Revival means 'Re-engineer,
During the first-ever TRAVTALK Digital Conclave and its crucial session on ‘Coronavirus: A small roadblock or a major disrupter for the tourism industry’, eminent speakers put forward their views on how to fight the deadly pandemic and explore means for revival. It is also equally important to prepare for the post-COVID era, they shared.
Leadin g the way in brainstorming was Suman Billa, Director, Technical Cooperation & Silk Route Development, UNWTO along with Kapil Kaul, CEO & Director, CAPA South Asia and Naveen Kundu, Managing Director, EbixCash Travel & Holidays. With an agenda to find workable solutions for the present and strategies for the future, the session was well-attended and all three speakers elaborated on new ideas for the industry and how travel and tourism can contribute so everyone comes out of the crisis collectively.
Tackling the crisis
According to Billa, the challenge the world is facing with COVID-19 is unprecedented. “Most of the problem is fear of the unknown. At UNWTO, we would be looking to work on getting tourism on track as soon as possible since there will be issues of cash flows and job retention, while also looking at ways to sustain the industry in the near future, ensuring liquidity for companies, working cash problems, making sure that people do not lose jobs and ensuring that there are fair arrangements for consumers,” he said.
Steps that countries are taking
Many countries around the world have come up with holistic relief packages for the tourism industry. Spain has committed 460 million Euros for tourism. The important thing to realise is that most of the governments are stressed for cash. Another aspect of COVID-19 is that its impact is very staggered. It will take time for the world to completely get rid of COVID-19. There will be travel restrictions in a phased manner. “We also need to leverage institutional funding and debt mechanism. India should consider tourism as a priority sector for relief and job retention,” Billa said.
Time to reboot
Analysing the revival plan for the tourism industry post the crisis, Kundu said that there will be a lot of behavioural change in the industry including a complete price realignment for every tourism product. He said that post-COVID, rationalisation and consolidation will become important. “Ebix has always been bullish about the Indian market. Post COVID-19, there will be a complete paradigm shift in the industry, which will create a consolidation opportunity for us. We will be looking at specialinterest acquisition over the next one year and will continue the way we have progressed in the Indian market. Among the travel sectors, I believe M!CE will be the first one to bounce back,” he said.
“We must regroup and figure out what this behavioural change is going to be because it is going to drive the entire tourism mechanism. The private sector needs to come together and redefine, realign and reenergise the entire industry. I don’t think we need to rely on any external factors. What’s most important is to understand the behavioural change,” he explained.
The way forward
Talking about future plans of his company, Kundu said, “We are not going to stop on our acquisitions. Considering what has happened right now, there will be a lot of consolidation. The market will shrink. There will be a lot of players who would want us to handle or manage their business.
I see it as an opportunity for us; the market has suddenly opened for us actually.”
The future of tourism will now be experience-driven rather than attraction or sightseeing-based. There will be a complete paradigm shift.
Tough time for aviation
Sharing his analysis on the present situation, Kaul claimed that it will almost take a year for the aviation industry to function normally, that too if conditions remained optimistic. “We have an entire aviation and global aerospace industry shut down right now and almost 800 airlines globally at near-zero capacity. Same goes with large OEMs like Boeing and Airbus; they are also facing major shutdowns. Airlines need government support in terms of a bailout package for revival,” he said.
Kaul added that if the crisis continues for a longer duration, we will have a smaller, shrinking industry, possibly some exits as well. “We might see consolidation in the market and the repair would begin thereafter,” he shared.
Revival strategy
A revival strategy depends on how much longer the lockdown stays and the way it is lifted, said Kaul. “I am more concerned about the transition from a lockdown to healthy operations. Ultimately, there is a demand destruction. Nobody knows whether people will fly or not, when they will fly or where they will fly to. And with social distancing and other challenges coming up, it will be difficult for airlines. They might feel it is better for them to ground planes to conserve cash. Choosing the routes to fly will be a big challenge. How will things get normal and what will be the cost for that?” he questioned.
When the situation normalises, airlines may have to stimulate flyers with offers to fill in seats
quickly. “Post COVID-19, airlines will have to come up with attractive packages to make passengers fly. They will have to stimulate the market and indulge in lower fare regime, attractive pricing. It will do another damage to them since they will already have faced a challenge for six months, with the next six months of aggressive bids to attract flyers. We feel that for airlines, it will almost take a year to recover and normalise the situation, that too if we are very optimistic and factor in favourable circumstances,” Kaul explained. Will the face of tourism change?
According to Billa, tourism is not going to be the same again in the post COVID-19 era. “There will not be business as usual. Tourism will now rebuild and regrow with more emphasis on sustainability and a strategy on how tourism can help the planet and not take away more from it. This means that tourists will be looking at shorter trips, zero food miles and local communities. There will be an ideological shift in the way we look at things. More and more countries have already started looking at how tourism can become a vehicle for sustainable development. The way the tourism industry organises itself has to now work on the pillar of sustainability. We will also be looking at that from more than just an economic point of view,” he explained.
According to a UNWTO analysis, COVID-19 may cost tourism seven years of growth and it will take a long time for the industry to regain the same growth level as achieved in recent times. According to Billa, the solution is: whichever country is proactive, quicker off the block, will be able to get the market share post the COVID-19 crisis. The global tourism demand will not be the same again. A strong public-private partnership will help the industry. “To my mind, all the B2B events, roadshows must be supported by the government in a big way,” he added.
According to Kundu, every travel agency, to survive, must now reengineer itself and redefine its product line. “They cannot do the business they were doing earlier. Airlines will stop giving commissions completely. It’s a question of survival now. To stimulate demand, agents may need to take various measures. There’s going to be no commission for them. For hotels, where the average room rate is going to fall down, you cannot be passing hotel commissions. The business of a travel agency is going to be more product-focused, more experience-focused. The product will not be cost-centric, it is going to be value-centric. The sooner the travel fraternity in India realigns its businesses, the better it will be for them. Every large travel agency has to come
Post COVID-19, airlines will have to come up with attractive packages to make passengers fly. It will almost take a year to recover and normalise the situation, if we are very optimistic and factor in favourable circumstances
– Kapil Kaul