to become more influential as airlines rely more heavily on state aid. In the travel and tourism industry, there have already been calls to use the crisis as an opportunity to create a more economically, socially and environmentally sustainable tourism model. Something similar could happen in the aviation industry, if we see the current numbers and predictions as an impulse to do better and help shape a brighter future for air travel.

This article was written by Vijay Poonoosamy, Director International and Public Affairs, QI Group and originally published on the World Economic Forum’s Agenda

Source: World Economic Forum’s Agenda

About Vijay Poonoosamy

Vijay Poonoosamy is the Singapore-based Director International and Public Affairs of QI Group, an Honorary Member of the Hermes Air Transport Organisation, a Non-Executive Member of the Board of Veling Group, a member of the International Board of Experts of Rebuilding Travel, of the Advisory Board of the World Tourism Forum Lucerne and of the World Economic Forum’s Strategy Officers Community and Gender Parity Steering Committee. He is also a long-standing resource person for ICAO, IATA and ACI. He was the Managing Director of Air Mauritius, Executive Chairman of Airport of Mauritius, Vice President International & Public Affairs of Etihad Airways and a member of the World Economic Forum’s Global Future Council on Mobility.