Sunday, April 18, 2021

Preparing for the return of tourism

Apr 04. 2021
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By CHINADAILY/ANN

Pent-up demand impossible to ignore as time estimates vary for travel recovery

As international travel came to a standstill in 2020, companies in the travel and tourism industries hit a wall. Business dried up to almost nothing.

Now, with vaccination campaigns beginning to pick up speed, plans around travel bubbles falling in place and discussions around vaccination certificates proliferating, there is hope for a big rebound that will supercharge the moribund industry.

The year 2019 saw almost 2 billion international tourism departures around the world. But that number evaporated in 2020, even for domestic travel. The World Economic Forum estimates the travel industry lost $1.3 trillion in 2020.

According to the United Nations World Tourism Organization, or UNWTO, 1 billion fewer international arrivals were recorded in 2020 than in 2019, a plummet of 74 percent. Even during the global crisis of 2009, the decline was just 4 percent.

Malaysia recorded just 4.22 million tourist arrivals in 2020, down from 26.1 million in 2019, while tourism revenues fell 85 percent. Thailand lost 40 million tourists and experienced the worst economic downturn since the Asian financial crisis of 1997. Foreign arrivals in Vietnam fell 79 percent to just 3.8 million, according to the General Statistics Office.

The plunging numbers have forced the industry to adapt.

Singapore's Blue Sky Escapes is a good example of how the adaptation is playing out. Blue Sky specialized in outbound journeys but had to shift its offerings as COVID-19 hit in February 2020.

"At the onslaught of the virus in February, we were busy dealing with change and cancellation requests," said Blue Sky Escapes Director Krystal Tan. "Many of the trips we spent months working on were indefinitely postponed or canceled."

For a short period, Blue Sky focused on wellness staycations, but then social distancing measures kicked in. Blue Sky shifted again to provide virtual experiences.

"It was definitely a big shift for us to pivot from a predominantly outbound travel company to pretty much an events programming company with the virtual experiences," Tan said. "But we found this to be the most effective way to continue engaging with and growing our community."

When restrictions began to lift in July 2020, the company went back to offering staycations. It has arranged about 850 staycations and the future is beginning to look brighter.

"Domestic and foreign staycation bookings have picked up a great deal since February 2021 and we are also starting to receive requests for overseas trips for travel in 2022," Tan said. "This is a huge contrast to 12 months ago-I would say there has been a more than a 100 percent increase."

The company is starting to see requests for trips to places with more relaxed quarantine measures such as Maldives, Sri Lanka and Dubai.

"We've most certainly observed an upward trend based on the number of requests we have received in the last five to six weeks," Tan said. "The big question is how quickly things will bounce back, with vaccination plans being rolled out at different rates across the globe. It is a given with most of our clients that they will not travel before being vaccinated."

The entire global industry is pinning its hopes on the billions of people around the world that are eager to travel. If that pent-up demand is freed up, the super-boom the industry needs to recover could come to pass.

But it is unclear when full-scale travel will again happen. A lot of things have to line up first, including vaccinations, some kind of harmonization regarding testing and government regulations.

The World Travel and Tourism Council is optimistic that a rebound is near, particularly as countries open up. Greece, for example, is set to begin opening up on May 14 and the United Kingdom on May 17.

A recent survey in the UK found people planning to spend a big portion of extra savings accumulated during the lockdowns on a personal expense or a trip. Another survey, done in Canada by Mainstreet Research for iPolitics, a Canadian news website, found that 56 percent of Canadians would travel internationally within a year of the pandemic and 81 percent would do so after a year.

The International Air Travel Association, or IATA, is piloting a travel pass that would allow travelers to manage health credentials on mobile devices. The first traveler using the pass arrived in London on a Singapore Airlines flight on March 18. The European Union is working on its own vaccine passport, hoping to have it in place before the summer and the United States is also considering COVID-19 health credentials.

The World Health Organization has established a Smart Vaccination Certificate Working Group to find ways to align all the different vaccines available around the world. The 10-country Association of Southeast Asian Nations is considering a common digital vaccine certificate.

Travel bubbles are also beginning to form. The first emerged in May 2020, with the three Baltic states of Estonia, Latvia and Lithuania.

Singapore created the Reciprocal Green Lane and the Air Travel Pass, has set up arrangements for Malaysian workers and is in discussions with Australia for a travel bubble. Australia has a one-way travel bubble with New Zealand, which was suspended several times.

In turn, Malaysia is working on setting up bubbles with other countries in the region, but Tourism Malaysia's director-general Zulkifly Md Said told the media that bubbles cannot be set up unilaterally. "Certain timeframes would allow us to plan, but it is beyond our authority," he said. "The urgency is not only with us, but with the countries we are talking to."

Indonesia is planning a one-way bubble for Singaporeans to go to the beach resorts of Batam and Bintan, perhaps as early as April 21. The two islands are a short ferry ride from Singapore and visits are a common weekend getaway for Singaporeans.

While still in the early stages, these developments could set the stage for a much-needed rebound. International and domestic tourism industries have been decimated. Cruises have been suspended. Airlines have cut flights, laid off staff and even gone bankrupt. Hotels are operating well below capacity. Tourist attractions are empty.

"2020 was the worst year in history for air travel demand," said Albert Tjoeng, the Singapore-based head of corporate communications at IATA. "Our most recent analysis shows that the airline industry is expected to remain cash-negative through this year, a worsening of what we had previously assessed that the industry would turn cash-positive in (the fourth quarter of) 2021."

The air travel industry alone lost $118 billion through 2020 and demand fell almost 66 percent compared to 2019. And 2021 started off worse, Tjoeng said, noting that there were 78 percent fewer forward bookings in February 2021 than in February 2019.

"We are not expecting passenger demand to return to 2019 levels until 2024," said Tjoeng.

In 2019, there were around 51 million intraregional visits within ASEAN and the industry would very much like to get some of those travelers back on the road.

CITS Travel in Singapore, for example, is "hoping for bookings starting on the second half of the year with the rolling-out of vaccines", said Director Paul Yip. "We have still not gotten any bookings."

The entire industry is certain that a bounce-back boom will happen, but opinions are divided as to when. Estimates range from later this year to 2024, depending on the availability of COVID-19 testing and the willingness of governments to open up.

Breakaway Travel International Ltd, a Hong Kong travel agency, lost about 90 percent of its business and currently has just 10 air ticket bookings, according to Director KP Chan. "We do not expect significant improvement in the current year but hope to gradually recover in 2022," Chan said.

But even when it rebounds, travel and tourism may have changed forever.

Pretty much the entire industry, from the large cruise lines and airlines to individual operators such as tour guides, will have to adapt. Airlines in countries like South Korea or Australia, for example, are offering "flights to nowhere"-basically touring countries from the sky. Individual tour operators have also had to change the way they do business, much like Blue Sky Escapes in Singapore did.

Kang Dong-won, a tour guide in Hong Kong, has taken to filming weekly virtual tours. He uploads them to his "Mr. Kang in Hong Kong" YouTube channel.

"I believe big-scale package tours are a thing of the past, as travelers will fear being in large groups even in a post-COVID-19 world," Kang said. "So even when tourists return, it will be in smaller groups and revenue will take a hit. This will probably make returning to being a full-time tour guide more difficult."

The domestic tourism industry on the Chinese mainland may be an exception, thanks to swift return to some kind of normalcy later in 2020.

The industry went through a blip in early 2021, when the government discouraged trips during Lunar New Year holiday, usually the busiest travel season of the year, after a small spike in COVID-19 cases.

Still, tourism revenue during the Lunar New Year in 2021 reached 301.1 billion yuan ($46.24 billion), higher than the 278.28 billion yuan the industry earned in 2020 when the pandemic lockdowns were in full force, but much lower than the 513.9 billion yuan the industry generated in 2019, according to data from China's Ministry of Culture and Tourism.

The China Tourism Academy now expects that 4.1 billion domestic trips will be made in the country this year, up 42 percent from last year.

Travel within China, and eventually out of the country, could lead the way to a global recovery. There were 155 million outbound international tourists from China in 2019, and many of them are eager to get back on the road. Chinese tourists are likely to pour hundreds of billions of dollars into economies around the world.

On March 8, China launched an International Travel Health Certificate that operates via WeChat and shows results of recent tests and vaccinations, but quarantine requirements remain in place.

With the many disparate efforts underway to kickstart the industry, any rebound may be uneven.

In a recent survey, the UNWTO found many industry experts do not expect the industry to return to pre-pandemic levels for two years and say COVID-19 testing, tracing and vaccination certificates will be key components of any rebound. Just 15 percent of respondents to the UNWTO survey expect a rebound next year and 43 percent expect it by 2023. Still, 45 percent of respondents to the same survey say 2021 will be better than 2020.

Despite the uncertainty about the future, it is impossible to ignore the pent-up demand for travel.

Chris Chuang, a lawyer and avid traveler, has not left Hong Kong for more than a year. He has not taken a plane out of the city or even a train into the Chinese mainland, and is eager to get back on the road.

"I love traveling and Italy and Japan are two of my favorite destinations," Chuang said. "I hope COVID-19 will be over very soon, as I had to cancel six trips in 2020 alone."

 

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