“The Travel Bug”: Tourism Amid the COVID-19 Pandemic
Prior to COVID-19, tourism-reliant nations had bright economic growth prospects. In 2019 alone, the Dominican Republic’s GDP rose by 5.07%, and Seychelles and the Maldives experienced GDP growth of 3.5% and 5.2%, respectively. Tourism is a strong pillar in both emerging and advanced economies, with 44 countries relying on this sector for 15% or more of their total employment. However, COVID-induced travel restrictions have put a stop to this sector’s boundless growth. With 9 of out 10 individuals now living in countries with border restrictions in place, 120 million tourism jobs worldwide are at risk.
The demise of the tourism sector poses a serious threat to a number of developing economies. In these environments, tourism provides a constant income source to many marginalized groups, including women and unskilled workers. Both governments and businesses must innovate to ensure that the pandemic doesn’t erase years of progress on reducing poverty within these groups. The tourism sector can adapt to COVID-19 restrictions through innovative domestic and international tourism offerings, as well as through credible safety certifications. However, innovative measures won’t be able to protect all tourism jobs, highlighting the urgent need for tourism-dependent nations to diversify their economies.
In order to survive given COVID-19 travel restrictions, tourism organizations would do well to consider marketing to domestic consumers. While experts from McKinsey predict that international tourism will not return to 2019 levels until 2023, domestic tourism could recuperate much faster, recovering to 2019 levels in just a few years. International travel restrictions also serve as a great incentive for locals to explore their own surroundings. As such, tourism businesses and governments can boost local demand by providing targeted financial incentives and by adapting their offerings to local markets.
To ensure that local tourism spending boosts the nation's economy, subsidies should only cover expenses at domestic businesses. One striking example is Japan, which provided its citizens with a travel subsidy of up to $190 per day for use at domestic destinations. When implementing travel subsidies, governments must ensure that such subsidies will primarily benefit small- and medium-sized businesses, rather than large corporations. In small island nations where most hotels are foreign-owned, government subsidies should be oriented towards local restaurants or towards entertainment and cultural venues.
Tourism businesses can also raise local demand by strategically adapting their offerings. Often, tourism sites are designed exclusively with foreign consumers’ expectations in mind; as such, businesses can redesign their offerings to meet the desires of their domestic customer base. For instance, to raise local interest in safaris, certain African companies are providing transportation from major cities to safari campsites and softening the colonial undertones of the experience. Adaptations like these are critical in eliminating the barriers domestic consumers face in accessing their own country’s tourism experiences.
Although local consumers will help mitigate the impact of COVID-19 on the tourism sector, domestic tourism won’t compensate for the loss of international tourism. For instance, in South Africa, hotels and tour operators had to provide steep discounts reaching over 40% to adapt to the local median household income. Price reductions required to raise local demand are simply unsustainable for businesses operating in countries where the average monthly salary is equivalent to the cost of a weeklong resort stay.
To persuade foreigners to travel again, governments can implement travel bubbles and safety certifications. Countries can loosen travel restrictions and quarantine requirements for foreigners travelling from lower-risk nations. As seen in Europe this summer, however, travel restrictions can change unexpectedly as cases rise, creating a substantial level of uncertainty that may deter many foreign travellers.
Travel bubbles won’t be sufficient to attract consumers who are afraid of COVID-19; ultimately, persuading foreigners to travel can only work if credible safety mechanisms are implemented. The World Trade and Tourism Council has recently created a ‘Safety Travel Stamp’ signalling companies’ and nations’ compliance with global COVID-19 protocols. Other countries, such as Spain, have created certifications of their own, which demonstrate organizational compliance with guidelines set by local health ministries. Unfortunately, these certifications put a great financial strain on already troubled businesses; in Spain, implementing the required measures can cost up to 3,000 euros. A single global certification, which countries can further adapt to national public health guidelines, would reassure foreign consumers and would strengthen the credibility of the global COVID-19 response. If they are not already doing so, governments should consider subsidizing the cost companies are incurring to obtain safety certifications.
The one silver lining to this pandemic has been the creation of a new consumer class who can potentially work or study from anywhere in the world. Governments can capitalize on this new market of remote workers and students by creating more accessible visas. Nations with favourable climates, such as Barbados and the Cayman Islands, are implementing long-term visas to lure remote workers.
Businesses can adapt their offerings to this new market by modifying hotel amenities for longer stays, ensuring reliable internet connectivity and IT support, and incorporating work and study spaces into hotels and long-term rentals. However, without government support, only chain-brand hotels will be able to adapt their amenities, thus retaining most of the economic gains of the new remote worker visa programs. Fiscal support for local hotels as well as for entertainment, dining, and local cultural offerings can better ensure that remote workers' spending will help boost the local economy.
Remote worker programs have been met with an overwhelmingly positive response—to date, over 1,300 people have applied to a remote worker visa program in Barbados. Nevertheless, many countries continue to discourage residents from travelling abroad, and a number of companies legally require their employees to remain in the country, even when they’re working from home.
Even after the discovery and large-scale distribution of a safe and effective COVID-19 vaccine, it will take a few years for the global tourism industry to reach its pre-pandemic level, and when it does, the future of hospitality will probably look different than its current state. This crisis, thus, serves as a poignant reminder that a diversified economy is far more resilient to market instability. Some governments, such as those of Cambodia and Thailand, have moved in this direction, providing retraining or skill upgrading programs for the unemployed. Similarly, the governments of Ireland and Portugal have created online trainings and webinars for tourism employers and workers, highlighting the need for digital skills upgrading. However, these initiatives remain limited in scale and are unlikely to mitigate COVID-19’s devastating economic impact on tourism-dependent nations. Although COVID-19 has hindered the development of the tourism sector, this crisis clearly offers an opportunity for the sector to explore new offerings and for governments to diversify their revenue base.
Stringent travel restrictions in tourists’ home countries have erased years of economic gains for tourism-dependent nations and pushed their local tourism business to the brink of bankruptcy. Despite the new opportunities available in domestic tourism and remote worker programs, economic diversification is the only solution that will ensure that nations do not lose their progress in their fight against poverty. As Einstein’s famous saying goes, “in the midst of every crisis, lies great opportunity.” Good crisis management will require governments of tourism-dependent nations and the tourism industry to diversify and successfully pinpoint new offerings that will spur economic development.