13 Signals of a Post-COVID-19 ‘New Normal’€¦ · Photos: Unsplash DinarStandard™ is a...

Produced byAn Insights Brief Series

June 2020

GLOBAL TRAVEL AND TOURISM INDUSTRY

13 Signals of a

Post-COVID-19

‘New Normal’

1Signals of a Post-Covid-19 New Normal: Global Travel and Tourism Industry © DinarStandard June 2020

ACKNOWLEDGEMENTS

Authors

Sapta NirwandarChairman of Indonesia Halal Lifestyle Center & Indonesia Tourism Forum

Rafi-uddin ShikohManaging Partner DinarStandard

Reem El ShafakiDirector, Growth StrategiesDinarStandard

Nahla MesbahSenior Associate DinarStandard

Report design by ÁM

Photos: Unsplash

DinarStandard™ is a growth strategy research and advisory firm empowering organizations for profitable and responsible global impact. We provide fact-based insights and experience-based strategic advice to help our clients reach their full potential. It is registered in the USA as Strategy Insights Inc., D.B.A. DinarStandard.

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PURPOSE

Amidst the ensuing mayhem in which the tourism sector globally is in a crisis management mode, a key strategic question many are asking is

what will the post-COVID-19 ‘new normal’ look like?

How can the tourism industry thrive, not just survive? This is the focus of this Insights Briefing.

TARGET AUDIENCE Industry Government Investors

APPROACH

This briefing is not looking at the immediate crisis response but is focused squarely on post-COVID-19 scenarios. Our assumption on the timing of a post-COVID-19 environment globally is summer or fall of 2021 and is based on the majority of health experts’ views of realizing an effective vaccine deployment or major populations reaching sufficient immunity.

As such, our “New normal” timeframe is 1-3 years.

This Insights Brief is structured to flow as follows:

This Insights Brief leverages DinarStandard’s global research and expert reviews, and its global trade, investment and consumer

spend data analysis.

PURPOSE AND APPROACH

Pre-COVID-19 baseline

Current crisis impact

13 Signals of Post-COVID-19

An action plan


Pre-COVID-19 Global Travel and Tourism

The travel and tourism sector, one of the biggest global employers and industry, was already going through significant changes and challenges pre-COVID-19.Tourism-specific

challenges

Sustainability issues

Overtourism

Highly fragmented

Needs regulation

Consumer trends

Sustainable Travel

Immersive Travel

Wellness Tourism

Bleisure travel

$8.8 trillion industry value

319 million jobs supported

10.4% of global

GDP 1

10% of global

employment 1

International Tourism Receipts - Top Countries by Region3

41,115Japan

40,386China

40,187Macao (China)

21,375UAE

12,038KSA

11,615Egypt

7,775Morocco

8,939South Africa

2,449Tanzania

1,962Nigeria

63,042Thailand

20,528Singapore

19,143Malaysia

28,568India

4,381Sri Lanka

3,028Maldives

214,468USA

21,936Canada

22,510Mexico

45,035Australia

11,004New

Zealand

GLOBAL RISKS IN TERMS OF2

Likelihood 1. Extreme weather2. Climate action failure3. Natural disasters4. Biodiversity loss5. Human-made environmental

disasters6. Data fraud or theft7. Cyberattacks8. Water crises9. Global governance failure10. Asset bubbles

CHALLENGES BY SECTOR*

Transportation • Fluctuating oil prices• Overcapacity• Competition from low cost carriers

Accommodation • High OTA commissions• Too many hotel brands

Activities • Crowd management• Security

Food Services • Stiff competition• Food sourcing

Travel Services • Dominance of top OTAs• Limited management authority (DMOs)Impact

1. Climate action failure2. Weapons of mass destruction3. Biodiversity loss4. Extreme weather5. Water crises6. Information infrastructure

breakdown7. Natural disasters8. Cyberattacks9. Human-made environmental

disasters10. Infectious diseases

73,765Spain

67,370France

51,882UK

US$ MILLIONEUROPE

MIDDLE EAST AND NORTH AFRICANORTH AMERICA

SOUTH-EAST ASIA

OCEANIASOUTH ASIA

SUBSAHARAN AFRICA

NORTH-EAST ASIA

*Source: DinarStandard analysis; 1 World Travel & Tourism Council. 2017 International Comparison Program; 2 World Economic Forum Global Risks Perception Survey 2019-2020; 3 UNWTO

RANK3

5

4

21


Impact of COVID-19 on Consumer BehaviorFour Biggest Impact Areas on Consumer Behavior

Health/Safety Concerns

1Domestic travel & less popular

destinations preferred

2Substitutes to

travel

4Intent to travel varies across generations

3

8,993,659Confirmed Covid-19

cases

75% increase in video

game traffic in the US according to

Verizon

1,000% increase in Facebook

group calls since March 24, 2020

according to Facebook

50% increase in Snapchat video calls betweenFebruary and March

2020.7

101% increase in Zoom’s

stock since January.8 It is now valued at $50 billion, more than 7 biggest

airlines combined!9

28% increase in Netflix revenue compared to same period last

year10

425% increase in online course enrollment

in Udemy, an online learning platform

Americas

Eastern Mediterranean

Western Pacific

Europe

South-East Asia

Africa

4,437,946

933,052

206,948

2,562,642

336,577

232,215

Source: DinarStandard analysis; 4 World Health Organization, June 23, 2020: 5 Organisation for Economic Co-operation and Development, “Tourism Policy Responses to the coronavirus (COVID-19),” OECD, last modified June 2, 2020, https://bit.ly/OECD_Covid; 6 Bloom Consulting and D2-Analytics, “COVID-19 The impact on Tourist Behaviours,” Bloom Consulting, accessed June 22, 2020, https://bit.ly/Bloom_consulting; 7 Wunderman Thompson Intelligence, “Wunderman Thompson. The Future 100 (2.0.20),”

Wunderman Thompson, 2020; 8 Louis Navellier, “Zoom Turns the Corner After Privacy Missteps,” Nasdaq, last modified June 5, 2020, https://bit.ly/nasdaq_zoom; 9 Nickie Louise, “Zoom Video conferencing app is now worth more than the world’s 7 biggest airlines combined; now valued around $50 billion,” Tech Startups, last modified May 17, 2020, https://bit.ly/techs_zoom; 10 Wendy Lee, “Record high Netflix subscriptions in coronavirus crisis,” LA Times, last modified April 21, 2020, https://bit.ly/netflix-sub

75% of total tourism

economy in OECD countries is forecasted

from domestic tourism5

SENTIMENTS ABOUT TRAVEL HAVE BEEN AFFECTEDSurvey of 4000 respondents by Bloom Consulting shows.

INCREASE IN ACTIVITIES THAT REPLACE TOURISM AND OTHER FORMS OF RECREATION

35-45% of respondents will not travel again unless the

virus is fully eradicated.6

64% cited feeling unsafe

traveling

Only 11% of millennials will not book a trip during the pandemic

compared to 25% of baby boomers according to Fuel

Travel, a hotel software provider

89% of millenials plan

to travel

75% of baby boomers will book a trip


https://bit.ly/OECD_Covid


https://bit.ly/Bloom_consulting

https://bit.ly/nasdaq_zoom

https://bit.ly/techs_zoom

https://bit.ly/netflix-sub

Impact of COVID-19 on IndustryFive Biggest Impact Areas for Industry

Aviation & Hospitality sectors most impacted by crisis

1SMEs in

crisis

2Pivots & aggressive promotions

to maintain revenue streams

4Innovation in touchless travel,

hygiene & health screening protocols

3Financial viability &

investment implications

5

42% drop in leisure sector investments in Asia

compared to same time last year14

Over 50%

of SMEs will not survive the next

few months which will

impact national economies.13$84 billion

airline industry losses in 2020 (IATA)

50% drop in airline revenues

compared to 2019 (IATA)

$112 billion in hotel losses

50% revenue decline in 2020 for the hotel industry (STR and

Oxford Economics)11

1.6 million hotel employees out of work

Source: DinarStandard analysis; 11 American Hotel and Lodging Association, “COVID-19 Devastating Hotel Industry,” AHLA, last modified April 22, 2020, https://bit.ly/AHLA_Covid19; 12 World Travel & Tourism Council, “Coronavirus Brief - 15 June,” WTTC, 2020; 13 Organisation for Economic Co-operation and Development, “Tourism Policy Responses to the coronavirus (COVID-19),” OECD,

last modified June 2, 2020, https://bit.ly/OECD_Covid; 14 Nikki Sun, “Asia’s travel startups battle for survival as investors pull back,” Nikkei Asian Review, last modified June 18, 2020, https://bit.ly/Nikkei

Aviation & hospitality sectors face heavy losses

INVESTMENTS SECURED

$400 million Norwegian Cruise Line

$100 million Traveloka

$80 million Thayer

Ventures

$43.7 million Fly Now Pay

Later

$350,000 Hotel Data

Cloud

80%what SMEs

account for of the travel & tourism

sector12

CERTIFICATIONSWTTC, hotels & travel industry players released hygiene & safety

certifications

Safe Travels by World Travel & Tourism Council

Sansee Hilton Clean Stay

ALLSAFE by Accor


https://bit.ly/AHLA_Covid19


https://bit.ly/Nikkei_

Impact of COVID-19 on Government Policies Five Biggest Impact Areas for Governments

Economic losses / supporting the industry to safeguard the economy & job impact

1Travel restrictions &

regulations

2Medical needs

4Travel bubbles

3Sustainability

regulation

5

$9 trillionglobal fiscal

support to fight COVID-1919

Source: DinarStandard analysis; 15 World Tourism Organization, “World Tourism Barometer May 2020 - Special focus on the Impact of COVID-19,” UNWTO, last modified May, 2020, https://bit.ly/WTO_b; 16 WTTC Travel and Tourism Economic Report 2019 - World; 17 World Travel & Tourism Council, Travel and Tourism Economic Impact 2019 - World (London: WTTC, 2019); 18 World Travel & Tourism Council, “Coronavirus Brief - 15 June,” WTTC, 2020; 19 Organisation for Economic Co-operation and Development,

“Annex 1.B. International Organisations and industry associations’ COVID-19 dedicated information,” OECD, last modified June 2, 2020, https://bit.ly/OECD_COVID-19_Annex; 20 World Tourism Organization, How are countries supporting tourism recovery? Briefing Note – Tourism And COVID-19, Issue 2 (Madrid: UNWTO, 2020; 21 Ibid; 22 Organisation for Economic Co-operation and Development, “Forecasting the impact of the COVID-19 crisis on tourism in selected OECD countries,” OECD, last modified June 2,

2020, https://bit.ly/OECD_COVID-19_Box1; 23 Outlook Traveller., “These lanes will ensure smoother health protocols for those undertaking official or essential travel,” Outlook India, last modified June 7, 2020, https://bit.ly/OT_India; 24 Dian Septiari, “Indonesia eyes ‘travel bubble’ for four countries in Asia Pacific,” The Jakarta Post, last modified June 17, 2020, https://bit.ly/Jakarta_Post; 25 Daily News, “Turkey to ‘certificate’ tourism destinations,” Hürriyet, last modified April 19, 2020, https://bit.ly/HurriyetDN.

$910 bn to $1.2 trnloss in export revenues from tourism15

319 million jobs are supported by Travel

& Tourism16

This represents 10% of global employment17

SDGs THAT TOURISM IMPACTS

Intensive care units and ventilators close to tourism

resorts in Turkey25

144 countries have

adopted fiscal policies to support the

industry, mostly in the form of stimulus

packages20

100 countries have adopted policies to support jobs

and training21

197.5 million jobs at risk18

Singapore in talks with Australia,

South Korea, New Zealand, Malaysia

to establish corridors23

Indonesia in talks with China,

South Korea, Japan, Australia to create travel

bubbles24

Australia and New Zealand first to publicize a “corona corridor”

156countries have completely closed

borders as of June 1st 22

TRAVEL BUBBLES


https://bit.ly/WTO_b

https://bit.ly/OECD_COVID-19_Annex

https://bit.ly/OECD_COVID-19_Box1

https://bit.ly/OT_India

https://bit.ly/Jakarta_Post

https://bit.ly/HurriyetDN

13 Signals of a Post-Covid-19 “New Normal” for the Global Travel and Tourism Industry and for Governments

The 13 signals presented here are based on our analysis of travel data, consumer trends and industry actions in wake of the COVID-19 crisis.

Source: DinarStandard

Millennials & Gen Zs an important segment

5Sustainability as a priority

6Funding for travel

tech startups

7Broadening Business

Models to hedge tourism risks

8

For Industry:

Hygiene as a criterion

1Contactless travel

innovation

2Rise in domestic

travel

3

For Governments:

Crisis preparedness

9Regulate hygiene

& safety certification

10Tourism corridors

11Incorporate

sustainability in tourism plans

13Destinations/attractions

will reconfigure for safety

12

Opportunity for boutique travel agencies

4


Signals of a Post-COVID-19 “New Normal” for the Travel and Tourism Industry

Safety and Hygiene will become an important criterion in travel and tourism decision-making by consumersThe industry, led by the hospitality and aviation sectors, has already started implementing strict hygiene and health cleaning protocols. The World Travel & Tourism Council launched a global safety and hygiene stamp of approval, and there are several other examples.

We are already witnessing an accelerated adoption of travel innovations across the industry which could continue beyond the crisisInnovation is expected to continue for touchless travel, including contactless payments, contactless kiosks at airports, in addition to robotics in hotels as well as airports.

Hygiene as a criterion

Contactless travel innovation

2

1


The share of domestic travel will continue to rise beyond the COVID-19 crisisAs a result of the travel restrictions coupled with health and safety concerns, the COVID-19 crisis has sparked a demand for domestic travel. This trend could continue as people discover destinations a car ride away, and destinations continue to tailor their products and marketing messaging to their local markets to manage their risk.

Boutique travel agencies could provide personalized assistanceWith travelers having to adhere to a myriad of expected new regulations including providing proof of health, in addition to any country-specific regulation, smaller travel agencies will have an opportunity to gain loyal customers as travelers will prefer having the reassurance of working with a specific person instead of a faceless agent in a large call center. Smaller companies will also be well positioned to assist travelers in obtaining proof of health certification as required by destinations.


Rise in domestic travel

4

3

Opportunity for boutique travel agencies


The share of the sustainable travel segment will grow within certain traveler segmentsWitnessing the positive impacts on the environment during the absence of travel (clearer skies, more wildlife, cleaner bodies of water), certain travel segments are becoming more conscious of the impact of travel on the environment and the communities they visit and may choose more sustainably in the future.


Sustainability as a priority

6

5 Millennials and older Gen Zs could become an even more important segment for the travel industrySurveys showed millennials are more willing to travel once restrictions are eased and they are more willing to take risks than older generations.

Millennials & Gen Zs an important segment



Funding opportunities for travel tech startups

7 Travel tech startups will be much more well positioned to raise fundingUAE-based travel-tech startup Hotel Data Cloud (which will use AI and machine learning to help hotels engage with customers) secured $350 thousand in seed funding from local and international investors.

Thayer Ventures, a venture capital firm focused specifically on technology innovation in travel and transportation, raised $80 million to invest in technology companies disrupting the travel and transportation industry.

Travel payment startup Fly Now Pay Later has raised $43.7 million to develop its flexible payment technology for use once coronavirus-related travel restrictions ease.26

26 Jill Menze, “Fly Now Pay Later raises £35 million to bring travelers flexible payment options,” PhocusWire, last modified May 20, 2020, https://bit.ly/phocus_wire


https://bit.ly/phocus_wire


Broadening Business Models to hedge tourism risks

8 Tourism businesses will broaden their business models by adding services that are not dependent on tourismAfter witnessing tourism come to a standstill during the crisis, some companies started offering services that are in line with the activities people were doing while confined to their homes (consuming media content, gaming and learning).

Air Canada just launched a free at-home streaming service for its loyalty program members, which could eventually become a paid service.

Airbnb and Viator, as well as several other tours and activities companies started offering virtual experiences with local hosts and guides.


Governments have realized that they need to strengthen their crisis preparedness plans especially in case of future pandemics Governments need to invest in the aviation and hospitality sectors to avoid their collapse in case of future crises. They also need to be prepared to provide both financial assistance in addition to technical and regulatory support to small businesses, as small and medium enterprises are an important component of the global economy, that otherwise risk collapsing. There is also a need to retrain tourism workers who lost their jobs since not all jobs will be coming back after the crisis.

With hygiene and safety stamps being offered by international organizations (WTTC) as well as the private sector (Hilton, Accor), governments are expected to step in to regulate these certifications

Signals of a Post-COVID-19 “New Normal” for Governments

Crisis preparedness

10

9

Regulate hygiene & safety certification


New tourism corridors through regional cooperation among countries will be createdSome countries are opening up to regional travel, allowing travelers from select neighboring countries to enter without quarantine restrictions – like Australia and New Zealand. This paves the way for regional cooperation among countries including the creation of tourism corridors.

Destinations will continue to make adjustments to ensure social distancing and other safety measuresIn preparation for reopening, several museums have invested in technology to allow for mobile app booking and dynamic pricing. In the meantime, several theme parks have adopted digital queuing to avoid lines. We expect many of these and similar measures to continue after the crisis.


12

11Tourism corridors

Destinations/attractions will reconfigure for safety


The forced pause in tourism has allowed governments, especially in cities previously suffering from over-tourism, to start planning sustainability regulations to implement once tourism re-opens. Greenpeace, for example, is demanding that airline bailouts come with strict conditions on their future climate impact.27


13Incorporate sustainability in tourism plans

27 Jane Dunford, “‘Things have to change’: tourism businesses look to a greener future,” The Guardian, last modified May 28, 2020, https://bit.ly/GuardianJD


https://bit.ly/GuardianJD

An Action Plan Towards the “New Normal”A post-COVID-19 “new normal” action plan for the travel and tourism industry transitions from crisis management mode through three phases of Return (transition to post-COVID-19), Reform (operational setup) and Reinvent (new solutions, efficiencies, compliance).

For Industry:MID-TERM STRATEGY 1-3 YEARS

Incorporate health and safety measures within product offerings, including cleanliness protocols, contactless technology, and social distancing regulation, and communicate this in your promotional material

Develop new business models that expand beyond current services. For example, hotels can offer at home catering, restaurants can offer frozen prepared meals, groceries

Include domestic travelers as one of your target markets and provide relevant products and services

RETURN

REFORM

Destinations Travel Agencies & OTAs Hotels Restaurants &

Food Services

REINVENT

6-12 MONTHS

Not part of this briefings focus

1 – 1.5 YEARS

Return – Reform – Initiate Reinvent

1.5 – 3 YEARS

Expand Reinvention

Focus on AI and machine learning to tailor offerings to customer preferences

Re-invent the guest experience and incorporate touchless technology

Re-configure the MICE industry to be prepared for a future of possible outbreaks

Implement PPP (public-private partnerships) to support destinations

Implement strategies to attract investment

Consider incorporating the cloud-kitchen model (focusing on food delivery and using centralized commercial food production facilities used by a group of restaurants)



An Action Plan Towards the “New Normal”


A post-COVID-19 “new normal” action plan for government transitions from crisis management mode through three phases of Return (transition to post-COVID-19), Reform (operational setup) and Reinvent (new industry policies, stakeholder engagements)

For GovernmentMID-TERM STRATEGY 1-3 YEARS

Strong contingency planning in place for future pandemics

Develop strong government-linked travel industry and related investment strategy, including enhanced PPPs for the “new normal”

Revise tourism action plans to incorporate crisis preparedness plans in addition to addressing sustainability issues (community, environment, economic sustainability)

Enhance regulations to prevent outbreaks, working closely with the private sector

Invest in the aviation and hospitality sectors to avoid their collapse in case of future crises

Focus on building PPP (public-private partnerships)

Support funding of hygiene and safety expenses for the sector (e.g. hotels)

Work towards implementing a universal or targeted basic income, as many of the tourism jobs lost during the pandemic will not return given accelerated automation & cost cutting measures

RETURN

REFORM Health and Safety

Economic Enablement

Social Services

6-12 MONTHS

Not part of this briefings focus

1 – 1.5 YEARS

Return – Reform – Initiate Reinvent

1.5 – 3 YEARS

Expand Reinvention

REINVENT


DISCLAIMERThe report’s data is believed to be correct at the time of publication but this cannot be guaranteed. Please note

that the findings, conclusions and recommendations that DinarStandard has delivered are based on information

gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a

position to guarantee. The findings, interpretations, and conclusions expressed in this report do not necessarily

reflect the views of DinarStandard.

As such, the information contained in this report is intended to provide general information only and should

not be considered as legal or professional advice or a substitute for advice covering any specific situation.

DinarStandard specifically disclaims all liability arising out of any reliance placed on this material. DinarStandard makes no representations or warranties of any kind,

express or implied, about the completeness, accuracy, reliability or suitability of this material for your purposes.

DinarStandard 2020 All Rights Reserved


Produced by

An Insights Brief Series

GLOBAL TRAVEL AND TOURISM

INDUSTRY

13 Signals of a

Post-COVID-19

‘New Normal’

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