#2 Governments Will Play a Greater Role in Shaping Recovery
Over the last few months, we have started to see how different government policies and tactics have been employed to stimulate demand. A recent report by KPMG highlighted that if Australians could be convinced to spend 70 percent of their international travel budget domestically, then the tourism market could tread water through the pandemic.
Diverting overseas spend to the domestic market is not going away anytime soon, and the largest markets such as the U.S. and China have an advantage here.
According to the UN’s World Tourism Organisation (WTO), Chinese tourists spent $254.6 billion overseas in 2019, accounting for almost one-fifth of global tourism spending. By keeping its borders closed, it has diverted much of that spend locally. China has seen a record number of domestic flights this year. In March, for example, Macau welcomed the largest number of visitors from the mainland since before the pandemic.
This may be good news for domestic businesses, but not all markets can survive without overseas tourists. In these cases, the only option is to innovate their way to safely reopening borders.
For example, Thailand’s tourism industry is particularly reliant on overseas visitors, but is struggling with its own vaccination program. But by creating a sandbox on the island of Phuket and prioritizing the vaccination of its islanders, it has been able to reopen to overseas visitors who are fully vaccinated and want to stay on the island.
“This level of government intervention is something that we will see for some time to come,” Shay said. “A previously silent partner to the industry has woken up and is now key to its recovery.”
While something like this can stimulate recovery, the rapidly changing conditions of the pandemic can still bring about unsettlement. Spare a thought for the numerous businesses that have re-hired staff, only to be told they need to hold off or change the way they operate, again.
“The key for travel brands is digital flexibility and agility, because it is difficult to predict what’s coming next,” said Shay. “We’re helping our clients rapidly adapt their service models to accommodate more contactless interactions and make more use of their direct channels to provide up-to-date information, more booking options, modifications, and refunds. Safety may have been the primary driver here, but removing friction points and improving the overall experience is happening along the way.”