Unpacking The Impacts Of COVID-19 On Tourism And Repackaging The Hotel Service

World Tourism Organization Offers Stunning — But Not Surprising — Fact About Travel
May 15, 2020
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May 15, 2020

Due to increased globalization, the ripple effect of the COVID-19 pandemic has reverberated through every corner of the globe, causing loss of lives and jobs as well as a slump in general economic activities. The domino effect of the virus has brought untold pain and hardships to many individuals and organizations from all corners of the world. Apart from the loss of over 280,000 lives (as at 10th May, 2020), Bloomberg has projected that this pandemic could cost the world $2.7 trillion, equivalent to the UK economy. However, the impact has not been even across all industries. For instance, information communications technology (ICT) and its related industries have not felt the pinch as much as other industries.

Impacts of pandemics and crises on tourism

The tourism industry has always been one of industries hardest hit by pandemics and crises. Throughout history, the industry has borne the brunt of major pandemics and plagues, notably, the Black Death (1346-1353), Spanish Flu (1918-1920 ), SARS (2002-2004), H1N1 Swine Flu (2009-2010) and Ebola Virus (2014-2016). The Spanish flu for instance, restricted travel for four months and killed 21 million people during that short period. Also, the swine flu pandemic led to the Mexican tourism industry alone losing almost a million overseas visitors over a five-month period which translated into losses of about US$2.8 billion.
The tourism industry is in a unique situation because transport serves as a vector for spreading the virus therefore it is usually targeted for breaking the chain of spread of the virus. Tourism has a dynamic element which involves movements and this invariably fuels the spread of viruses. The movement of people via air travel increases the risk of the spread of viruses at a much faster pace than normal. Thus, tourism is both a catalyst for the spread of viruses and a victim of the spread.
Pandemics and outbreak of diseases render destinations unattractive to tourists who are risk averse. Usually, travel restrictions, border closures, quarantine and social distance measures are instituted by governments to minimize or curtail the spre ad of viruses. The World Health Organization also issues travel advisories to discourage travel to destinations with cases of pandemics. These measures coupled with media sensationalism in news reports render destinations affected by pandemics unattractive. These result is fear of travel to those destinations and cancellation of flights, hotel reservations and other scheduled events.
During the outbreak of pandemics, almost everything connected to tourism is affected perhaps with the exception of the environment. In Italy, one of the countries hardest-hit by COVID-19, popular tourist destinations like Rome, Venice and Milan are deserted and occupancy rates have slumped to as low as 6%. On 26 March, the World Tourism Organization predicted a 20-30% loss in international arrivals in a press release. Meanwhile, the World Travel and Tourism Council has indicated that 50 million travel and tourism jobs are at risk due to COVID-19.
In spite of the monumental impacts on t he tourism and hospitality industry, it appears tourism’s loss could be the environment’s gain. There has been a concomitant fall in greenhouse gas emissions especially in industrialized countries as evident from satellite images of coronavirus hot spots around the world. This has been widely circulated on social media. In China for instance, emissions fell by 25% when factories were shut and cities were on lockdown. Also, the use of coal fell by 40% in the six largest power plants in the country. Whiles there is a lot of panic about the pandemic, nature is undergoing a healing process. It is expected that by the time we are done with the pandemic, nature would have been troubleshooted. Since the environment is the base product of tourism, destinations would become more attractive.
Airlines, tour operators, travel agents, attraction sites, car hire, restaurants and hotels have all been adversely impacted. All businesses and service providers along the tourism value chain including the farmer who supplies vegetables to a restaurant and a taxi driver who shuttles tourists from the airport to hotels are all affected.

Impacts of COVID-19 on hotels

Undeniably, hotels are one of the hardest-hit industries by COVID-19. As a result of massive cancellations of flights, tours, events, hotel reservations and a resultant decline in inbound travel, hotel occupancy rates and average room rates have dropped sharply causing unprecedented declines in profit margins. In Italy, 90% and 80% of all hotel bookings in Rome and Sicily respectively have been cancelled and for a relatively small tourist destination like Ghana, hotel occupancy rates are down from 70% to under 30%, with some hotels recording as low as 5%. Also, it has been reported that hotel industry REVPAR in the United States fell 11.6% for the week ending 7th March 2020. The problem is compounded by lockdowns and other social distance protocols announced by governments in an at tempt to ‘flatten the curve’. Governments are in a dilemma as to how to flatten the curve without flattening their economies. Though hotels are experiencing substantial revenue losses, utilities, wages and salaries as well as other recurrent expenditure and statutory payments have to be made. From all intents and purposes, the hotel industry is headed for an unprecedented slump from COVID-19. According to experts, the pandemic will linger on for about two years. However, the fear of travelling and enforcement of social distance protocols will not go away soon after the pandemic subsides.
COVID-19 will leave the hotel industry badly bruised and there is a general agreement that the industry will not be the same long after the lockdowns and travel restrictions have been lifted. But hoteliers cannot afford to follow the existing model of operations. Hotels must adopt survival strategies against COVID-19. This calls for repackaging the hotel service to make it more attractive in this CIVID-19 era. After all, desperate situations require desperate measures.
It must be emphasized that the extent of the impact of COVID-19 on the entire economies of destinations and along the tourism value chain, requires government to provide leadership in managing the situation. Indeed, in most destinations, governments have instituted a number of austerity measures to help cushion businesses including hotels and restaurants off the debilitating effect of the pandemic. This has been in the form of relief funds, tax cuts, subsidies, credit facilities and employment support.