Brace, Brace, Brace, and resilience: The global tourism industry should prepare for a major impact from Coronavirus

Kaba

The effects of coronavirus lead to a global crisis, disrupting economies around the world.

It is a multidimensional issue that requires health and crisis management measures to tackle the spread of coronavirus. Governments and international organisations need to take immediate action to provide support to health systems that are under immense pressure. They also need to take care of their economies and ensure liquidity for businesses that face a severe drop of demand, debt payments. At the macro level they need revise budgets to account for additional health and safety related expenditure, against the loss of consumption and income related taxes. They also need to address issues related to but also risks associated with job loss and raising unemployment. All stakeholders need to exchange views and information in order to make decisions at the right time and use all the tools at their disposal to ensure growth against the risks posed by COVID-19.

It is becoming evident everyday that the impacts of the Coronavirus COVID-19 will have a very serious impacts to the global tourism, travel, transportation, hospitality industry apart from the health impact to the people that are affected by the coronavirus. By the 2 March 2020, COVID-19 has affected millions of people around the world and it is spreading with little control, especially in locations where people are not disciplined enough to follow the instructions of the authorities. It has affected nearly 90,000 people and claimed the life of more than 3000 people. The real-time tracker developed by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University
As travellers are become very concerned about travelling in the short term there is already a wave of requests for cancelation and refunds. Many travellers are now keen to change, cancel, or not book future travel plans for the short to medium term. Often refunds have outweighed sales placing reverse cash flow pressure on many travel organisations. China has banned its citizens from booking overseas tours and purchasing overseas hotels and flight packages . Airlines have cancelled schedules to affected areas and there is a reduced transportation capacity. IATA said that coronavirus has resulted in “serious declines in demand”. Cancelations, non-shows and reduced booking forced airlines to give staff unpaid leave, freeze pay and parking aircraft. BA cancelled more than 200 flights to countries including Italy, Germany and the USA; Ryanair cut short-haul flights to Italy by 25% whilst Lufthansa and easyJet had similar cancelations. ( https://www.ft.com/content/ebc1d0a8-5c90-11ea-b0ab-339c2307bcd4 )

South China Morning Post reported that 50% of the Cathay Pacific fleet is sitting in parking lots and 75% flights for March 2020 are cut. Cathay said 75 per cent of staff, or 25,000 employees of the group, would take unpaid leave.

Many major events such as the ITB in Berlin, Salon Μondial du Τourisme in Paris, the annual Geneva International Motor Show, the Barcelona Mobile World Congress, the International Hospitality Investment Forum and many conferences including PATA Annual Summit have been cancelled or postponed. Cancellation ITB Berlin affected the confidence of tourism and event organisers dramatically. Uta Goretzky, the Executive Director of IFES International Federation of Exhibition and Event Services estimates that more than 3 million square meters of showrooms have been cancelled. In March and April 2020 it was expected that 614 short and world-wide exhibitions would take place but were cancelled due to governments and health authorities restrictions. It is estimated that an event cancelled 2 weeks before its official launch will lead exhibitors to losses equal to 75% of their total attendance costs due to service providers costs such as kiosks, promotion agents and catering and more. Assuming 1500 cancellations are affected by cancellations in Europe, then we are talking about half a million euros per company on average and there have been cases where one company has lost 3.5 to 4 million of its sales.

Many organisations have banned business and corporate travel to affected areas as part of their business continuity strategies. Disney has closed Disneyland Hong Kong, Shanghai, Tokyo for a period of time. Many sporting events may be cancelled and Japan is concerned about the upcoming Olympics and Paralympics. Demand for cruising is freezing following the Diamond Princess fiasco with 700 confirmed COVID-19 cases. Travel intermediaries both online and on physical outlets are inundated with requests for information, cancelations and postponements of travel. Governments are also issuingtravel bans and advisories against traveling to affected area resulting in reduced bookings and many cancelations. Travel insurance will also play a critical role in this with premiums increasing and urgent discussions of what is a force majeure that can void insurance policies.

As a result, many airlines, hotels and tourism attractions have felt already the impact and slowed down their operations. Often organisations are asking staff to take unpaid leave and reduce their schedules, force annual leave or make drastic changes to staff arrangements to deal with the unexpected downturn. Many destinations and particularly China, Korea, Italy will suffer a major downturn in both incoming and outgoing tourism, slowing down their economies and bringing huge challenges to regions that depend on tourism for their income and regional development. Many tourism destinations will experience a dramatic reduction of activity, in the short term, and will need to find alternative ways to support their local communities. Unfortunately, it is at times of crisis that the true value of tourism and its contribution to regional development and the lifehood of peripheral and insular areas becomes obvious. It is becoming obvious everyday that there will be several months before we return to “normality” and will take the best part of the year 2020 to recover the damages. This crisis will have major economic, political and socio-cultural impacts. It will also change best operational practices and change global strategies. In the meanwhile, there is an urgent call for resilience in the industry to ensure that we ensure business continuity. The key strategies should include:

CRISIS MANAGEMENT plans should be enforced and business continuity practices need to be in place. Addressing the expansion of Coronavirus by constantly providing specialised instructions up to date instructions to each group is critical. For example, what exactly should airlines, hotels, bus companies do regularly. Also what should they do should there be an incident. What are the processes and procedures for each eventuality? Records should be kept in order to find the “patient zero” instantly in order to trace all those potentially exposed to infection and containing the outbreak as fast as possible. Smart Technology and big data should be used extensively in this occasion. Business continuity plans need to be updated with the new processes that include voluntary quarantine and self-isolation of critical personnel, decision makers, and critical staff. The ability to use technology for teleworking is critical in this situation.

CLEAN AND DISINFECT THOROUGHLY AND FOLLOW WHO ADVICE: There is sufficient advice on how to prevent spreading the virus and protect self and others. The Hong Kong Government provided detailed Guidelines on Infection Control & Prevention In Hotel Industry ( https://www.chp.gov.hk/files/pdf/105_guideline_on_infection_controland_prevention_in_hotel_industry.pdf ). Practising good hand hygiene and sneeze/cough hygiene is the best defence against most viruses. Organisations need to inform staff and customers to wash your hands frequently with soap and water, before and after eating, and after going to the toilet; avoid contact with others (touching, kissing, hugging, and other intimate contact) and cover cough and sneeze, dispose of tissues, and use alcohol-based hand sanitiser. Disinfect regularly any touching objects or surfaces (such as door handles or tables) that may be contaminated by droplets from secretions coughed or sneezed from a person with a confirmed infection.

COMMUNICATION AND OPENNESS: Use technology and social media to communicate accurate information, build trust and cocreate smart solutions to support all stakeholders in the tourism ecosystem. It is critical at this time to support all actors in the ecosystem and cocreate solutions that can develop the long-term relationships. It is time to invest in relationships using smart systems to understand real time information and address concerns and suggestions.

FOCUS ON THE DOMESTIC AND SHORT HAUL MARKETS: Experience shows that the domestic market is more resilient as there is less risk for them to travel. Many destinations will need to focus to their domestic and short haul markets in the short and medium term. Alternative markets need to be explored and addressed.

SUPPORT TRAVELLERS: Support travellers to understand the key issues and encourage them to make informed decisions based on facts and evidence. Provide honest advice and understand their concerns rather than reinforce policies and procedures. As a best practice example Aegean Airlines, the Greek carrier announced a number of precautionary or reactive measures that included amplified standard aircraft cleaning procedures between all flights and additional specialised disinfection processes in cases where a possible affected passenger is reported by National Public Health Organization (NPHO). AEGEAN also informed passengers who already hold a ticket, issued until 23 February 2020, for all network destinations, with travel dates until 20 March 2020 and wish to change it to a later date, with new travel date from 21 March 2020 until 20 October 2020, due to Coronavirus outbreak, may do so without any rebooking fees. Similar initiatives of reassurance and travel support will be appreciated and develop relationships in the longer term.

SUPPORT STAFF AND SUPPLIERS: Work with staff and suppliers to achieve realistic solutions that can meet the needs of all involved parties. At the time of crisis working together is critical for managing the situation and ensure business continuity. It is at crisis periods that everybody remembers a king employer, partner or supplier and that develops the depth of relationships that ensure the long lasting bond.

FINANCIAL CONTROL: Revise budgets and address the downturn of demand through adjusting the cost base. And Brace, Brace, Brace for the wave of cancelations and also the impact on cash flow. Companies need to ensure liquidity and prepare to face a severe drop of demand and serve debt payments. Goverments need revise budgets to account for additional health and safety related expenditure, against the loss of consumption and income related taxes.

AGILITY AND REAL-TIME MANAGEMENT: as this is a very dynamic crisis, organisations should develop agile and real time management where they are collecting, analyzing and responding to real-time information. They should be able to address last minute requests for both bookings and cancelations depending on the contextual situation.

THINK STRATEGICALLY: Coronavirus will have long lasting effects and will change the way people travel, meet, consume and engage in leisure. We need to think smartly, strategically and sustainably to develop tools and methodologies for resilience of the industry and the communities it supports.

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