Tourism Sector Challenges & Opportunities to Overcome the Crisis

Business and Technology University and Hospitality Management Institute, with the support of the United Nations World Tourism Organization and the National Tourism Administration, publishes a large-scale research and recommendations with the involvement of local and international experts.

The study discusses the challenges of the tourism sector worldwide and the possibilities of overcoming the crisis caused by the COVID-19 pandemic, and provides relevant recommendations based on the analysis of the member states of the UN World Tourism Organization.

The steps to be taken to rehabilitate the global tourism industry in the post-pandemic period, in a roundtable format, with the participation of international organizations, the National Tourism Agency and experts were discussed on July 9.

The World Economic Forum Report Review

Presented by the World Economic Forum on March 17, 2020, the report reflects the challenges in the tourism sector caused by COVID19 pandemic.

Based on the World Travel and Tourism Council, the COVID-19 is putting up to 50 million jobs worldwide in the global travel and tourism industry at risk.

Asian countries are expected to be the worst affected.

Once the epidemic outbreak is over, the industry will need up to 10 months to recover.

The tourism industry currently accounts for 10% of global GDP

In cooperation with Thomson Router, the World Economic Forum offers the following solutions to respond to the challenge.

The impact of the pandemic on the tourism sector depends on its duration, and since it is expected to exacerbate in the future, the recent restrictive measures taken by, for instance, the US administration regarding travel to Europe seem to be too generic and less sensible.

‘Certain measures are not helping and they can prompt the economic impact to be way more significant,’ (Thomson Reuters)

It is argued that implementing such generic policy, the effectiveness of which is yet to be proven in containing the virus, cannot be justified. Imposition of such restrictions could only complicate the matters for medical experts travel and medical supplies delivery.

Around 850, 000 people travel each year to the United States from Europe, which amounts to a $3.4 billion contribution to the US economy (Thompson Reuters).

The estimated 50 million jobs are expected to be lost in the following countries:

Asia – 30 million

Europe _ 7 million

The USA - 5 million

Other continents – 8 million

Based on the WTTC, a three-month loss of global travel in 2020 corresponds to a 12-14% reduction in jobs. The World Travel and Tourism Council is also calling on authorities to either abolish or simplify visa regulations wherever possible, to lower travel taxes and introduce different incentives once the epidemic is brought under control.

The WTCC also calls on flexibility in the tourism sector that will allow travelers to postpone their planned visits rather than to cancel them.

By sector, airlines and cruise chips have a greater impact on the industry than hotels; hence, they need more immediate support.

Meanwhile, the official WTTC advocates confining certain cities to contain the outbreak– as it is happening in Italy and Spain – should health officials recommend to do so, but only in specifically targeted areas or for certain age groups.

The research reviews different countries’ anti-Crises plans based on their specific characteristics, including the most heavily affected countries, such as Brazil, China, the US, France, Italy, the UK, etc. and offers relevant recommendations for effective recovery in the post-COVID period.

The research also includes In-depth interviews with experts regarding the current main challenges in economies and businesses worldwide and relevant solutions.

It is noteworthy that a part of interviewed experts stressed Georgia’s success in the fight against the Coronavirus.

“The unpredicted nature of the outbreak shakes hospitality sector, turning the hotel management into a challenge. Avery day is a new battle, but the tourism industry has to remain active. Each tourist or visitor’s trust to the country should be restored; due to the fact that total of new cases of COVID 19 and fatalities remain flat and because of the effective implementation of healthcare measures by the government, Georgia has achieved its leading position in its fight against the pandemic,” said Elene Sharikadze, the General Manager of Hotel Radius and the Director of Operations at Hotels MC Ltd, with more than 20 years of work experience in hotel sector.

Alvaro Hidalgo, a member of the advisory board of HITEC Europe for HFTP, the largest US association of Hospitality IT & Finance professionals, also congratulated Georgia on its successful efforts and becoming a safe destination.

“I would like to congratulate Georgia. You have become a safe destination; it is not easy to achieve. The main task now is to resume operations and maintain security. In my view, a strong training system should be established and travel service companies, bars, hotels and restaurants need to be certified that they provide COVID-free environment.

“As for domestic tourism, citizens will be able to travel and spend money if the safe environment is provided. And once the safe environment is created, international tourism will also revive. The COVID-19 has triggered an economic crisis making tourist services more expensive.

“Once the economic crisis defuses, a large flow of tourists will start travelling and the industry has to be ready for this. Interesting research will be possible during this process; however, this might take a long time as we cannot foresee the crisis end period.

“As it seems, people have started planning their travel, which is very important and pleasant, but whether they will be able to implement their plans is yet unknown,” he said.

At the same time, the expert Fernando Cortinas, a Global Executive with more than 25 years’ experience in top companies and an Associate Professor at EI Business School, noted that small countries, like Georgia, will not be able to recover the country’s economy with domestic tourism alone.

“The most important is opening borders to allow people to travel. I suggest introducing quick immune sustainability tests the results of which will be reflected in the travelers’ passports. Consequently, we will have 5-6 hour delay precedents, which is much better than 15 day long quarantine. This will be beneficial both for international business and travelers.

“Airlines should be granted the possibility to check passengers’ health condition before permitting them to fly. Implementation of quick tests is especially beneficial for the countries with busy tourist traffic. Unfortunately, airline companies can measure passengers’ temperature, but they cannot identify the asymptomatic viral infection. We have many examples of people who endured COVID 19 without a rise in temperature. It is in the interest of host countries to compile testing protocol that will include the data on temperature and infection tests. This should not impose any burden on countries or airline companies as most travelers will be willing to cover the costs themselves.

“Regarding domestic tourism, I feel skeptical about it as I believe it will not boost economy. In other words, this will lead to much greater evil than COVID19 in terms of economic collapse; and small countries, like Georgia, will not be able to recover the country’s economy with domestic tourism alone,” he noted.

Conclusion and recommendations

“As a result of the reviewed materials and the conducted interviews, we can pinpoint several central issues that need to be addressed in order to stimulate the battered tourism industry revival during the economic fallout from COVID-19 pandemic,” the authors of the research conclude.

The main issues to be addressed and experts’ recommendations are as follows:

1. On the report of consolidated anti-crises action plans and surveys carried out worldwide, and based on the respondent experts' claims, the most sensitive link the recovery of which heavily contributes to the tourism sector is air transport, namely airlines, airports, air-cash registers and other minor segments that have got severely affected. Virtually, every country, that has already rolled out anti-crises relief measures, has set aside considerable financial resources to provide subsidies to air traffic restoration, which, on its part, stimulates speedy recovery of other sectors, such as international business, medical tourism, and education. Due to the global significance of this issue, all countries, without any exception, should make their share of contribution to its solution. Tax regulations should be adopted and imposed so that the industry can get fuel or parking benefits and be exempted from standard taxes and income tax amid the pandemic.

Strict regulations should be introduced regarding the transportation of passengers by airlines and the passenger seating rules - accurately defined for every flight, Aircraft cleaning standards need to be regulated to ensure the level of cleanliness on-board. Airlines need to serve hygiene kits (including masks, disinfectants, antiseptic tissues, etc.) during the flights.

Airlines should expect the demand decline resulting in reduced passenger number on every flight and try to maintain pre-pandemic ticket prices to make it more affordable for tourists to purchase plane tickets to their destinations. Airports need to adopt new security routine, such as measuring the temperature of passengers and giving viral antibody tests based on which a COVID-19-free health certificate can be issued. The latter will allow foreign travelers bypass the 15-day quarantine; however, the cost of the pre-travel test needs to be covered by commuters themselves. In the matter of cargo aircrafts, new regulatory measures and standards should be introduced, including cleaning and disinfection procedures using chemical disinfectants. The Sanitation Services should monitor the process.

2. Health safety regulations need to be implemented for the airport personnel in compliance with the existing international standards.

3. Host countries need to prepare their tourist zones, establish common regulations and provide strict certification in accordance with the international standards. Certification costs should be covered by the state to prevent affected tourism sector representatives incur additional costs.

4. Small and medium-sized companies and self-employed individuals should be entitled to special tax benefits from the tourism industry during the pandemic. Moreover, funds need to be subsidized to ready companies to comply with international standards so that they can survive.

5. Technological platforms need to be developed to provide easy access to remote services for tourists (booking, commuting, meals, etc.)

6. Strict regulatory measures should be established for small and large hotels in relation to the number of guests received, sanitary norms and personnel health safety.

7. The provided list will allow countries to overcome the 'trust' and 'communication' issues, which, currently, represent the major challenge for the tourism industry.

8. With regard to the domestic tourism, experts unambiguously agree that it is not justified for states to allocate funds for its promotion. Amid the economic turmoil, domestic tourism does not represent a priority with respect to sustainability and growth potential.