Impact of Coronavirus:  Travel and Tourism Industry on A Slow Path to Recovery  

Summary

• Travel and Tourism have been one of the first to be hit hard by the global pandemic, there have been mounting revenue losses and job cuts across the sector
• Spike in infections and inadequate testing facilities create fears among the travellers, and staff of travel related businesses
• Many industry experts consider the road to revival for the industry to be a complicated and lengthy process

24 July 2020 turned out to be a good day for many British travellers living in isolation, as it was announced that they can now book tickets for their summer vacations. The UK government exempted around 70-holiday destinations from its mandatory 14-day quarantine rules announced on 3 July 2020 (In a latest the government imposed an immediate two-week quarantine for anyone returning from Spain). Albeit, with advisory on social distancing measures to curb the spread of infections at least till a vaccine for Covid-19 hits the market and both travellers and service providers, are vaccinated, travel is the last thing on people’s mind.

The Coronavirus pandemic has brought the travel industry to a standstill leading to mounting revenue losses and job cuts across the sector with each passing day. The outbreak started at a time of the year (spring and summer) when the travel industry earns most of its revenue. Industry bodies and analysts are finding it difficult to forecast the exact numbers amid fears of a resurgence of the deadly pathogen. In early April 2020, The World Travel and Tourism Council (WTTC) that represents major global travel companies had stated if the pandemic stretches in coming months, there would be a global loss of 75 million jobs and US$2.1 trillion in revenue and had requested the different governments to provide support to travel related companies.

Global pandemic hits many leading players in the industry

The travel industry has been one of the first to face the heat of the lockdown imposed to curb the Coronavirus spread. Airlines, rail cruise and roads were among the first to put a pause button as the government banned unnecessary travel. The hospitality business closed the shutters of hotels, restaurants and pubs. The tourism destinations wore a deserted look until the government eased travel norms as part of unlock measures. Even today, while the online travel agencies have started to punch bookings, but the numbers are much less as registered in pre-Covid times.

When the lockdown was imposed in March 2020, Airlines UK, the industry body representing UK-registered airlines, stated that the future of UK airlines is grim as it faces a critical situation due to the global pandemic which would create a long-term and irreparable loss. The aviation industry might take another three to four years to reach the 2019 levels of growth.

In July 2020, British Airways, UK’s leading airline announced to retire its fleet of 31 Boeing 747-400 aircraft with immediate effect amid crushing impact the Covid-19 outbreak. It was also reported that the company might suspend 36,000 of its employees. In July, another major airline, Virgin Atlantic, secured £1.2 billion investment from the Virgin Group, investors and creditors after the UK government denied to help. The money would help the airline to protect around 6,500 jobs, while still having to see around 3,500 layoffs.

According to some reports, the hospitality sector has also been devastated as corporate, sports, social and political events had either been cancelled or postponed to check the spread of the deadly virus. It remains to be seen how sanitisation and social distancing measures would be put in place to revive the hospitality sector. The hospitality and leisure business accounts for nearly 10% of employment in the UK and contribute 5% to the nation’s GDP. In comparison to 2019, the tourists visiting the UK would be lower by 35% due to Coronavirus-led crisis. If the EU-UK talks do not succeed to have a free trade agreement, Brexit will potentially add to the worries of the food and drink segment. Brexit has lowered the business sentiments as global business travel share in 2019 was recorded at 21.8% from 2015’s 24.6%.

There has been continuous demand that businesses in the sector should receive 100% waiver on business tax. The hospitality and leisure business with a tax value of £15,000 or less is entitled to receive a grant of £10,000. The government has announced to provide a grant of £25,000 in cash to businesses entitled to pay between £15,000 and £51,000 as tax.

Some recent announcements by the government

In order to ease travel restrictions due to lockdown, the UK government on 4 July 2020 permitted to reopen most leisure and tourist attractions but adhering to the safety guidelines. The government allowed hotels, holiday apartments, campsites, movie theatres, arcades, and theme and caravan parks to start functioning with a clean and sanitised shared area. The decision to reduce two-metre social distancing norm to one and minimal staff-to- diner contact to resume table services brought a major relief to the pubs and restaurants and indoor hospitality.

Spas were though asked to remain closed. The beauty and wellness segment forms a considerable part of the hotel industry, and the government’s decision to keep the spas closed had led several spas and spa hotels to face closure. On 25 July 2020, the government announced the reopening of indoor swimming pools and gyms in the country. These announcements together brought the much-needed respite to the hospitality industry. Also, air bridges, applicable to air travel have been created in the times of global pandemic to facilitate travel to different countries.

Later, in mid-July 2020, The UK government said if the rates of COVID-19 infections do not increase from the current level, then it will allow conducting business events and conferences from 1 October 2020. The country’s Department for Digital Culture, Media and Sport (DDCMS) issued guidelines to safeguard the health of both the event organisers and delegates while organising such events. Safe social distancing norms, contactless operations, adequate cleanliness and sanitisation facilities, and use of digital means form key suggestions.

The segment contributes around £32.6 billion to the UK every year and accounted for a quarter of the 38 million international visitors to the UK in 2018. This is especially welcoming during the off-peak tourist season. Stating that the segment plays a key role in the country’s visitor economy, Nigel Huddleston, the UK tourism minister, commented that it is an important effort in getting them back to contribute while having safety norms in place. The country is known to host many events in the segment that brings business prospects for various other sectors.

Other steps to revive the industry

Beyond immediate steps towards easing the lockdown and safety advisory, there is a greater need to support the travel industry for a quick recovery. Travel restrictions would be effectively lifted if measures are taken to restore the confidence of both service providers and the traveller. It is important to create and sustain the demand with necessary schemes and programmes that are monitored properly and revised as needed.

Several agencies in the UK are all geared up to provide screening and adequately responding to the effects of the Coronavirus. These include VisitBritain, the UK’s national tourism agency, DDCMS, Tourism Industry Events Response Group (TIER) and the Tourism Industry Council. The UK will also associate with international forums like the G20 and OECD, especially to tackle travel restrictions, while prioritising on the traveller’s health. VisitBritain has already started the work on a post-pandemic campaign to promote UK tourism. The government’s Jobs Retention Scheme has not been able to save job losses in the sector. The country’s tourism industry comprises of 2,00,000 SME’s and 1.6 million employees.

The revival scheme must be an industry-wide coordinated effort and focus in the areas of business, product and marketing domain, besides building on consumer sentiment. Though the domestic travel market is most likely to be the immediate driver; the focus should be on making the entire sector viable. VisitEngland has administered a fund of £1.3 million to support Destination Management Organisations (DMOs) during the present crisis period to help the SMEs operating in the sector. In its steps to revive the retail, hospitality and leisure sectors affected by Covid-19, in March 2020, the UK Government announced £330 billion financial rescue package.

Conclusion

As the UK is still actively fighting the Coronavirus, industry and society are looking to re-emerge from the unprecedented crisis. Many experts believe that the road to revival seems to be a complicated and lengthy process. There is concern about flying as well, with the spike in infections in several tourist hotspots across Europe, there is a fear that the air bridges could collapse and backpackers may be required to undergo 14-day quarantine when they return home in the UK.

The travel and tourism industry needs immediate recovery measures, which includes confidence-building measures such as increased Covid-19 testing at the airports and isolation facilities, relaxed quarantine norms, rise in employment and pay rise apart from others, which will slowly create demand for travel services.