There are ways to combat a steep decline in tourism revenues during the COVID-19 outbreak. By becoming more resilient through change in operations and marketing approaches, the tourism, hospitality & travel operators can stay in business while keeping their staff. Mallika Naguran speaks to experts to put together this feature.
SINGAPORE, 13 March 2020. Tourism, hospitality and travel have taken a beating with the spread of coronavirus or COVID-19 since December. People are travelling a lot less; tourists are avoiding stricken places or have stopped boarding flights, ships and boats altogether. There’s real fear of catching the infectious bug. In the meantime, there are advisories cautioning against getting out and about too much, especially to cities and towns that have reported a high number of cases.
On 11 March, the World Health Organisation (WHO) has characterized COVID-19 as a pandemic, not a word that is used lightly, it warned, as it can cause irrational fear or “unjustified acceptance that the fight is over, leading to unnecessary suffering and death”.
Dr Tedros Adhanom Ghebreyesus, WHO Director-General said, “We are not at the mercy of this virus. All countries must aim to stop transmission and prevent the spread of COVID-19, whether they face no cases, sporadic cases, clusters or community transmission.”
The speed at which the virus is spreading makes it hard for businesses to operate as per usual. The tourism industry that relies on international travellers especially as the source of revenues is experiencing its worst nightmare as tourist arrivals plunge. For destinations that had previously been subject to environmental disasters such as parts of Australia with the drought, bush fires and flooding, the nightmare lingers. Profits are dropping fast, jobs are at stake and confidence in maintaining business is fast eroding.
It’s time to switch to survival mode.
Surviving COVID-19
A staff prepares a picnic for guests at Six Senses Thimpu in Bhutan. Pic: Christopher Wise. Courtesy: Six Senses
Survival can be tough for small- and medium-sized operators, which constitute a large part of the tourism business, according to Dr. Mihee Kang, Global Sustainable Tourism Council (GSTC) Director, Asia Pacific. “Tourism industry easily gets impacted by all types of crises caused by natural and socio-economic issues,” she said. In a crisis, the tourism business gets hit the hardest because of its “poor economic sustainability” as a result of being largely dependent on tourists to keep it going.
Banyan Tree Holdings has temporary closed its properties in China in accordance to local government recommendations to help contain the spread of COVID-9. This should be tough for the hotel chain especially when it comes on the heels of reported slower revenue growths in 2019.
Just last month, Skift.com wrote about Wyndham Hotels and Resorts’ closure of about 70 percent of its hotels in China, and those that remain open are seeing fewer guests. Hilton has been reported to have closed around 150 of its hotels in China as well.
The closures and change in market demand bring about uncertainty. Six Senses Hotels Resorts Spas told Gaia Discovery that the impacts of COVID-19 have led them to constantly evaluate their position and role in the community. “Like most businesses in the hospitality and tourism travel sector, we have had cancellations and postponements of bookings. Where there are no restrictions on travel, we continue to welcome our global guests as usual. Our cancellation policies are subject to review to ensure that guests travelling to or from affected areas are not being penalized. Six Senses believes that is the responsible thing to do,” said Guy Heywood, Chief Operating Officer of Six Senses Hotels Resorts Spas that manages 18 hotels and resorts and 30 spas in 21 countries under Six Senses, Evason and Six Senses Spas brands.
Opportunities during a downturn in economy
So what can tourism do at this point in time to rise above these challenges? It is time to think about opportunistic moves. It is time to think about resilience.
“Resilience is that capacity to cope with the unexpected and be capable of coming out the other side with your business, perhaps damaged, but surviving,” said Tony Charters AM, ecotourism consultant and founder with Tony Charters & Associates. He is also the Vice-Chair of the Global Ecotourism Network and is on the board of the Asian Ecotourism Network.
Charters acknowledged that economic downturns are tough on the tourism industry, especially when overheads such as rent and salaries have still to be paid. Still, he recommended that the operator could use the downtime to “expand domestic markets, expand the portfolio of international target markets, and in the immediate future targeting demographics that are less susceptible to COVID-19.”
Six Senses is contemplating more focus on “staycations” for domestic and closer regional markets that are not subject to the same travel restriction. “It could also give us the opportunity to place even more emphasis on our well-being initiatives, encouraging guests to stay longer in a healthy environment with programs to enhance their health,” said Heywood. Strategising marketing moves and reinvention of businesses are essential considering that the hotel group had signed a further 25 properties into the development pipeline.
A new marketing angle could be a focus on health and in places that are deemed healthy, says Six Senses’ COO Guy Heywood, as a way of coping with COVID-19. Pic: Seth Powers. Courtesy: Six Senses.
It is timely to think about managing crises effectively. According to Kang, one of the GSTC Criteria for Industry (Hotel/Tour Operators) is Crisis Management, which is often overlooked by the industry. “To set up the strategy and procedures for managing crisis, they need to identify potential types of crisis and develop relevant plans responding to the crisis,” said Kang. GSTC establishes global sustainability standards known as the GSTC Criteria and is the accreditation body for certification programs in sustainable tourism and travel.
Governments, environmental authorities and tourism associations should step up their game plan too. Kang reckoned that many Asian countries (especially China) are notorious for trading in illegal wildlife and that many tourism destinations in Asia lack adequate safety or hygiene management. “So this coronavirus threat may help the destinations to prepare safer and more hygienic conditions including national, regional and local response plans to crisis.”
Education is key. “The government could make use of this opportunity to promote more environmental education,” said Dr. Alan Wong, founder of G & D Hospitality, Tourism and Education Consulting and Vice-chair or Asian Ecotourism Network that promotes responsibility, conservation and community in ecotourism.
In addition to improving environmental education, safety and health, the government could extend subsidies and incentives to help the industry stay afloat. To date, the Indonesia government has offered subsidies to airline companies so as to provide cheaper flights to ten priority destinations from March to May this year, according to Ary Suhandi, executive director of Indonesia Ecotourism Network and Vice-chair, Asian Ecotourism Network.
The Cambodian government is knocking off taxes for the hospitality industry for four months, according to Johnny Orn, wildlife tourism consultant, co-founder of Cambodia Bird Guide Association and Asian Ecotourism Network board member.
The financial institutions are striving to bolster the economy too. In Cambodia, banks and microfinance are encouraged to offer low interest loans there. Likewise in Thailand, banks have extended short-term loans to affected employees with a low interest of 1-2%. The spotlight is now on travelling local, and governments and tourism associations are trying to make that happen.
“In Thailand, the government is sponsoring marketing space in the form of free exhibitor booths at shopping malls,” said Supaporn Prach-Umpai, managing director at Royal Silk Holidays and Asian Ecotourism Network executive committee member.
According to Orn, local tourism is being encouraged for destinations with the help of good package prices. Wong added that a good marketing ploy would be to “sell products for future consumption” with the help of huge discounts.
Emphasis on safety and health is essential. “The other strategy is to promote tours with the safest options. There are still people who want to travel,” Kang added.
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The hospitality industry affected by travel bans or town isolation is facing the difficult period of forced downtime. While this is extremely challenging for businesses such as resorts, food and beverage operators and retail shops, there are opportunities to adapt: this includes utilising human resources differently.
“Using downtime to undertake labour intensive tasks such as maintenance creates a positive outcome out of a negative situation. Bring forward maintenance schedules, undertake preparation work for projects later in the year, and of course encourage staff to take accrued leave or long service entitlements,” advised Charters.
With regard to staffing, Six Senses is using the down time to redirect energy to on-property detail and community focus, where appropriate.
Kang opined that tour operators could use the downtime for reviewing their services and supply chains, developing new tours under crisis management plans, and training their staff. She also noted that a staff retention strategy could be to reduce workdays or salaries. This is already being done in Thailand.
Prach-Umpai noted that travel companies in Thailand have now reduced working hours and salary at 10-25% for a period of 4 to 6 months.
WHO’s DG Tedros Adhanom Ghebreyesus: Let our shared humanity be the antidote to our shared (COVID-19) threat.
Wong agrees that this is the best time for staff training, so as to prepare for better service when business picks up again. “The major issue for operators at this difficult time is related to cash flow. The usual practice is to reduce expenses and explore incomes through innovative marketing and create new products and services. The key is to keep surviving!”
Survival should be the mantra of the tourism, hospitality and travel industry. As Dr Ghebreyesus told the world, “The rule of the game is: never give up. Let hope be the antidote to fear. Let solidarity be the antidote to blame. Let our shared humanity be the antidote to our shared threat."