Tourism and COVID 19: A perspective, is an opinion article by Mr Vivek Nath Pyakuryal, CEO of Nana Group of Companies. He has been working for the past 6 years to build Nana from a small guest house to an umbrella company that operates in 4 industries and 7 cities with over 100 employees.
Tourism and COVID 19: Other crises
As at the time of writing, 100% of global destinations have COVID 19 travel restrictions. The world is at a standstill and tourism is the worst affected sector. The UNWTO (United Nations World Tourism Organization) estimates international tourist numbers could fall 60% – 80% in 2020. This would mean a loss of around 1 billion international tourists, a loss of USD 1 trillion in export revenue from tourism, and 100 million direct tourism jobs. This is by far the worst crisis for international tourism since the Second World War. Things are going to be tough
But it’s not the first time things have been tough. In the past two decades, we have faced the 2001 royal massacre and the civil war, we have gone through a global financial crisis and we have endured the 2015 earthquake and the economic blockade.
In the aftermath of the 2001 royal massacre, which was followed (in the same year) by September 11 attack in the US and the war in Afghanistan, Nepal’s tourism sector experienced a 40% decline in international tourist arrivals. However, one year after the end of the civil war, we got back to the year 1999 levels of tourist arrivals.
The 2008 Global Financial Crisis led to a huge cutback in expenses. Many consumers shortened, cancelled or postponed their planned holidays. Businesses tightened their belt and cut travel expenses. In the US, airlines stocks fell 68% and hotel and resorts stock fell 74%. Nepal saw 3% negative growth that year and it took us two years to recover.
After the 2015 Earthquake and the subsequent economic blockade, tourist inflow decreased by over 30%. Images of destruction, particularly in Kathmandu, Patan and Bhaktapur, gained negative media attention internationally. As a result, 2015 saw the lowest tourist arrival in 6 years! The number of tourist arrivals bounced back and exceeded 2014 levels in 2017, just 2 years after the earthquake and economic blockade.
Tourism and COVID 19: How things may change
These crises brought about lasting changes to the tourism industry. For example, after the 2008 financial crisis, the demand for frugal and experience-focused travel increased. This led to the emergence of Airbnb and a boom in travel startups. These so-called ‘disruptors’ have changed the way we travel now.
Another example is the increase in airport security after 9/11. It was initially perceived as a hassle to air travel. However, it is now viewed as the essential factor in making air travel safe and reducing the anxiety of the traveller.
The tourism sector has in all instances successfully innovated ways to provide better services to the customers.
Changes brought by the COVID 19 crisis will certainly be driven by hygiene, sanitation and physically distancing concerns of the costumers. This will likely push for an accelerated digital transformation of the sector.
The government stimulus packages will increase government scrutiny and push the sector to improve services and facilities.
Tourism and COVID 19: Path to recovery
After the 2015 earthquake, domestic market played a big role in getting the tourism sector back on its feet. The domestic market is growing year on year with plenty of potentials still to be realized.
We can expect the domestic demand for tourism to start recovering much faster. The domestic market will provide the much-needed lifeline for the industry during the crisis.
Overland connectivity with regional markets, which include our two largest tourist sources, is another hopeful reason for quicker recovery. Inbound tourist arrival from India and China are likely to recover sooner than other international markets that are solely dependent on air travel into Nepal.
China has already started opening up its economy and reducing restrictions on travel. If the second wave of COVID 19 is contained in China, it is likely that we could see tourist from China coming in soon.
What can we do?
The recovery of demand from the domestic market, or the regional market or the global market, is dependent on us being able to effectively contain and control the spread of COVID 19 in Nepal. This is not a task for anyone of us alone but rather for all of us together. It is an unprecedented crisis.
The scale of the crisis and the uncertainty of the ‘new normal’ creates a unique and urgent challenge. I would imagine many business leaders have already started taking actions to recover quicker than the competition and come out of this crisis in a better position. Here are some things, we as business owners and managers can do to get ourselves on the road to recovery.
- Take actions to provide safety for customers and reestablish their trust in our products and services. We can do things like place physical distance markers to ensure distance is maintained, implement new sanitation procedures when cleaning the premise regularly, and have plenty of hand sanitizers and tissues available for customers.
- Take steps to ensure the safety and livelihood of employees during this crisis. It means doing things like developing appropriate support systems and training to overcome the hardships and safety issues; assisting employees to get access to government support programs; providing training on the risks and preventions from COVID 19 at the workplace, and introducing safety measures like temperature checks and use of masks.
- Revive revenue by revisiting the marketing mix, helping key clients bounce back, and identifying and capitalizing on (new) pockets for profitable growth. We will need to tweak our product, pricing and promotion to remain competitive in the changed circumstances.
- Build tactical advantage by taking steps such as digitizing work, training (there are plenty of free courses available online now), streamlining business processes, and becoming more sustainable and greener.
- Reboot operations and connect with the supply chain. The lockdown has caused disruption across the economy. It will be important to know how clients and services have been affected and incorporate those changes when rebooting operations.
A concluding remark
The resilience of our industry is apparent in the crises we have gone through and the transformation we have been able to bring after the crises. It is apparent that COVID 19 crisis will be a difficult one to overcome. It will cause a lot more damage and hardship before it is done. Being in the midst of the crisis now, the way ahead seems very unclear and uncertain. The fear of the unknown in a crisis of this scale is daunting. Nevertheless, we can make our way out one step at a time. The COVID 19 crisis may be unprecedented, but like with other crises before this, we will rebound with new rigour. People will travel.
Vivek Nath Pyakuryal
NANA Group of Companies
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