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Travel and Tourism Is Unlikely to Recover Quickly From COVID-19 Shutdowns

With most countries at some stage of easing their draconian COVID-19 lockdowns, it is time to examine the future of travel and tourism. Like all future-casting, there are a few possible scenarios. Perhaps everything will follow the best-case scenario, and the travel industry will rebound fully and quickly.

More realistically, we face several years of hardship and struggle before the travel and tourism industry recovers. Of course, things can always get worse, and we would be remiss to discount the possibility of future devastation to the travel industry.

The Positive Scenario

After months of being stuck indoors, many people are looking forward to nothing more than leaving their homes and going on a grand adventure. Given that many companies suspended paid time off during periods of shelter-in-place, many employees will find themselves with vacation time to burn before the end of the year.

When coupled with money saved by avoided commuting costs and limited options for dining out, there is the potential to see a drastic increase in travel and tourism, particularly during the holiday season. If the various travel industries seize this opportunity, the coming fall and winter could see a relatively large number of travelers.

While this is dependent on the public feeling safe while traveling, some experts are suggesting a vaccine could be ready by the end of the year. Even in the absence of that, most of the travel industry has already begun to modify policies to reassure their traveling guests and protect their health. We’re also seeing rapid advances in technology for more flexibility in their business model.

The Ugly Scenario

While history has shown us that the travel industry is resilient, it also warns us of the potential for failure. Consider the demise of Trans World Airlines immediately following September 11. An interruption of normal business operations as grand as what we are currently experiencing is bound to cause a few casualties.

Globally, one in ten jobs is related to travel and tourism, so the repercussions of these failures will be felt throughout the economy. As so many people lose their income, they also lose the financial means to travel. This, in turn, reduces the number of travelers and further hurts the travel industry. The travel industry will not fully recover until this cycle can be reversed.

Since travel is one of the biggest concerns surrounding COVID-19, it is likely to be the last industry to recover. Operators without the necessary stability and cash to operate in a modified way for at least two years will likely be lost to bankruptcy or buyout. Those who survive will have to rise from the ashes as freight rail has over the past 50 years.

The Realistic Scenario

While there is potential for a travel boom during the holidays, there are many obstacles. Airlines cannot profit while operating at 67% capacity, so they are unlikely to resume pre-COVID levels of operations before 2022. Even then, there will likely be long-term changes due to several years of unusual operating conditions.

Therefore, airlines must perform a balancing act throughout 2020. They need to prepare for recovery in a way that will allow them to meet the potentially high demands of returning travelers, while ensuring their model in the interim can withstand whatever time it may take for their passengers to return.

With COVID-19 comes the opportunity for airlines to offer new ancillary services and products to compensate for their reduced profit. Airlines may find the market ripe for convenience services that expedite the customer’s transition from airport curbs to airline seats. Perhaps airlines will better align in-flight shopping opportunities with customer demand, thereby increasing commission revenue from those sales.

Airlines will need to achieve all of this while weathering the ever-changing demands of their customers, and the uncertainty of new requirements that may come from their governing bodies. Even more challenging, they must accept and account for the disillusion of their traditional models predicting traveler behavior.