Ep 26: The 6 Key Factors Inhibiting a Travel Recovery

So, here we are in the 2nd week of July, and it is becoming increasingly evident that the route towards a travel recovery is lined with gigantic barriers.

This week, Gary and Hannah discuss 6 critical factors hindering a tourism rebound in South East Asia, Asia Pacific and worldwide:

1. The coronavirus
2. Border closures and travel bans
3. Rising economic uncertainty
4. Consumer sentiment and the travel fear factor
5. Reduced travel industry operational capacity
6. The emerging marketing challenge

Is there a take-off path to brighter skies up ahead?

Show notes

01:11 The critical factors hindering a travel rebound:

1. The coronavirus
2. Government border closures and travel bans
3. Economy uncertainty
4. Consumer sentiment and the travel fear factor
5. Reduced travel industry operational capacity
6. The new marketing challenge

01:47 The coronavirus itself - we’re nowhere near the peak. Lockdowns in Melbourne, record cases in the USA, resurgence in Beijing are all making countries skittish.

“We know that this virus loves to travel, but it also seems to be more resilient than perhaps anyone was expecting.” (Gary)

“People are just worried about a second, third wave.” (Hannah)

“What has become clear is that a) we are in a multi-phase world, with some parts of the world which are really struggling […] and b) that a lot of countries that were COVID-safe are now reassessing what that means.” (Gary)

“You have completely different phases of coronavirus even within those countries. Areas like Bali, who are saying they are going to reopen to tourists in September, and places like Jakarta which is still really struggling.” (Hannah)

04:45 Conflicting messages on the safety of flying. Qatar Airways imposing face shields on economy classes as well as face masks.

“This again is going to rattle confidence of consumers. We were told, if you get on board a plane, wear a mask, that’s safe enough. Now there’s this extra level.” (Gary)

06:09 Government border closures and travel bans. How can countries like Indonesia encourage domestic tourism when COVID-19 tests are required just to travel domestically? Could Bali be opened purely for international tourism?

“Sometimes the cost of getting the test itself is higher than taking a domestic flight there. So how do you incentivise people to book?” (Hannah)

“If Bali is reopening to international tourists, there’s still a high risk of them mingling with local domestic tourists, who may well have COVID.” (Hannah)

08:40 Is ASEAN strong enough to lead the nations through border reopenings?

“They look more fragmented than ever.” (Gary)

“Travel bubbles seem to have gone extremely quiet, and I wonder if that because there just wasn’t enough top-level leadership to push this through.” (Gary)

“Why are they so obsessed with China, and Korea, and Japan when they have neighbours right on their doorsteps who are more likely to take these short flights?” (Hannah)

10:39 Localised lockdowns and localised travel bubbles - will that be the way forward, rather than opening up whole countries?

“You use some of your more remote areas as a test case.” (Gary)

13:00 The uncertainty of whether travel will open up - consumers have to decide whether to save their cash for an overseas holiday, or book a domestic holiday now.

13:53 Economic uncertainty is certainly putting a dampener on consumer appetite for travel.

The UNCTAD dramatic scenario forecast (12 months of international travel at a standstill) for the impact of tourism losses on national GDP:

• CLMV: -9%
• Indonesia: -6%
• Malaysia: -9%
• Philippines: -7%
• Thailand: -18%

“Right now, we are swaying more towards this 12 months of international travel at a standstill, rather than the moderate forecast of 8 months at a standstill.” (Hannah)

“Forecasting is very differentiated, and the figures vary.” (Gary)

“With these job losses, gloominess about what the economy holds, recession, travellers are really thinking if they want to spend on travel right now.” (Hannah)

“Around 800,000 Malaysians lost their jobs due to coronavirus by the end of April. It’s looking at another million Malaysians becoming jobless in the next few months. But the key point is that there will be drastic paycuts for those who are still employed, so the discretionary spend to be able to spend on travel, even domestic travel, is going to be reduced.” (Gary)

17:12 Business travel not recovering: fear of sending employees abroad plus conferences and meetings postponed due to fear and budgetary constraints.

18:50 Chinese travel spend: The Chinese Dragon Boat Festival saw this year’s domestic travel less than 50% of last year’s.

The Chinese Tourism Academy did a survey of travellers during the festival and found:

• 20% of those travelling planned to shift their travel plans to overseas travel when they were able
• 30% said they would look at short-term travel, not longer trips
• 50% said they would reduce their travel budget

Trip.com x Google found short term travel developing as a key factor for Chinese travellers, with the 2 foremost considerations being:

1. Safety
2. Flexibility

“Where does the cut come? How many international trips will they take? How many domestic trips?” (Gary)

21:05 The fear factor: travellers worry about being stranded overseas.

“There’s absolutely fear from consumers that this could happen again. Especially as borders reopen, but borders closed so fast with such little notice. Can you take that risk of it happening to you?” (Hannah)

22:16 Reduced operational capacity: slimmed down airlines with less aircraft, less staff. AirAsia losses, Lion Air losing staff. IATA is not anticipating recovery until 2023 or 2024.

“If you’re cutting your pilots, you’re not going to have people to fly those routes anymore, you’re going to have to cut routes, you’re not going to be able to maintain sales offices in all the countries you’ve had. It becomes hard to get those slots back.” (Hannah)

“Flight options are nowhere near as to what we were used to before.” (Gary)

24:58 Tour operators need to adapt to the domestic market, but that is easier said than done. The Philippines is particularly confusing with its often lack of coordination between the Department of Tourism and Local Government.

“The problem isn’t the adapting, but that you are adapting to what? You don’t know what the landscape is, you aren’t getting a lot of clarity about when this could rebound.” (Gary)

“Until DMCs have greater clarity, they just can’t put together the products, let alone be able to market it to customers.” (Hannah)

26:44 There is a contradiction between the way airlines are announcing resuming flight routes to destinations and the travel restrictions which still remain in place.

“Airlines are protecting their own future, their own slots.” (Gary)

28:04 The new marketing challenge: how do you balance safety concerns with aspirations?

“This is the fact that for all travel marketers […] there is a huge challenge because safety, trust and cleanliness, they’re not emotional drivers, they’re not sexy.” (Gary)

“It’s a massive conceptual rethink of how travel should be marketed, not just now but for the future.” (Gary)

29:20 2 campaigns striking the right balance for reopening tourism: Dubai Tourism and the Anantara Golden Triangle hotel in Thailand.

“That’s the way this marketing should be done.” (Hannah)

31:00 How do you balance marketing hotels for international tourists vs. for locals?

“The other issue for marketers is the challenge of marketing to domestic travellers and local residents.” (Gary)

“Trying to convince a Singaporean to take a holiday in their very small city state […], just 10km away from their house - how can we make it special?” (Hannah)

Resources

Anantara Golden Triangle reopening video link HERE

Dubai Tourism video link HERE

UNCTAD forecasts HERE