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2021: Mood of cautious optimism

With 2020 labelled as the ‘pandemic year’ that witnessed all sort of unfortunate developments due to the ongoing health crisis, the rolling out of vaccines has brought much needed relief to every industry in the world including travel and tourism industry. 2020 will count among those which left an indelible mark on the course of history. The damage done to the tourism industry due to COVID-19 is beyond imagination and its spill over to 2021 is still a major concern. Experts of the industry feels that 2021 is likely to be the year when the world transitions to the next normal.

Going by the latest update, UNWTO expects international arrivals to decline by 70 per cent to 75 per cent for the whole of 2020. In this case, global tourism will have returned to levels of 30 years ago, with one billion fewer arrivals and a loss of some US$ 1.1 trillion in international tourism receipts. This massive drop in tourism due to the pandemic could result in an economic loss of US$ 2 trillion in world GDP.

T3 interacted with some of the thought leaders of the industry and all of them are of the opinion that the way forward is of cautious optimism.

Market dynamics

The industry had to move with speed and in the face of uncertainty in a way that it never anticipated before. Although there is optimism in the air, but a lot will hinge on how the thing unfold on the economy front.

“While a combination of lockdown fatigue and announcements on the vaccine have ushered in positive consumer sentiment, the road ahead will be one of cautious optimism for the sector at large,” says Madhavan Menon, CMD, Thomas Cook (India).

Rakesh Bansal, CEO, Amadeus India & sub-continent says that although it is too early to talk about life after COVID-19, as we entered into 2021 we have reason to be cautiously optimistic. “Breakthroughs in bioscience and medicine are helping to reduce the risks of contamination and limit the spread of the virus better than ever before. This is good news for everyone and particularly those who long for the freedom to travel. Helping travellers get safely back on the road, in the air, on the railways and into hotel rooms is a top priority for the industry. We’re seeing a growing number of industry initiatives from stakeholders such as The Commons Project and IATA’s Travel Pass,” Bansal adds.

Sandeep Dwivedi, Chief Operating Officer, InterGlobe Technology Quotient, opines that the industry is currently at the transition point both in terms of COVID-19 crisis and overall advancement in the sector. “Old methods are gradually shifting as market is advancing towards new methodologies, technologies and opportunities. With customers expressing interest in travelling and out-of-home activities, businesses in the industry have actively started innovating to bring safer, convenient options to meet this demand. On a broader scale, including international travel and global condition, various factors are at play, such as low GDP growth, especially below forecast for many economies; web meetings reducing the demand for business travel, further expected to be impacted by up to 35 per cent; and new waves of outbreaks restricting international movement as to the UK,” Dwivedi says.

Dwivedi further opines that while gradual lifting of restrictions may show signs in first quarter of 2021, yet the situation is skeptical and at the same time dynamic, and it may take up to 12 months for all restrictions to be lifted. “All this throws light at a slow but steady revival of low-scale out-of-home activities in what I call a testing-phase from customers,” Dwivedi adds.

According to Kerrie Hannaford, Vice President Commercial, Accor India & South Asia, travel decisions currently are being led by keeping safety and hygiene as prerequisites. “The hospitality industry will remain dynamic but will now be extra cautious, agile and innovative. Hotels are also undergoing a transformation with the deployment of digital, contactless solutions and potential design changes because of changing social behaviour and health considerations. We firmly believe that every crisis presents itself with opportunities. Domestic tourism is rebounding, sustainable travel is in focus more than ever before along with the emergence of experiential travel,” Hannaford adds.

Road ahead

Although cautious optimism is prevailing in the industry, the road ahead for the industry is full of uncertainty. Players are of the opinion that it will take time for the industry to get back to normal.

“My expectation is that 2022 will see a return to normalcy if I were to look at 2019 and 2023 will be a full-blown return to normalcy in each of our of line businesses. With regards to retail travel, I expect that when borders opened and the regulations regarding arrival at destinations as well as issuance of visas is clarified, we should see travel. As fast as business went away, I would hope that we would see a quicker return. 2021/2022 should see a degree of normalcy and 2022/2023 will see a full-blown return to normalcy,” Menon says adding that we can certainly expect more positive news in 2021 for the industry as Indians are already making their travel plans and are looking at both domestic as well as international destinations.

Dwivedi is looking at a coordinated recovery in 2021 and beyond, considering outbreaks subside in 2021 with substantial success rate of public health measures, and GDP grows in line with forecasts following availability of vaccine/s. “Further, if international restrictions are lifted 20-30 per cent faster, there shall be an optimistic growth in sight. In case of customer sentiment, expectation shall remain high on better safety with modified interiors in hospitality sector, and scientific upgrades in aviation as well as airports,” Dwivedi adds.

According to Hannaford, 2021 is looking positive in terms of bookings and Accor is hopeful that the industry will emerge stronger and provide seamless hospitality to our guests. “The ongoing trend of domestic leisure travel will keep prospering in India especially for weekend getaways, staycations, drivecations and celebrating special occasions. People want to step out of their house to simply relive the joys of travelling and relax. The overdue pent-up demand to travel has further resulted in a rise in number of bookings from the leisure segment,” Hannaford adds.

Menon opines that while booking trends for domestic travel continue, we are seeing a growth in demand for travel to longer haul destinations like Kashmir and the Andaman. “Our survey revealed that 71 per cent respondents displayed confidence in air travel and this has been substantiated by the increased demand for flight-inclusive packages,” Menon adds.

Bansal says that the success of the travel industry hinges on our collective ability to adapt, innovate, and collaborate to make travel easier, safer and more seamless than ever before. “Fortunately, the travel industry is chockfull of creative thinkers from all over the world, and our technological abilities have never been greater. Pre-COVID, the travel industry contributed approximately US$8.9 trillion to the world’s GDP – that’s roughly 1 in 10 jobs. This attests to the powerful human desire to explore the world. In 2021, this desire will remain undimmed – if not brightened –and will act as a powerful driver that will push the travel industry forward,” Bansal adds.

Citing Thomas Cook India and SOTC Travel jointly released Second Holiday Readiness Report (Dec 2020), Vishal Suri, Managing Director, SOTC Travel says that 73 per cent respondents are willing to increase spends to ensure higher levels of health and safety on their holiday – a significant 38% increase from the First Holiday Readiness Travel Report (May 2020). “The upcoming year has many weekends that can be clubbed with other holidays that make weekends longer. We are observing a rise in inquiries and bookings for these long weekends,” Suri adds.

Aditya Agarwal, Head of Corporate Strategy, Cleartrip opines that the pandemic has made forecasting challenging. “We expect the broad trend around recovery to continue moving forward. Customers were initially traveling for only emergency purposes close to the date of travel. However, over time we have seen confidence return as evidenced by the increasing share of round trips and advance bookings. We expect this trend to continue over the year further. We will increasingly see customers building confidence to travel longer distances, and as and when international travel returns to normalcy, we will see more volumes,” Agarwal adds.

Digitalisation: A game changer

With touchless becoming the new norms, digitalization is emerging as the key elements for the travel and tourism industry. Bansal expects that airports in in India is going to introduce new technologies and a greater level of automation to all of their processes in then ear future. “Contactless technologies are likely to become commonplace to enable passengers move from check-in to boarding in a more safe and seamless way. We also expect airports to adopt a range of technologies to reduce crowds and queues within the terminal buildings, to meet new demands for social distancing. The introduction of off-site passenger handling services – such as check-in and bag drop services outside the airport terminal at railway stations, conference and sporting venues, and hotels – is likely to be one such development,” Bansal adds.

Citing a recent study, Bansal says that that technology plays a crucial role in supporting recovery, as over 4 in 5 (84%) travellers said technology would increase their confidence to travel in the next 12 months by addressing concerns around mixing with crowds, social distancing and physical touchpoints. “Hence, mobile applications, self-service portals, contactless payments & transactions etc. would be the focus in the coming times,” Bansal adds.

According to Menon, technology was mission critical and technology solutions were immediately implemented post lockdown to serve our customers. “We deployed our Virtual Outlets and our Virtual Agency Network to enable contactless services to customers by equipping our teams (sales and servicing) with technology - to interact with consumers, as also access our critical internal systems for seamless delivery,” Menon adds.  He says that one of the key trends driving digitalisation in the travel industry is the need for safe, contactless, yet personalized holiday planning.

Agarwal says that the pandemic has accelerated the shift from offline to online across markets. “We expect digital business models to benefit from this shift and garner a higher market share. Travel behavior has also changed, with customers placing a high degree of emphasis on flexibility and safety in travel. Industry participants that can differentiate on these two needs will also garner a disproportionate share,” Agarwal adds

Hannaford opines that guests have become more tech-savvy during the lockdown and digital interaction has gained popularity now more than ever before. “The hospitality industry has been aggressively embraced technology; Starting from booking the room, to check-in, check-outs and payment procedures. Consumers also are preferring emails, digital posters, digital menus for all the communication,” she adds.

Echoing similar opinion, Rohit Kapoor, CEO, OYO India and South Asia, stated, “In 2020, we leveraged technology in a big way by offering meaningful solutions to our consumers, partners and employees in the new normal. We focussed on continuously delivering a high-quality experience to our customers as part of our ‘Sanitised Stays’, ‘Contact-less check-ins’ and ‘Sanitised Before Your Eyes’ initiatives while adding value to the experience of our asset partners with improved occupancy and revenue.”

For Dwivedi, digitally, race for offering advanced smartphone applications and chatbot facilities has been swifter than the other areas. “Many airports and airlines are picking this trend. Voluntary contact tracing by airlines is another emerging trend; its mass acceptability and adaptability is yet to be witnessed. At ITQ, we are planning to offer digitally advanced experience and options to our community of travel agents with chatbot and AI-ML based tools for better experience and augmented decision making to help our travel agents offer smoother, smarter and safer services to their customers,” Dwivedi adds.

MICE, social events & business travel

Hannaford informs that the hospitality industry is operating in a new reality with social distancing as the norm and in increased emphasis on health safety. “With the continuous focus on providing contactless services, hospitality industry has ventured into virtual events and weddings. This new trend in the MICE segment has already started attracting the eyeballs. However, weddings have been resilient, with continuous demand through the pandemic. At several of Accor’s hotels, we witnessed a rise in demand for curated and virtual weddings,” Hannaford says adding that Accor is also expecting an increase in bookings of small meeting rooms.  “Business travel will take some time to recover as people are still working from home and only travelling for unavoidable meetings only. However, we are positive that this segment will also recover gradually like others in the coming year,” she adds.

Thomas Cook (India)’s MICE teams have used the period of the lockdown to reimagine business and to conceptualise vibrant virtual/ digital models and platforms, advanced health and safety measures as well as new age technologies. “Our teams have successfully delivered exciting hybrid models and digital R&R events…We are proud of the impactful service our Corporate Travel teams were able to deliver handling the repatriation of around 10000 Canadian citizens in partnership with the Canadian High Commission during the period of the lockdown,” Menon reveals.

According to Dwivedi, business travel is one category with low signs of recovery and is expected to display baby steps towards revival in early 2021. “The year may witness gradual move towards business travel, especially in manufacturing sector where factory-visit has been long overdue. MICE may pick up for key sectors in current times like medical, banking, and technology. As these industries cover a substantial space in global marketplace, this sector shall see positive growth in 2021, comparing to 2020. Social events still remain a complex area to speculate considering new waves of outbreaks in various markets, especially Europe. This may likely portray limited growth and may shift for better when positive news regarding vaccine emerges in near future,” Dwivedi adds. 

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