2021-02-10
John M. Koldowski
PATA CEO Advisor
Abstract: While adversely affecting the tourism industry, COVID-19 has also made the industry realize the importance of risk management. Under the new normal, safety will become the primary prerequisite for the recovery and development of tourism. In the face of the change and reconstruction of the business model, cooperation, communication, pioneering and innovation are bound to become more important in the future.
Affected by the epidemic, many industries are really up a creek. But have we ever thought about how we can make the tourism industry recover quickly and make more efficient responses if we face similar situations, uncertainties and destructive moments again in the future?
The Concept of Risk
What is a risk? What are the risks in the tourism industry? What is the definition of risk in international tourism? Various measures to fight against the COVID-19 pandemic have brought the world economy to a standstill, with tourism bearing the brunt of the huge impact.
COVID-19 pandemic is a typical risk. Faced with such risks, how should we deal with them, how should we recover the economy, and how can we be more resilient and efficient in dealing with similar situations in the future? These are all issues that need to be considered in advance.
Risks are everywhere, whether in sleeping, walking, or even in all aspects of our daily life. Moreover, they are often unpredictable and may have come quietly when you are unprepared. The picture above is a classic example of a risk, in which two divers are taking pictures and admiring beautiful underwater creatures, and they are unaware of the great white shark behind them. In fact, when SARS was rampant 17 years ago, we have learned the impact of the virus on human society. After SARS, we should know that similar viruses may strike again and similar risks may affect human beings again. Based on this risk awareness, what preparations should be made?
Tourism in the Face of Risks
After the outbreak of COVID-19, the number of international tourists dropped to a freezing point. According to the relevant survey data of the United Nations World Tourism Organization, in the first eight months of this year, international tourists around the world fell by around 70% and international tourist arrivals fell by around 78%; the Asia-Pacific region was the worst affected, with a drop of nearly 79% in international tourist arrivals, including a 67% drop in Northeast Asia, a 73% drop in Southeast Asia and even a drop over 80% in some places; the United States is relatively less affected, shrank by about 64.8% in international tourist arrivals.
The epidemic has revolutionized travel behavior around the world, and its impact on the world is still reverberating. According to the estimation of the United Nations World Tourism Organization, from January to August, COVID-19 affected the travel of approximately 700 million international tourists worldwide. There will be many problems in the recovery process of international travel, such as health problems, solutions, uncertainties, and economic problems. The impact of seasons on the epidemic is particularly prominent. As winter is coming soon in the northern hemisphere, if the virus becomes more active at that time, a new round of epidemics will strike again, which will make the tourism industry add insult to injury. This will make it simply out of question for tourism to recover before 2021, and the scale of international travel will not be able to recover to the pre-epidemic level even by 2023, which is what we need to be prepared.
Affected by the second round of epidemics, France has just declared its second national lockdown. At the same time, the Berlin International Tourism Exhibition, the most well-known in Germany’s tourism industry, was cancelled again, which brought great impact on the global tourism industry. Hundreds of millions of people lost their incomes and even their jobs. The lack of income directly inhibits people’s willingness to consume, and people can not afford to spend on leisure tourism, which further leads to the shrinking of tourism greatly.
COVID-19 has caused severe damage to the global economy. According to the latest calculations of the International Monetary Fund, it is possible to recover a growth point of about 4.2% in 2021, but the so-called 4.2% is calculated on the basis of a large negative growth in 2020. Compared with the growth rate before the epidemic, it has just a negligible effect on the economy.
The latest analysis and report from McKinsey made a judgment on the global economic barometer in October 2020, and also made relevant analysis on the extent of the global impact of COVID-19 in the next 6 months. According to McKinsey, the global impact of COVID-19 will still be great in the next six months, and most economies in the world will experience negative growth and contraction in the next six months.
What Should Tourism Industry Do
At the end of 2020, China has shown signs of positive recovery. It is estimated that China’s economic growth will be around 1.9% in 2020, making it the few or even the only major economy in the world with positive growth. According to the calculation in the World Economic Outlook, China’s GDP may grow 8.2% in 2021. It is not difficult to see from China’s data that the recovery of tourism and all sectors of the economy is obvious, especially since the third quarter, there have been signs of economic recovery.
At present, China’s anti-epidemic model has become the best practice for other countries to learn from. According to the survey of more than 2,000 Chinese tourists, it can be found that their demand for traveling is very obvious. At the same time, it can be found that the demand for high-end tourism is increasing. However, affected by the COVID-19 in various countries, it is still difficult to carry out international air travel in the short term.
Boston Consulting Group proposed eight ways to embrace the new normal of tourism in its latest report. First of all, for economic entities, the economic development should be premised on safety and public health, which is of great importance. At the same time, for customers, employees and consumers, safety comes first and is a very important premise. It is absolutely impossible to carry out economic activities without ensuring the safety of customers, employees and consumers. So a new model of economic growth based on health and security needs to be reconsidered and planned.
We need to start a completely new dialogue with consumers, such as using digital technology or artificial intelligence to gain insight into, track and respond to consumers’ preferences, improve personalization and service quality, and thus build trust between consumers and customers. However, artificial intelligence indicates not replacing people with machines, but playing the role of digital technology based on the human nature. Therefore, it is necessary to consider how to adjust some functions and supply chains in the business organization, so as to transform the original linear supply chain into non-linear supply chain and organize and implement business activities in a more agile way.
The inspiration brought by the epidemic and the areas that we need to consider and make changes are more than that.
For example, the concept of profit may also undergo fundamental changes. Although the profit is of course very important, and what businessmen pursue is profit, there are still differences in the means of pursuing profits. Especially after the epidemic, the thinking patterns of many businessmen will change. On the premise of ensuring the safety of personnel, profits will follow when taking good care of every customer, every employee and the supply chain. If you simply regard the pursuit of profit as the ultimate goal and ignore the safety, it will most likely be counterproductive. Therefore, the business community needs to reconsider the concept of profit and should not regard profit as the ultimate and highest priority pursuit.
Moreover, their way of working should also be changed. To create positive social benefits, it is not advisable to work alone. You must work together with multiple parties, including your shareholders and stakeholders in the entire tourism industry chain. We should play the long game and understand the overall situation and key issues. If the key issues are not properly handled, the future will be on the ropes. People-oriented is the most important principle and priority. To deal with crises and risks, people must be put first, which is also the basis for sustainable and benign development.
In the end, what it all boils down to is that the best way to embrace the future is to create the future. Only by creating the future can one have initiative to create the desired future. We need new thinking, tools and methods. Your fate is decided by yourself. It is absolutely impossible for us to build a better future if we only go by the book.