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Bloomberg.
Quarantines continue to frustrate travelers and strangle airlines a year into the pandemic, with the threat from highly infectious coronavirus variants meaning enforced isolations are mostly getting longer and stricter rather than easing up. Even as vaccines embolden countries like Israel and the U.K. to plot paths to reopening, authorities around the world are tightening the screws to stop Covid-19 mutations slipping through quarantine models designed to contain a less aggressive virus. With questions hanging over the efficacy of vaccines on mutated strains, this new front in the public-health battle is damping hopes of a swift rebound in international air travel. While U.K. Prime Minister Boris Johnson said Monday that foreign travel could start as soon as May 17, triggering a surge in flight bookings, England has only just put in place its toughest border curbs of the pandemic, imposing 10-day hotel quarantines for British and Irish nationals and residents arriving from dozens of countries. Pfizer Shot Elicits Fewer Antibodies to South Africa Strain Meanwhile, in parts of the world that have been most successful in keeping out the virus, quarantine rules are being tightened and policy makers are striking a more cautious tone on when travel may start again. Authorities in Melbourne are sketching out plans for custom-built isolation facilities outside the city. Hong Kong has one of the most extreme policies: a soul-crushing 21-day hotel lockup awaits residents arriving from outside China. The different requirements are neutering a push by airlines for a standardized global response to get people flying again. The International Air Transport Association’s proposal for test or vaccine certificates to replace quarantines hasn’t gained traction with governments. “We cannot seriously talk about recovery as long as quarantine requirements are in place, said Volodymyr Bilotkach, a lecturer in air-transport management at the Singapore Institute of Technology. “Countries continue making up their rules, changing them as they go. Cabin Fever Isolation can take a toll on travelers stuck in hotel rooms, which often have sealed windows and minimal space. Finance worker Chanyoung Kim struggled through three weeks without exercise, fresh air or human interaction in the Sheraton in Hong Kong on his return from a business trip to South Korea. Kim, who has also endured several 14-day quarantines in Seoul, has sought treatment from a psychiatrist and told his manager he’s not sure how long he can maintain this lifestyle. “It was getting mentally difficult, said the 42-year-old. “When you’re on your own, one tends to think a lot and that’s not a good experience. Governments have decided it’s a price worth paying to keep out fast-moving Covid-19 strains from places such as South Africa, which was linked to a 16-fold increase in cases in neighboring Zambia within a month. Mutations have also been tied to Brazil and the U.K. “The problem is at this point we have very little information about these variants, said Abrar Chughtai, an epidemiologist who lectures at the University of New South Wales in Sydney. Tighter quarantines might be sensible as a precautionary measure, he said. Why the Mutated Coronavirus Variants Are So Worrisome: QuickTake The U.K.’s restrictions aim to shield the country as the government accelerates its vaccination program. Adults arriving from a so-called red list of countries must pick up the 1,750-pound ($2,450) bill for hotel quarantine, and face a 10,000-pound fine or a decade in prison for breaking the rules. Prime Minister Johnson fueled optimism this week by saying the end of the pandemic is in sight for England, unless infection rates surge again. All adults in the U.K. are due to be offered a vaccine shot by the end of July, and data suggest one dose provides a high level of protection. There are signs elsewhere, too, that curbs on travelers could ease with inoculations and lower caseloads. Taiwan, which has had only nine virus deaths, may loosen border controls next month, while Macau has reopened to quarantine-free travel from mainland China. Thailand is considering scrapping two-week isolations for vaccinated tourists. More than 63 million doses have been given to Americans. New Measures At the same time, fresh restrictions are being imposed on travelers to block Covid-19 variants. As of Feb. 22, passengers on flights into Canada must pay for three nights at a government-approved hotel as part of their mandatory 14-day quarantines. The New Zealand government is considering forcing travelers from overseas to isolate at home even after their 14-day mandatory hotel quarantine ends. From Feb. 1, anyone entering Vietnam has to do 21 days of quarantine at their own expense. The constantly changing rules and approaches are wreaking havoc with flight networks and schedules. Cathay Pacific Airways Ltd. axed services to Vancouver, San Francisco and other cities from this week and has introduced an arduous shift cycle for crew members to bypass Hong Kong’s new rules on quarantine. Cathay crew can volunteer for a 21-day work shift, during which they stay in a company hotel whenever they fly into Hong Kong. That is followed by 14 days of quarantine in another hotel, and then 14 days of leave. “The focus of governments is almost universally on containing the spread of the virus across borders, IATA Director General Alexandre de Juniac wrote in his blog in early February. “There is little hope of an imminent return to normal. Rather than gradually being wound back, some quarantines are approaching permanency. The Australian state of Victoria has started looking at “long-term solutions for separating overseas arrivals from the local population, with arrivals housed in newly-built complexes near airports. The review followed an outbreak of the virulent U.K. strain from a quarantine hotel in Melbourne. In Hong Kong, Kim has become a disheartened isolation veteran. “No matter how long or short the quarantine is, it’s still a very difficult experience, he said. Dubai's Emirates head doesn’t see travel recovery until year-end Coronavirus travel ban: Lying on arrival could mean 10 years in prison in England UK foreign travel curbs to stay until at least mid-May
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Published by the International Monetary Fund: February 19th 2021. Summary: This departmental paper analyzes the impact of the COVID-19 pandemic on tourism in the Asia Pacific region, Latin America, and Caribbean countries. Many tourism dependent economies in these regions, including small states in the Pacific and the Caribbean, entered the pandemic with limited fiscal space, inadequate external buffers, and foreign exchange revenues extremely concentrated in tourism. The empirical analysis leverages on an augmented gravity model to draw lessons from past epidemics and finds that the impact of infectious diseases on tourism flows is much greater in developing countries than in advanced economies. Executive Summary The COVID-19 pandemic, a global crisis like no other in modern history, has led to a sudden stop in travel and a collapse in economic activity worldwide. A major economic driver, tourism accounts for more than 10 percent of the global economy and in many countries a large share of exports and foreign exchange earnings. The industry is also highly interconnected; multiple sectors are dependent on its performance. The pandemic has had severe repercussions on the complex global tourism supply chain, putting millions of tourism jobs at risk. Informal and migrant workers, particularly women and youth, have suffered disproportionately from diminished employment opportunities and lack of access to social safety nets, leading to increased poverty and slowing progress toward the UN Sustainable Development Goals. This departmental paper analyzes the impact of the COVID-19 pandemic on tourism in the Asia Pacific region, Latin America, and Caribbean countries. Many tourism dependent economies in these regions, including small states in the Pacific and the Caribbean, entered the pandemic with limited fiscal space, inadequate external buffers, and foreign exchange revenues extremely concentrated in tourism. The empirical analysis leverages on an augmented gravity model to draw lessons from past epidemics and finds that the impact of infectious diseases on tourism flows is much greater in developing countries than in advanced economies. Given the unprecedented nature of the COVID-19 crisis, forward looking model simulation results for tourism dependent economies show scope for a faster recovery, if rapid advancements in vaccine distribution were to bring back travel to pre-pandemic levels, but also significant downside risks from protracted uncertainty and limited vaccine effectiveness and availability, with deep and long-term scarring effects potentially amplifying existing vulnerabilities. The paper also explores several innovations given the peculiarities of the tourism industry and high degree of pandemic uncertainty. The paper finds vii strong correlation between the spread of COVID-19 and big data high-frequency indicators on travel, which suggests that the quality of healthcare systems will be pivotal in the post-pandemic recovery of the tourism sector. The analytical and modeling techniques leverage the interaction among epidemiology, tourism development models, and macro structural features of tourism dependent economies. The analysis suggests, among other things, the challenges that tourism-based economies could face in leapfrogging from high-density to socially distanced tourism. For some countries, the inherent rigidities of switching from one tourism business model to another, combined with the likely protracted process of building consensus across stakeholders, could amplify the pre pandemic macro and structural vulnerabilities and make the transition to the new normal more challenging. The paper examines policy options to navigate the post-pandemic world. Although tourism bounced back relative quickly from the impact of past epidemics like SARS, the COVID-19 pandemic could create long-term scarring effects. How tourism recovers will depend on the availability and distribution of an effective vaccine and policy choices made during the pandemic, specifically: Phase 1, crisis mitigation: In response to the COVID-19 shock, many countries have provided fiscal support to buttress demand for the industry and preserve jobs. Further support may be needed and there is scope for well-designed fiscal stimulus to support the most affected sectors including the poorest households and businesses, while being mindful of available fiscal policy space and debt sustainability concerns. Phase 2, reopening: As countries reopen their economies and borders, special attention should be devoted to health and hygiene protocols. During this transition phase, domestic tourism is being incentivized in several countries through attractive offers from hotels and tour operators and the tourism sector is being integrated into governments’ re opening strategies. The creation of COVID-free travel bubbles also shows some potential across regions, despite implementation challenges. Targeted policies to address the pandemic impact on youth and women, enhancing access to new opportunities, including through digitalization, can help mitigate the scarring effect in the tourism sector, broaden inclusion, and help lift potential growth. As many firms in the industry, especially small and medium enterprises (SMEs), are at risk of slipping from liquidity stress into insolvency, monitoring and promoting needed restructuring and retooling in a timely manner will be critical to the recovery. Phase 3, recovery: As the recovery takes hold, a shift to eco-sustainable tourism services with lower density, higher value-added, and greater digitalization may allow countries to reduce the health risks potentially associated with mass travel, foster a greener recovery, as well as diversify their economies to increase their resilience to future shocks. This challenging juncture presents an opportunity to accelerate long term structural transformation, within and beyond the tourism sector, to mitigate the impact on output and jobs and adapt to the post pandemic normal. Harnessing a long-term solution will require global cooperation, starting with the immediate priority of establishing global safety and health protocols as well as making a reliable vaccine widely available. For full 115 page report click below 
Table of Contents
Acknowledgments Executive Summary Introduction The Tourism Landscape
Annex 1.Case Studies Annex 2.Applying A Gravity Model to Predict Post-Pandemic Tourism Flows Annex 3.Analyzing Macroeconomic Scenarios Using GIMF Annex 4.Assessing Export Development Potential in Tourism-Dependent Economies References Dan Reed Senior Contributor Forbes Magazine. The slow pace of development of a single global system for tracking and certifying the Covid-19 vaccination status of the world’s 7.8 billion people is delaying the beginning of a meaningful recovery of air travel demand. No one is expecting the deeply depressed demand for business travel to begin recovering until late this year, and probably not even then. But the overall travel industry - including not just airlines but also hotels and other accommodations, attractions, convention and trade show facilities, resorts and restaurants – desperately is hoping to see the beginnings of a significant pickup in leisure-oriented travel this spring or summer. True, leisure travelers spend far less money on average than business travelers, but their typically huge numbers could help cash-starved travel service companies staunch the flow of red ink, bring back many of their laid-off workers and keep some of them out of bankruptcy. Yet, even people who are tired of being cooped up by the pandemic, and who are eager to travel for fun again, likely won’t do so in large numbers until the industry and various governments settle on a clear set of virus testing protocols and rules for crossing international, or even state borders. That’s according to a new study from travel consultancy IdeaWorks called 2021: How Airlines and Travelers Will Adapt as the Pandemic Recedes. The study is the second in a series from IdeaWorks. It is on a deep analysis of historical trends in human responses to major pandemics as far back as the 12th Century, and on an analysis of current efforts to rekindle travel demand and the challenges that must be overcome to achieve that goal. In the consulting firm’s first report in the series, issued Dec. 1, it suggested that somewhere between 19% and 36% percent of the business travel traffic aboard the world’s airlines prior to the pandemic may never come back at all, or at least will take many years to do so. That’s because of adaptations businesses have made and continue to make in the absence of their ability to travel. The use of video conferencing tools like Zoom, Microsoft Teams and others, new ways of providing support, sales and training services online rather than in person, and other behavioral changes will continue to erode demand for certain types of business travel, according to that first report. Now, the latest report says, “There is a need to distribute vaccines as quickly as possible.” But “much of the world is unprepared for electronic health passports from technical and cultural perspectives,” the report says. “Creating a mobile application (to serve as an electronic health passport) is doable and deliverable. However, feeding that system with verified data from field locations throughout an entire country is a significant hurdle. This is an admirable and beneficial objective, but one that won’t be meaningfully achieved during 2021.” Unlike most other economic sectors, which are expected to rebound strongly over the first four years after the current pandemic is perceived to be under control or eliminated, IdeaWorks’ analysis suggests that many of the effects of the Covid-19 pandemic on travel demand will linger for years. Business travel demand will be most heavily and negatively affected, and those affects will endure much longer than the pandemic’s affects on leisure travel. That’s why, IdeaWorks suggests, travel service companies in general, and especially airlines now need to give serious thought to ways of attracting as many leisure travelers as possible. Though business travel is the motive behind just 29% of all passenger trips globally (and the motivation for as much as 50% of all trips on major global airlines that target business customers), business travelers tend to spend almost twice as much on their trips as the average leisure traveler. Thus, going forward airlines and other travel companies will need lots and lots of additional leisure travelers in the years ahead to partially make up for the lost revenue associated with whatever portion of business travel does not come back. Jay Sorensen, IdeaWorks’ president, wrote in the December report that “Recognizing that something significant and permanent is happening to our business culture is not a popular topic. The airline industry really wants a return to pre-pandemic spending on higher yield airline tickets for business trips. Most of this activity will return, but it’s crucial to realize that some will not.” Changing the interior configurations of certain planes, especially widebody jets aimed at long haul and international routes, to increase the number of economy and “premium economy” seats – and reducing the number of premium class “suites” and lie-flat business class seats should be up for serious consideration at conventional airlines. Doing so could generate more revenue per plane load over the next few years – or longer. Currently, most big conventional airlines allocate larger-than-historically-normal amounts of space on their planes to seats typically bought by high fare-paying business travelers. Prior to the pandemic, and in most cases still today, conventional airlines’ business or first class seats feature spacious mini-office surroundings and/or seats that convert into lie-flat beds with partitions that enhance privacy. “Consumers all over the world will continue their love of travel for vacations, adventure, relaxation, and to connect with family and friends,” Sorensen wrote in the new study. He added that “Leisure travel has a significant advantage over business trips, because technology is no substitute for the sounds, tastes, and smells of being on a beach, in a forest, or on a mountaintop.” And that, the study suggests, that consumers’ willingness to engage in outdoor recreational activities during the fall of 2020 should grow and drive more demand for outdoor-focused travel later this year. Accordingly, the preferred means of travel as leisure travel begins to recover, IdeaWorks suggests, will be the family car (or a rented vehicle), not the airplane. A preference for staying relatively close to home and still somewhat isolated from other people makes trips by car both a conservative and logical choices. The study suggests car travel fits well with other kinds of trips that early returning leisure travelers are likely to take: “VFR” (Visiting Friends & Relatives) and “rural, recreational and beach vacations.” That, however, is not an encouraging outlook for airlines or, for that matter, tourist attractions in urban locations, or high-end hotels that target big-spending business travelers. In IdeaWorks’ new report Sorensen contrasted the 2020s recovery from the Covid-19 pandemic against economic recovery after the global 1918 Flue pandemic – an economically over-heated period now known as the “Roaring Twenties.” This time around, he says, pent-up demand for all sorts of goods and services should power a recovery in retail and other sectors. But even though people are eager to get out and to do something for fun, travel won’t recover as much or as quickly. Both business and leisure travelers will resume traveling, at distinctively different rates, and only to the degree that they perceive that he right steps are being taken on a global basis to make it safe once again to travel. Actually, booking a trip on a plane will require, for most people, greater assurance that there is not at risk when they travel. And though there is now growing discussion of using technology to do that by tracking who has or has not been vaccinated, neither the global travel industry nor the world’s governments have settled on a single system - or two - for doing so. Unfortunately, establishing one, or even a few global vaccination tracking systems to fight the spread of the virus is sure to raise a number of difficult-to-resolve legal, logistical, cost and technical issues. They include:
“Testing for active Covid-19 infection is an effective method to reduce viral spread but the complex nature of the process virtually ensures quick, efficient, and pervasive solutions will not develop this year,” the new IdeaWorks report says. Another barrier that will keep not only business travel but also international leisure travel from fully rebounding, the IdeaWorks report said, is the existence of tough health testing requirements to enter most nations. Such requirements have made it a practical impossibility for most people to enter the vast majority of nations other than their own, even if they have passed one or more the various virus detection tests. Beyond that, the complexity of navigating one’s way across international borders when nations are imposing – and frequently changing – rules for entry is another significant deterrent to travel of any type across borders. Sorensen, in an interview, said insecurity about what rules might change or be added while one is traveling is a big enough concern to keep nearly everyone from traveling. “If you’re in in Little Rock, and you fly to New York, and while you’re away there’s a sudden a 1,000 case outbreak back in Little Rock, you couldn’t go back home,’ Sorensen asked? “Or if you live in New York, would you fly to Little Rock knowing that if they have a break out there, New York may not let anyone who’s been in Arkansas recently come in there? That would mean you couldn’t go home.” Thus, he said, not only do nations – and U.S. states – need to settle on agreed-upon rules for travel during a pandemic and its eventual wind-down, they also need to standardize their Covid-19 testing and data reporting protocols before either leisure or business travel will begin to comeback to something closer to pre-pandemic levels of demand. “I try not to get into this business of predicting when travel demand will begin to recover,” he added. “But I can say that it won’t comeback the way we all want it to until was all get on the same sheet of music. And that’s not happening yet.” For the complete Ideaworks Report click below
2020 was a disastrous year for tourism. But with some exceptions: in the midst of the pandemic, Mexico ranks third among the world's most visited countries, after Italy and France.
Even as the coronavirus pandemic continues, Mexico is open for tourism. Since December, planes have been taking off and landing at Cancun International Airport every five minutes. It is high season in the Mexican seaside resort on the Caribbean coast. Lufthansa expanded its schedule and added the Mexican tourist hotspot in October — despite COVID-19. Tourists from Europe and North America are flocking to the beaches and standing in line to admire the Mayan pyramids. Hotel and restaurant owners are relieved. It seems the pull of a sandy beach is enough to eclipse alarming press reports about crowded intensive care units and rising infections in Mexico, where 174,000 people have died from COVID-19 so far. According to the latest preliminary statistics from the World Tourism Organization (UNWTO), Mexico was Latin America's most visited destination in 2020, moving up to third place worldwide, after Italy and France. Open borders and visits home The reasons for this are manifold. Mexico never closed its borders and is still one of the few countries in the world that does not require a negative PCR test upon entry. President Andres Manuel Lopez Obrador has ruled out lockdowns, instead putting the economy first. Another reason is the fact that Mexican migrants came home to visit their families at Christmas time. Mexico City reopens shops despite virus alert But the UNWTO statistics don't necessarily tell the whole story. Michael Hallé is the Canadian co-founder of the 10Gates Matrix Inc. consulting firm, which specializes in travel data. He's been advising authorities and entrepreneurs in the industry in Mexico for 30 years, and told DW that they also "included the pre-pandemic months of January to March 2020 that count as high season in Mexico." Confidence-inspiring hygiene measures Despite ranking third in the UNWTO statistics, the slump was marked in Mexico, too. According to the Inegi statistics institute, 2020 saw almost 48% fewer visitors and 55% less foreign exchange revenue compared to the previous year. The fact that the sector survived is remarkable — unlike in Germany, there were no subsidies for foundering airlines and tour operators. In fact the Mexican government closed down the national tourism marketing agency shortly before the pandemic to save money. But as Hallé explains, regional authorities and tourism associations have stepped into the breach. "As early as summer 2020, hotels on the Caribbean coast had certified hygiene concepts, the likes of which we don't even have in Canada," he said, adding that gave travelers confidence. Face masks are a requirement in the state of Quintana Roo, where Cancun is located — just a three- to four-hour flight away for Canadians and US citizens, which means the risk of contracting COVID-19 on a flight is lower. According to UNWTO, the majority of foreign visitors came from these two countries. Mexico was the world's third most visited country in 2020 Many doctors consider the opening risky and blame tourism for the rise in infections in vacation destinations. Official statistics showed rising numbers in February, but infections were still fewer than in the hotspots around Mexico City and in central Mexico. Growing optimism Domestic tourism was another decisive factor, a lucrative market in a country with 127 million inhabitants. Mexican visitors helped cushion the slump in international business. Meinolf Koessmeier runs the Mexico Adventures agency in Cuernavaca that organizes motorcycle tours for Mexicans in Europe. In 2020, his business survived because he offered local tours. He hopes business will return to normal in 2022. "There's a lot of interest in nature-based vacations," he said, adding that motorcycle manufacturers all over the world enjoyed record sales in 2020, and buyers were now just waiting for an opportunity to hit the road. Nature conservation in cruise ship paradise Hallé agreed that consumers are feeling a travel itch and said the survey showed that Americans, in particular, were optimistic again and "hoping to travel in the next 6 months thanks to vaccinations." All the same, the sector is unlikely to see a quick recovery. Canada and the US have just imposed stricter travel requirements on returnees due to the new virus mutations, including negative PCR tests and stricter quarantine regulations. In response, major Mexican airports immediately offered PCR testing modules, and even some hotels are providing the service. According to Hallé, the pandemic is a chance for Mexico to offer more sustainable tourism. Mass check-ins and city trips are out of the question in the medium term, he said — and countries like Mexico, with its vast countryside and natural beauty, may very well benefit in a post-COVID world. The Economist
It could even improve, if properly managed It is an unfortunate fact that the ease of throwing things into a wheelie-bag and travelling far and wide helped spread covid-19 around the world. The effects on leisure travel and destinations that rely on tourism will be felt for years to come. But just as the way we travel may improve as a result, so the chance for countries to rethink tourism industries could turn a bruised and battered industry into a better one. The pursuit of pleasure using cultural pursuits as cover goes back to the days of the grand tourists, who trawled Europe’s artistic heritage as well as indulging in more hedonistic activities. As souvenirs they returned with paintings, sculptures and sometimes syphilis. Travel was hard and expensive. The earl of Salisbury spent the equivalent of nearly £500,000 today on his grand tour in the 18th century, according to mbna, a credit-card firm. Even 50 years ago foreign travel was a luxury pursuit. In 1970 a return flight from New York to London cost around $500 (equivalent to $3,500 today). Lower fares and the rise of the internet have made holidays cheaper and easier to arrange. Airlines, hotel chains, car-hire firms and other businesses have moved online. Dedicated internet travel agents like Expedia and Booking.com have emerged. Online peer-to-peer review sites offer a mostly honest assessment of hotels, restaurants and tourist sites. Airbnb and its competitors have created a new class of accommodation. The frictional costs of travel have fallen sharply. Such is the stunning growth of tourism that the 72% decline in trips in the first ten months of 2020 on a year earlier merely took international travel back to where it was in 1990. Leisure travel accounts for the biggest slice but the rest contributes too. Business travellers stay in hotels, eat at restaurants and hire cars. Some visits to relatives or friends may be barely distinguishable from a holiday. Not only are there more trips, but the world is a bigger oyster. In 1950 the top 15 destinations—with America, France, Italy and Spain the most visited—claimed 97% of tourist arrivals. By 2015 that share had dropped to just over half. Europe, with its historic cities, countryside and beaches, still rules, taking just over half of all international travellers. That is twice the share of the Asia-Pacific region, the next most popular area. Europe rakes in the most receipts, around 37% of the global total, worth some $619bn in 2019. France and Spain are the most popular countries for a visit. The top spots may not have changed, but their arrivals have. Chinese visits overseas have grown from just 9m trips in 1999 to 150m in 2018. Travellers’ preference for richer countries has created large industries. Spain relied on domestic and foreign visitors for 11.8% of gdp in 2019, France 7.4% and Mexico 8.7%. Poorer countries lean even more on tourist dollars. America is the biggest country for travel spending, some $1.8trn in 2019, but overseas visitors have put tourism at the heart of many economies. In Aruba it accounts for nearly three-quarters of gdp; in most other small Caribbean islands it is also the main economic activity. Other poorer countries are less reliant overall but have vast tourist industries. Thailand welcomed around 10m foreign tourists in 2001. By 2019 it had grown fourfold (with a quarter of the total coming from China), bringing in 1.9trn baht ($60bn) and contributing some 18% of GDP. The emptying of tourist trails and resorts resembling ghost towns is causing massive upheaval. UNCTAD estimated that losses could amount to 2.8% of world output if international arrivals dropped by 66% in 2020. The OECD now reckons that the drop was more like 80%. And the expectation is that international arrivals will probably not recover to pre-covid levels until 2023. Tourism is a resilient industry. But it faces a downturn like no other. Firms reliant on visitors may not be best placed to survive. According to the WTCC, around 80% of tourist businesses worldwide, from hotels to restaurants to tour guides, are small businesses. Large hotel chains may have the balance-sheets to weather the storm or the management skills to reconfigure their business to cater more to domestic travellers. Small businesses probably lack the cash to invest in equipment for contactless payments or better cleaning and hygiene to reassure returning tourists. The uncertain path to recovery raises questions over what will remain. The UNWTO reckons that countries with a big share of domestic tourism—America, China and India have the largest home markets—will recover more quickly. Travel restrictions have kept China’s high-rollers at home, giving its fanciest hotels their best year ever. But even domestic tourism is far from a saviour. Britain and Spain, for example, reckon on a decrease in domestic tourism of 45-50% in 2020. These problems have prompted various responses to keep businesses alive. Some countries such as France, which launched an $18bn bail-out in May, have aimed cash directly at tourist businesses. Others are trying to reassure tourists that their countries are safe by developing protocols and guidelines for tourism workers. Luís Araújo, president of the Portuguese National Tourism Authority, says his organisation has arranged training for 60,000 workers at restaurants, hotels and travel agents to create a safer travel experience. Finland and Greece are among countries with new training programmes aimed at improving the digital presence of tourist businesses. Some parts of the tourist economy will do better than others. Travel firms have noted a rising preference for self-catering and private accommodation over hotels. Coastal and rural locations, far from crowds, will recover faster than cities. Cyril Ranque of Expedia notes that his customers are more inclined to drive to domestic locations but then to stay longer than before. But these trends, he believes, are “all temporary”. Waiting for the rebound The travel bug seems certain to outlast the virus. Its first manifestation may be “revenge tourism” as people get away after a year of lockdowns and quarantines. But some things will change for good. A preoccupation in previous centuries, health and hygiene will re-emerge as central to holiday planning. Guidebooks from Baedeker, a German publisher, were never reticent about warning travellers of the filth they faced in foreign climes even in the early 20th century, bemoaning the “evil sanitary reputation of Naples”. Destinations will continue to boast of their scenery, cuisine and beaches but safety and hygiene will become as important, says Ian Yeoman, a tourism academic at Victoria University of Wellington, New Zealand. This may benefit longer-established destinations, tilting visitors away from poorer countries. Those countries will not be deliberately trying to avoid tourists, even so. Some remote places have used the hiatus to build a better online presence, says Mr. Ranque. He points to other innovations to make travel less of a bother. Flexibility, to cope with last-minute changes of plans, will endure. Late or even last-minute bookings are more common. Josh Belkin of Hotels.com reports that, because people are taking more staycations and travelling by car rather than plane, they are booking hotels later, on average 13 days before a trip rather than the 20 before covid-19. Many travel companies and airlines have introduced more flexible rebooking policies. Faced by a wave of cancellations as covid-19 took hold, Expedia introduced “one-click cancellation” to deal with all elements from flights and hotels to car hire. Firms that use its platform can deploy new tools to add special offers to listings to encourage last-minute bookers and manage refunds. Gathering real-time data on searches, and sharing them with businesses that relied on information from previous years to set prices, could also lead to a better match between supply and demand and encourage more dynamic pricing. In future, personalised customer data should allow travel firms to recommend holidays in a more focused way. Covid-19 presents a “once-in-a-lifetime opportunity to move towards more sustainable and resilient models of tourism development”, says the OECD. “Tourism was seen as unambiguously good 20 years ago...now it’s a double-edged sword,” says Paul Flatters of the Trajectory Partnership. Concerns about the impact of tourism on the environment predate the pandemic. But tourism also broadens awareness of different cultures and environmental issues and helps pay for wildlife conservation, as well as providing employment and economic development. Many destinations failed to strike a balance between tourist numbers and local sensibilities. Venetians have long protested against vast cruise ships, prompting some firms to drop the city from their itineraries. Venice also plans to impose a levy on all visitors from 2022. Anti-tourist slogans daubed on walls have greeted visitors to Barcelona, which has clamped down on illegal holiday letting (as have Berlin and other places in which holiday lets have replaced rental properties, forcing up prices for residents). Amsterdam is considering a ban on non-residents buying cannabis in its notorious coffee shops, to encourage a better class of tourist. Machu Picchu, where trails were overrun, imposed a pre-covid limit of 5,000 visitors a day. That will be cut to 675 to ensure social distancing. Covid-19 offers the chance not only to reset tourism to reduce the numbers who spend the least but also to spread them out. Barcelona has run a campaign to encourage people to venture away from the old city. Thailand has a scheme to promote 55 less visited parts of the country. Concentrating on attracting fewer tourists ready to spend more is one way to promote a healthier business. And sustainability may become a more important guide to choices as awareness of climate change and the less welcome effects of tourism grow. Getting the right balance between economic, environmental and social benefits and costs has seen a new emphasis on sustainability. Mexico thinks covid-19 will help with its “Mexico Reborn Sustainable” campaign, which aims in part to create new routes that spread tourist dollars more widely and promote destinations that tap into fast-growing nature tourism. A dynamic tourism economy depends on the availability of a variety of services, from accommodation and good services to attractions, activities and events. Whether a critical mass of services will remain everywhere is less clear. Less choice and competition, if businesses go bust, may mean higher prices. The rapid growth of tourist economies in recent years suggests they can be rebuilt swiftly. But for all those governments that redesign their tourism strategies to keep down crowds and protect the environment, others may compete by racing to the bottom, using deep discounts to fill hotels and planes. Tourist numbers will recover and continue to grow either way. Greater efforts to manage them carefully should make for a better experience for everyone.■ For the full 16 page Expedia 2021 Travel Trends Report click here
June 1, 2000 | McKinsey The traditional approach to strategy requires precise predictions and thus often leads executives to underestimate uncertainty. This can be downright dangerous. A four-level framework can help. At the heart of the traditional approach to strategy lies the assumption that executives, by applying a set of powerful analytic tools, can predict the future of any business accurately enough to choose a clear strategic direction for it. The process often involves underestimating uncertainty in order to lay out a vision of future events sufficiently precise to be captured in a discounted-cash-flow (DCF) analysis. When the future is truly uncertain, this approach is at best marginally helpful and at worst downright dangerous: underestimating uncertainty can lead to strategies that neither defend a company against the threats nor take advantage of the opportunities that higher levels of uncertainty provide. Another danger lies at the other extreme: if managers can't find a strategy that works under traditional analysis, they may abandon the analytical rigor of their planning process altogether and base their decisions on gut instinct. Making systematically sound strategic decisions under uncertainty requires an approach that avoids this dangerous binary view. Rarely do managers know absolutely nothing of strategic importance, even in the most uncertain environments. What follows is a framework for determining the level of uncertainty surrounding strategic decisions and for tailoring strategy to that uncertainty. Four levels of uncertainty Available strategically relevant information tends to fall into two categories. First, it is often possible to identify clear trends, such as market demographics, that can help define potential demand for a company's future products or services. Second, if the right analyses are performed, many factors that are currently unknown to a company's management are in fact knowable—for instance, performance attributes for current technologies, the elasticity of demand for certain stable categories of products, and competitors' plans to expand capacity. The uncertainty that remains after the best possible analysis has been undertaken is what we call residual uncertainty—for example, the outcome of an ongoing regulatory debate or the performance attributes of a technology still in development. But quite a bit can often be known despite this. In practice, we have found that the residual uncertainty facing most strategic-decision makers falls into one of four broad levels.  Level one: A clear enough future The residual uncertainty is irrelevant to making strategic decisions at level one, so managers can develop a single forecast that is a sufficiently precise basis for their strategies. To help generate this usefully precise prediction of the future, managers can use the standard strategy tool kit: market research, analyses of competitors' costs and capacity, value chain analysis, Michael Porter's five-forces framework, and so on. A DCF model that incorporates those predictions can then be used to determine the value of alternative strategies. Level two: Alternative futures The future can be described as one of a few discrete scenarios at level two. Analysis can't identify which outcome will actually come to pass, though it may help establish probabilities. Most important, some, if not all, elements of the strategy would change if the outcome were predictable. Many businesses facing major regulatory or legislative change confront level two uncertainty. Consider US long-distance telephone providers in late 1995, as they began developing strategies for entering local telephone markets. Legislation that would fundamentally deregulate the industry was pending in Congress, and the broad form that new regulations would take was fairly clear to most industry observers. But whether the legislation was going to pass and how quickly it would be implemented if it did were still uncertain. No amount of analysis would allow the long-distance carriers to predict those outcomes, and the correct course of action—for example, the timing of investments in network infrastructure—depended on which one materialized. In another common level two situation, the value of a strategy depends mainly on competitors' strategies, which cannot yet be observed or predicted. For example, in oligopoly markets, such as those for pulp and paper, chemicals, and basic raw materials, the primary uncertainty is often competitors' plans for expanding capacity. Economies of scale often dictate that any plant built would be quite large and would be likely to have a significant impact on industry prices and profitability. Therefore, any one company's decision to build a plant is often contingent on competitors' decisions. This is a classic level two situation: the possible outcomes are discrete and clear, and it is difficult to predict which will occur. The best strategy depends on which one does. Here, managers must develop a set of discrete scenarios based on their understanding of how the key residual uncertainties might play out. Each scenario may require a different valuation model. Getting information that helps establish the relative probabilities of the alternative outcomes should be a high priority. After establishing an appropriate valuation model for—and determining the probability of—each possible outcome, the risks and returns of alternative strategies can be evaluated with a classic decision analysis framework. Particular attention should be paid to the likely paths the industry might take to reach the alternative futures, so that the company can determine which possible trigger points to monitor closely. Level three: A range of futures A range of potential futures can be identified at level three. A limited number of key variables define that range, but the actual outcome may lie anywhere within it. There are no natural discrete scenarios. As in level two, some, and possibly all, elements of the strategy would change if the outcome were predictable. Companies in emerging industries or entering new geographic markets often face level three uncertainty. Consider a European consumer goods company deciding whether to introduce its products to the Indian market. The best possible market research might identify only a broad range of potential customer penetration rates—say, from 10 percent to 30 percent—and there would be no obvious scenarios within that range, making it very difficult to determine the level of latent demand. Analogous problems exist for companies in technologically driven fields, such as the semiconductor industry. When deciding whether to invest in a new technology, producers can often estimate only a broad range of potential cost and performance attributes for it, and the overall profitability of the investment depends on those attributes. The analysis in level three is similar to that in level two: a set of scenarios describing alternative future outcomes must be identified, and analysis should focus on the trigger events indicating that the market is moving toward one or another scenario. Developing a meaningful set of scenarios, however, is less straightforward in level three. Scenarios that describe the extreme points in the range of possible outcomes are often relatively easy to develop but rarely provide much concrete guidance for current strategic decisions. Since there are no other natural discrete scenarios in level three, deciding which possible outcomes should be fully developed into alternative scenarios is a real art. But there are a few general rules. First, develop only a limited number of alternative scenarios—the complexity of juggling more than four or five tends to hinder decision making. Second, avoid developing redundant scenarios that have no unique implications for strategic decision making. Third, develop a set of scenarios that collectively account for the probable range of future outcomes and not necessarily the entire possible range. Establishing the range of scenarios should allow managers to decide how robust their strategies are, to identify likely winners and losers, and to determine, at least roughly, the risk of following status quo strategies. Level four: True ambiguity A number of dimensions of uncertainty interact to create an environment that is virtually impossible to predict at level four. In contrast to level three situations, it is impossible to identify a range of potential outcomes, let alone scenarios within a range. It might not even be possible to identify, much less predict, all the relevant variables that will define the future. Level four situations are quite rare, and they tend to migrate toward one of the others over time. Nevertheless, they do exist. Consider a telecommunications company deciding where and how to compete in the emerging consumer multimedia market. The company will confront a number of uncertainties concerning technology, demand, and relations between hardware and content providers. All of these uncertainties may interact in ways so unpredictable that no plausible range of scenarios can be identified. Companies considering major investments in post-communist Russia in 1992 faced level four uncertainty. They could not predict the laws or regulations that would govern property rights and transactions—a central uncertainty compounded by additional uncertainty about the viability of supply chains and about the demand for previously unavailable consumer goods and services. Shocks such as a political assassination or a currency default could have spun the whole system toward completely unforeseen outcomes. This example illustrates how difficult it can be to make strategic decisions at level four but also underscores the transitory nature of level four situations. Greater political and regulatory stability has turned decisions about whether to enter Russian markets into level three problems for most industries today. Similarly, uncertainty about strategic decisions in the consumer multi- media market will migrate to level three or to level two as the industry begins to take shape over the next several years. Situation analysis at level four is highly qualitative. Still, it is critical to avoid the urge to throw up your hands and act purely on instinct. Instead, managers need to catalog systematically what they know and what it is possible to know. Even if it is impossible to develop a meaningful set of probable, or even possible, outcomes, managers can gain a valuable strategic perspective. Usually, they can identify at least a subset of the variables determining how the market will evolve over time. They can also identify favorable and unfavorable indicators of these variables—indicators that will let them track the market's evolution over time and adapt their strategy as new information becomes available. By studying how analogous markets developed in other level four situations, by determining the key attributes of the winners and losers, and by identifying the strategies they employed, managers can also identify patterns that show how the market may evolve. Finally, although it will be impossible to quantify the risks and returns of different strategies, managers should be able to identify what information about the future they must believe to justify the investments they are considering. Early market indicators and analogies from similar markets will help sort out whether such beliefs are realistic (see sidebar, "Postures and moves"). --------------------------------------------------------------------------------------------------------------------- Sidebar: Postures and moves A company can assume three strategic postures vis-à-vis uncertainty, and three types of actions can be used to implement that strategy. Strategic postures: shaping, adapting, and reserving the right to play. Fundamentally, a posture defines the intent of a strategy relative to the current and future state of an industry. Shapers aim to drive their industries toward a new structure of their own devising. Their strategies are about creating new opportunities in a market, either by shaking up relatively stable level one industries or by trying to control the direction of the market in industries with higher levels of uncertainty. By contrast, adapters take the current industry structure and its future evolution as givens and react to the opportunities the market offers. The third strategic posture, reserving the right to play, is a special form of adaptation relevant only in levels two through four. It involves making immediate incremental investments putting a company in a privileged position—through superior information, cost structures, or relations between customers and suppliers—that allows the company to wait until the environment becomes less uncertain before formulating a strategy. A portfolio of actions: big bets, options, and no-regrets moves. A posture is not a complete strategy: it clarifies strategic intent but not the actions required to fulfill that intent. Three types of moves are especially relevant to implementing strategy under conditions of uncertainty. The first is big bets—large commitments, such as major capital investments or acquisitions, that will produce large payoffs in some scenarios and large losses in others. Not surprisingly, shaping strategies usually involve big bets; adapting and reserving the right to play do not. Options are designed to secure the big payoffs of the best-case scenarios while minimizing losses in the worst-case ones; classic examples include conducting pilot trials before the full-scale introduction of a new product, entering into limited joint ventures for distribution to minimize the risk of breaking into new markets, and licensing an alternative technology in case it proves to be superior to a current alternative. Companies reserving the right to play rely heavily on options, though shapers use them as well, either to shape an emerging but uncertain market as an early mover or to hedge big bets. Finally, no-regrets moves are just that—moves that will pay off no matter what happens. Managers often focus on obvious no-regrets moves such as reducing costs, gathering competitive intelligence, or building skills. However, even in highly uncertain environments, strategic decisions such as investing in capacity and entering certain markets can be no-regrets moves. --------------------------------------------------------------------------------------------------------------------- Strategy in level one's clear enough future. In predictable business environments, most companies are adapters. Analysis is designed to predict an industry's future landscape, and strategy involves making positioning choices about where and how to compete. When the underlying analysis is sound, such strategies by definition consist of a series of no-regrets moves. Adapter strategies in level one situations are not necessarily incremental or boring. For example, Southwest Airlines' no-frills, point-to-point service is a highly innovative, value-creating adapter strategy, as was Gateway 2000's low-cost assembly and direct-mail distribution strategy when it entered the personal-computer market in the late 1980s. In both cases, managers identified opportunities, in low-uncertainty environments, that could be developed within the existing market structure. The best level one adapters create value through innovations in their products or services or through improvements in their business systems, without fundamentally changing the industry. It is also possible to be a shaper in level one situations, but that is risky and rare, since level one shapers, hoping fundamentally to alter long-standing industry structures and conduct, increase the amount of residual uncertainty—for themselves and their competitors—in otherwise predictable markets. Consider the overnight delivery strategy of Federal Express. When the company entered the mail-and-package delivery industry, a stable level one business, FedEx's strategy in effect created level three uncertainty for itself. In other words, even though the chief executive officer, Frederick W. Smith, commissioned detailed consulting reports that confirmed the feasibility of his business concept, only a broad range of potential demand for overnight services could be identified at the time. For the industry incumbents, such as United Parcel Service, FedEx created level two uncertainty. FedEx's move raised two questions for UPS: Will the overnight delivery strategy succeed? And will UPS have to offer a similar service to remain a viable competitor in the market? Over time, the industry returned to level one stability but with a fundamentally new structure. FedEx's bet paid off, forcing the rest of the industry to adapt to the new demand for overnight services. Strategy in level two's alternative futures If shapers in level one try to raise uncertainty, in levels two through four they try to lower it and create order out of chaos. In level two, a shaping strategy is designed to increase the probability that a favored industry scenario will unfold. A shaper in a capital-intensive industry, such as pulp and paper, for example, wants to prevent competitors from creating excess capacity that would destroy the industry's profitability. Consequently, shapers in such cases might commit their companies to preempting competition by building new capacity far in advance of an upturn in demand, or they might consolidate the industry through mergers and acquisitions. But even the best shapers must be prepared to adapt. Consider the Microsoft Network (MSN). It began as a shaping strategy, but in the battle between proprietary and open networks, certain trigger variables—growth in the number of Internet and MSN subscribers, for example, and the activity profiles of early MSN subscribers—provided valuable insight into how the market was evolving. When it became clear that open networks would prevail, Microsoft refocused the MSN concept on the Internet. Microsoft's shift shows that choices of strategic posture are not carved in stone and underscores the value of maintaining strategic flexibility under uncertainty. The best companies supplement their shaping bets with options that allow them to change course quickly if necessary. Because trigger variables are often fairly simple to monitor in level two, it can be easy to adapt or reserve the right to play. Strategy in level three's range of futures Shaping takes a different form in level three. If at level two shapers are trying to promote a discrete outcome, at level three they are simply trying to move the market in a general direction because they can identify only a range of possible outcomes. Consider the battle over standards for electronic-cash transactions. Mondex International, a consortium of financial-services providers and technology companies, is attempting to shape the future by establishing what it hopes will become universal e-cash standards. Its shaping posture is backed by big-bet investments in product development, infrastructure, and pilot experiments to speed customer acceptance. In contrast, regional banks, which don't yet have the deep pockets and skills necessary to set standards for the e-payment market but want to be able to offer their customers the latest electronic services, are mainly choosing adapter strategies. An adapter posture at uncertainty levels three or four is often achieved primarily through investments in organizational capabilities designed to keep options open.  Reserving the right to play is a common posture in level three. Consider a telecommunications company trying to decide whether to make a $1 billion investment in broadband cable networks in the early 1990s. The decision hinged on level three uncertainties, such as the demand for interactive TV service. No amount of solid market research could precisely forecast consumer demand for services that didn't even exist yet. However, incremental investments in broadband network trials could provide useful information and would put the company in a privileged position to expand the business in the future should that prove attractive.
Strategy in level four's true ambiguity Paradoxically, though level four situations involve the greatest uncertainty, they may offer higher returns and lower risks for companies seeking to shape the market than situations in levels two or three. Recall that level four situations are transitional by nature, often emerging after major technological, macroeconomic, or legislative shocks. Since no player necessarily knows the best strategy in these environments, the shaper's role is to provide a vision of an industry structure and standards that will coordinate the strategies of other players and drive the market toward a more stable and favorable outcome. Mahathir Mohamad, Malaysia's prime minister, is trying to shape the future of the multimedia industry in Asia's Pacific Rim. This is truly a level four strategy problem: potential products are undefined, as are such factors as the players, the level of customer demand, and the technology standards. The Malaysian government is trying to create order out of this chaos by investing at least $15 billion to create a Multimedia Super Corridor, a 750-square-kilometer zone, south of Kuala Lumpur, that will include state-of-the-art "smart" buildings for software companies, regional headquarters for multinational corporations, a "multimedia university," a paperless government center called Putrajaya, and a new city called Cyberjaya. By leveraging incentives such as a ten-year exemption from the tax on profits, the corridor has so far received commitments from more than 40 Malaysian and foreign companies, including such powerhouses as Intel, Microsoft, Nippon Telegraph and Telephone, Oracle, and Sun Microsystems. Mahathir's shaping strategy is predicated on the notions that the corridor will create a web of relationships between content and hardware providers and that this web will generate clear industry standards and a set of complementary multimedia products and services. Shapers need not make bets as enormous as the Malaysian government's to be successful in level three or four situations. All that is required is the credibility to coordinate the strategies of different players in line with the preferred outcome. Netscape Communications, for example, didn't rely on deep pockets to shape Internet browser standards; instead, it leveraged the credibility of its leadership team in the industry so that other players thought, "If these guys think this is the way to go, it must be right for us." Reserving the right to play is common but potentially dangerous in level four situations. A few general rules apply. First, look for a high degree of leverage. Say, for example, that an oil company is thinking of reserving the right to compete in China by buying an option to establish a beachhead and has a choice of maintaining a small but expensive local operation or developing a limited joint venture with a local distributor. All else being equal, the oil company should go for the low-cost option. Second, don't get locked into one position through neglect. Options should be rigorously reevaluated whenever important uncertainties are clarified and at least every six months. Remember, level four situations are transitional, and most will quickly move toward levels three and two. The difficulty of managing options in level four situations often drives players toward adapter postures. As in level three, such a posture in level four is frequently implemented by making investments in organizational capabilities. The approach we have outlined offers a discipline for thinking rigorously and systematically about uncertainty. On one plane, this discipline makes it possible for companies to judge which analytic tools can and can't help them make decisions at various levels of uncertainty. On a broader plane, our framework provides a way to tackle the most challenging decisions executives have to make, offering a more complete and sophisticated understanding of the uncertainty they face and its implications for strategy. ABOUT THE AUTHOR(S) Hugh Courtney is a consultant in McKinsey's Washington, DC, office; Jane Kirkland is an alumnus of the New York office; and Patrick Viguerie is a principal in the Atlanta office. This article is adapted from one that appeared in Harvard Business Review, November-December 1997. Copyright © 1997 President and Fellows of Harvard College. Reprinted by permission. All rights reserved. Expedia Group reported another steep drop in revenue in the fourth quarter, missing analysts’ estimates amid a surge in Covid-19 cases and new pandemic-related restrictions that weighed on travel in the last few months of 2020. Revenue fell 67% to $920 million, marking the fourth consecutive year-over-year decline. Analysts had projected sales of $1.1 billion, according to data compiled by Bloomberg. Gross bookings were $7.6 billion, also down 67% compared with a year earlier, the Seattle-based online travel giant said in a statement Thursday, barely an improvement from the previous quarter’s 68% decline.  Before 2020, Expedia, which provides everything from airline tickets to hotel rooms, rental cars and cruises, had gone eight years without a revenue decline. But the travel industry was one of the worst hit as a result of the coronavirus and the global lockdowns, forcing Expedia and its peers to endure steep losses and eliminate thousands of jobs. While the summer months seemed to offer a brief respite and saw people beginning to take tentative steps back into travel, the fall and winter saw a resurgence of infections, prompting a new wave of lockdowns and travel restrictions.
“The fourth quarter brought signs of hope in the form of vaccine approvals, but rising cases across the globe and rolling shutdowns of various travel markets made an impact,” Chief Executive Officer Peter Kern said in the statement. As a result, the fourth quarter didn’t “show any real sequential progress other than some signs of modest improvement around the holidays that carried into the early part of 2021.” On a call to discuss earnings with analysts Thursday, Kern said there are some signals of stronger demand in 2021, such as an increase in January gross bookings. He said their decline was in the high 40% range, compared with the 67% drop in the fourth quarter. Kern was ultimately conservative in his outlook, telling investors to “expect things to be bumpy for a while.” There are early indications that the market could improve later this year. Dr. Anthony Fauci, the nation’s top infectious disease doctor, said Thursday that an increasing supply of vaccines will allow for a “much more of a mass vaccination approach” in the U.S. by April. Analysts at Deutsche Bank wrote in a note to investors before the results were published that the first half of the year “is going to be tougher than we previously expected given the scale of rising case counts globally,” but vaccines should help with demand in the second half. Expedia’s home-rental unit Vrbo, which competes with Airbnb Inc., has weathered the pandemic relatively better than its parent. While flights and business travel ground to a halt and hotels shuttered, demand increased for regional vacations and work-from-home getaways. People have been booking on Vrbo further out, reversing a pandemic trend of last minute decisions and signaling consumer confidence, Chief Financial Officer Eric Hart said. “We know there’s pent-up demand, people want to travel, and I think people are confident they’re going to be able to travel, at least domestically,” Hart said. Expedia doesn’t break out Vrbo’s earnings and doesn’t plan to, Kern said when asked by an analyst. Also this year, Expedia should start to benefit from painful restructuring measures it took last year, including eliminating 3,000 jobs. The cost-cutting effort may help the company moving into the second half, said Bloomberg Intelligence analyst Matthew Martino. Expedia reported an adjusted loss before interest, taxes, depreciation and amortization of $160 million, while analysts were expecting a loss of $56.3 million. The adjusted loss per share was $2.64, beating the average analyst estimate of a loss of $2.06. The shares fell about 2% in extended trading in New York after closing at $149.91. The stock has gained 13% this year. Covid-19 is a disaster for tourism – but not everywhere
Outdoor recreation has been a lifeline for some smaller cities, which have fared better in terms of leisure and hospitality job retention than larger tourism hubs. BY ALEXANDRA KANIK Part of New Statesman Media Group Nearly all US cities have been experiencing record low employment across all industries, with leisure and hospitality employment suffering the most. According to New Statesman analysis of Bureau of Labor Statistics data, traditional US tourism destinations such as Kahului, Hawaii, New York City, New York and Boston, Massachusetts, saw average monthly employment reductions of 50 per cent to 65 per cent in the leisure and hospitality industry from June to October compared to the same period in 2019. But not every area is experiencing such dismal downturns in employment associated with tourism and entertainment. In fact, some metro areas have seen upticks. Out of the 356 US metro areas with leisure and hospitality data available, 18 show average monthly increases in employment for June to October 2020 when compared to the same months in 2019. Nearly all of those metro areas have small or mid-sized populations, with the exception of Lancaster, Pennsylvania, which is considered a large metro area. Lancaster experienced the smallest increase in leisure and hospitality employment (0.27 per cent) of the 18 metros that recorded average monthly increases. The average change in leisure and hospitality employment for all 356 metro areas was 20 per cent. But metros such as Carson City in Nevada, Pueblo in Colorado and Idaho Falls, Idaho, saw 14, 16 and 20 per cent increases respectively. While larger tourism hubs are still suffering, smaller areas near bigger cities with strong links to outdoor recreation are managing better. Benefits from national parks Proximity to national parks and other outdoor recreation has provided a lifeline for some metros. “While the shutdown in spring hurt our hospitality industry, Idaho has done a great job of keeping businesses open throughout the pandemic, making our city a popular destination for pandemic refuges from California, Arizona and Washington states,” said Chip Schwarze, the CEO of the Greater Idaho Falls Chamber of Commerce. Idaho Falls lies about 170 kilometres south-west of Yellowstone National Park and about 210 kilometres west of Grand Teton National Park. Known as the “gateway to Yellowstone”, it is the last major city a traveller would drive through on the way to the park from cities such as San Francisco and Phoenix, Arizona. Yellowstone recorded a 6 per cent increase in park visitors between June and October 2020 compared to the same period in 2019. With domestic air travel still down 63 per cent in September 2020 against its all-time high in January 2020, it is likely that many of Yellowstone’s visitors were driving there. Schwarze says that the opening of a new hotel and a new convention centre during the summer of 2020 may account for much of the increased leisure and hospitality employment for Idaho Falls. In addition to its 20 per cent increase in leisure and hospitality employment, the metro also experienced an 8 per cent bump in retail employment and a 4 per cent rise in overall employment – the largest increase of any metro. Idaho Falls metro area is small, with just over 150,000 people according to 2019 Census Bureau estimates. Analysis of employment data along with population data for US metro areas shows that small and mid-sized metros have fared better during the pandemic in terms of leisure and hospitality job retention than larger ones. Leisure and hospitality data is not available for all metro areas across the US. However, other metros that experienced increases in overall employment are also positioned near popular national parks. Staunton, Virginia, is a small metro area of 123,120 residents located 45 kilometres west of the southern entrance of Shenandoah National Park. For the months of June to October 2020, Staunton experienced an average monthly employment increase of 0.7 per cent, the fifth highest increase among all US metros. Outdoor recreation-based tourism surge In addition to national parks, other outdoor recreation opportunities have drawn Americans out of their houses and into nature during the pandemic. As a result, the areas surrounding those outdoor havens aren’t experiencing the same levels of economic downturn as larger, more urban areas. David Peterson, executive director at Visit Carson City, suggested places such as Carson City, Nevada, didn’t suffer as much of a hit as, for example, areas like Las Vegas and Reno, Nevada, because their economies aren’t as dependent on international tourists, visitors who arrive by plane and convention centre revenues. As Covid-19 raged through the summer and autumn, Carson City, a small metro area of 56,000 people on the east bank of picturesque Lake Tahoe, enjoyed the opening of several restaurants and its first new hotel in ten years. Although it is still experiencing revenue shortages, Carson City is also welcoming many visitors from neighbouring states coming to take advantage of its proximity to prime outdoor recreation. An over-dependence on tourism Though outdoor recreation has been a lifeline for some smaller metro areas in the US during the pandemic, tourism officials in those areas are still aware that over-dependence on any one industry is not sustainable. If too many jobs rely on a single revenue stream, any disruption – whether it’s a natural disaster, a pandemic or the swift creep of climate change and extreme weather – can have an outsized economic impact. US tourism hubs such as Hawaii and Atlantic City, New Jersey, are currently experiencing the strain of over-dependence on tourism. The Kahului metro area on the Hawaiian island of Maui saw average leisure and hospitality employment for June to October 2020 fall by 65 per cent compared to the same period in 2019. Overall employment in the metro fell by 28 per cent. Even without air travel limitations, mainland tourism-dependent cities like Las Vegas, Nevada, have experienced slower recovery than the average US city and much slower recovery than other cities in the state of Nevada. But, though Carson City and the Tahoe area have experienced a more minimised economic downturn during the pandemic than larger tourism-dependent cities, economic leaders in the area are still concerned. Heidi Hill Drum, who is CEO of the Tahoe Prosperity Center, sees diversifying Tahoe’s economy as a pressing issue. “We’ll always be tourism-related, but how can we start to expand the other sectors of our economy so that we’re not 62 per cent dependent on tourism?” asked Drum. Drum pointed not only to Covid, but to economic equality issues and climate change as clear reasons why economies should be diversified. “As a thriving community, you want people in jobs that have benefits, that are year-round and [that] provide a living wage,” Drum said. “Many of those tourism jobs do not.” A path forward in sustainable recreation Climate change is taking a toll on Tahoe’s outdoor recreation industry. Raising water temperatures kill marine life and affect lake clarity. Increased rain events and air temperatures reduce the area’s snow supply, pulling revenue from ski resorts that depend on the snow to provide sports and recreation. Additionally, Drum says that, over the years, Tahoe has seen more short-term trips to the area. She says climate change is driving more people out of cities and to the lake for short, one- or two-day trips. But short-term visits from nearby cities such as Sacramento and San Francisco mean more miles driven on the roads and more boats on the lake which lead to more air and water pollution. Short-term trips also mean fewer ski passes sold, fewer bikes rented for the weekend, reduced hotel tax revenue and fewer purchases at local businesses. For areas like Tahoe, sustainable recreation might be a way forward. This involves developing a recreation industry that accounts for environmental preservation, economic stability and societal well-being for both present and future populations. Building green or eco-friendly lodgings such as the Soneva Fushi Resort in the Maldives and investing in zero-emissions transportation methods such as the Niagra Falls Maiden of the Mist’s new electric ferries are examples of sustainable recreation. But sustainability is expensive for cities, companies and visitors. The cost of a single night at Soneva Fushi is USD $2,590. And that’s for the cheapest room. Modernising transportation methods can cost billions per project and can require legislative changes to make them feasible. And, of course, every financial roadblock has been made that much harder to overcome due to Covid. Cities around the globe are facing crippling budget cuts that will leave them struggling to afford even basic services for their residents. Increased unemployment worldwide has stripped many people’s travel budgets. But Drum is hopeful. She said we need to see Covid as an opportunity to do things differently, to do things better and to balance our cities. |
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics. Archives
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