COVID-19 And The Travel Industry
First discovered in November 2019, COVID–19 has caused severe losses to not only the airline industry, but to the cruise industry as well. In March, American Airlines suspended three-quarters of their long-haul international flights. Three days later, Qantas Airways announced that they were grounding their entire international fleet. Then, Lufthansa Airlines reported that they were grounding 700 of their 763 planes. All over the world, the airline stocks have plummeted. For Air Canada, their share value went down by over 15% in less than a week.
Governments are left with difficult decisions, including three options for the airline industry: let the struggling airlines fall, liquidate them, or nationalize them. In the United States, President Trump plans to give $50 billion in aid to the airline industry. The travel industry has been immensely affected; so much so that it requires $150 billion just to survive, given the 4.6 million travel-related jobs that have been lost due to the virus. When it comes to the three big players in the cruise industry, Princess Cruises, Royal Caribbean Cruises and Norwegian Cruise Line, they have lost 10-15% in share value. Transportation is a huge part of the supply chain in the economy, and if it disappears, it will make the economic situation even worse. Therefore, it has become a situation of extreme urgency and priority.
How Has COVID-19 Affected The Travel Industry?
Before the outbreak, according to China’s tourism bureau, the country’s inbound tourism alone brought in $127.3 billion. However, following the pandemic, various workers in the tourism and hospitality industries, from bellhops to travel agents, brace for economic disruption that may as well continue into 2021. Jack Ezonhe, the Founder and Managing Partner of Embark Beyond, a luxury travel agency, reported that almost 75% of his travelers canceled their travel plans to Southeast Asian countries in February and March. Additionally, a whopping 100% of honeymoon plans that Jack’s agency booked to the Southeast Asian region have been canceled and rebooked to other destinations such as Maldives, Southern Africa and Australia. At most, hotels have less than 20% occupancy. Major hotel chains like Marriott have started dismissing thousands of workers. One of the leading trade unions states that nearly 300,000 jobs in hotels, restaurants and casinos have and will lose their paychecks in the coming days.
One of the main reasons why it will take so excruciatingly long for the travel industry to recover is mainly due to the weather and the yearly holidays. As part of planning for a vacation, once the location has been decided, the question of “when?” is hugely impacted by the country’s weather during that time period. In places like Southeast Asia, which is highly affected by the monsoons and hot climate that lasts from roughly March to September, people will not start booking until Fall. Similarly, holidays can make or break such decisions. Families will not be able to travel until their children’s school schedule lines up with their plans. For most parents, the plans for spring break and summer vacations have been postponed until the next year.
Bottom Line
People generally believe that this tide will ebb and flow similarly to all others. Ebola is still in Africa, but safari bookings are stable. People tend to forget and just like everything else, the travel industry will bounce back.
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