Editor’s note: The novel Coronavirus (COVID-19) pandemic which started in the city of Wuhan China, has left the world economy devastated. However, one of worst affected economic sector is the hospitality and tourism industry. Being an industry expert, Mr. Alex Amen Okosun, has in this piece articulated some key measures that would help the sector recover and rebuild quickly.
Dissecting the current state of the Nigerian travel industry
The COVID-19 pandemic is no doubt a health and humanitarian crisis, and it is also an economic shock that is driving the world economy into a global economic recession. The outbreak has initiated an undeniable call to action for the air travel industry across the globe to now quickly assess these fast-changing developments, and the ensuing effect on their people, their customers, and their organizations. Currently, passenger travel and tourism is a public health hazard as well as a global economic problem. Travel companies are now making rapid decisions that will affect their very long time survival.
So What now? Reduce, restructure, rebuild
The fall in demand and closure of borders has seen the travel industry reduce at an unprecedented pace. Cruises have stopped, many airlines have suspended all scheduled service and hotel occupancy is low. The industry is starting to restructure—and the fortunate travel companies will pass from restructuring to rebuilding for a new normal.
Therefore, the next steps for travel companies will be crucial because passenger air travel is the fastest vector for virus transmission, and the most dangerous path for a resurgence of this economic crisis. Governments are recognizing this at different speeds, but the end outcome is clear: most, if not all, borders will be shut to people for as long as the virus circulates. The recovery for this crisis will only start when measures have been taken and travel is judged safe. Domestic passenger aviation will resume first, followed by international travel on a bi-lateral basis. When proven safe, national aviation systems will open back up to each other and the flow of people will again begin.
Government support is coming, with strings attached
Government support to economies across the globe is beginning in earnest. Travel companies need to be prepared to address the demands that will be placed on them when they accept the funding, irrespective of the source. Assuring public safety, creating wins for people and other themes can help travel companies ‘reset’ and potentially come out better than ever. The determination of those strings will be political, and the industry still has time to work with politicians and others to shape those demands for stronger, safer, and more resilient travel.
We anticipate these “strings attached” will be focused on creating “a new normal” for our industry, centered on the following six themes:
Assure public safety: The Nigerian public is understandably wary about travel now, and they need some assurance and instruction on how and where to return safely to traveling. We expect important regulatory bodies and travel industry participants to work together to respond to this health crisis in the same as they have to others: by engineering towards safety with prudent risk mitigation techniques.
In the short term, it is conceivable to expect health screenings just as we have security screenings in airports. Trusted, robust passenger information will be vital to helping ensure short-term traveler confidence and long-term public health.
What are the implications? The industry members will need to work together to deliver personalized and relevant messages in coordination with regional health organizations as those organizations communicate that it is safe to return to travel. It is also very likely that the industry will be asked to gather and share precise traveler details and globally monitor macroeconomic, geopolitical, and environmental events, and asked to put formal, predefined contingency plans in place and then continuously update them based on these developments. In the event of a crisis, the industry should plan for the expectation that it will seamlessly coordinate a response and communicate corrective actions to customers.
“Wins” for the travelling public: Travel today is optimized for operational efficiency. All travel businesses are likely going to restart from near zero—will they just scale back what they had or rebuild it better?
While cost competition will always exist, crowded cabins may be perceived as a health risk for some time. Customers may expect airlines, hotels, and cruises to implement hospital-like hygienic practices for every change of flight, room, and cabin, and expectations around cancellation policies and refunds will surely change.
What are the implications? Airlines will need to radically rethink their business model towards “customer-oriented” rather than efficiency-oriented. The average cost of delivering a trip will undoubtedly rise to meet new standards which means that back office cost reduction and efficiency will be required. AI-assisted customer engagement and a simplification of legacy systems, fare rules, and operational procedures will be required to help enable Travel companies to respond in a coordinated and aligned fashion to similar incidents in the future.
Truly human employment: The workforce in today’s travel industry is not organized in a way that makes it easy to respond to events that generate over- or under-capacity. In the event of a crisis, companies lack the cross-training capabilities and scalable infrastructure to resize and shape the workforce up or down as needed and as a result, they can be forced to lower service level and/or reduce the workforce.
What are the implications? Companies will be expected to take greater responsibility for the care of their people in both good and bad times. They will be expected to have plans in place that take into consideration the cultural and legal differences across regions. They will need the ability to shift large portions of their workforce from one role to another and enable them to work remotely.
High-speed one order: Travel bookings are currently disconnected across suppliers. While technology is available to stitch together the legs of an itinerary across air, car, and hotel, there is little to no information sharing to create an end-to-end transparency of the journey and to smooth out the handoffs between suppliers.
This situation affects the customer experience under normal travel circumstances but has made it even harder for the industry to mitigate and respond to catastrophic events like COVID-19. The underlying technology that supports the industry has evolved into a web of integrations that are limiting growth and creating barriers to better service that make it less constructive to generate tourism in some markets.
What are the implications? The successful rebound of the travel industry means that industry members need to regain the ground lost by COVID-19. This will require cooperation across the industry to make it as easy to purchase a two-week tour of a remote region as it is to purchase a round trip ticket between two major cities. It means that a single standard like “One Order” that evens the playing field for all markets to benefit must be established.
Anti-trust protection: The fabric of the travel industry will change significantly as a result of COVID-19. Expansion of services, mergers, and acquisitions will likely be part of the new normal. The number of competitors in each market may decline. This means that companies must be ready to rapidly and effectively adjust to market changes.
What are the implications? The travel industry will be expected to maintain and ideally improve access to a wide selection of fairly-priced travel services. They will need to be able to expand and/or wind down parts of their operations.
Furthermore, government participation or bail outs may lead to the introduction of “open access” and “fair price” regulation, creating the foundation to operate and regulate airlines as effective public concessions in a competitive marketplace. All of this must be done in a transparent way and adherent to antitrust laws globally.
Better than ever: Throughout history, crises like COVID-19, while adversely affecting an industry, have also been the driver of innovation and change. In the 2008/2009 automotive bailout, governments placed higher emissions and capital standards on the industry. The travel industry must be prepared to work in an environment where sustainability and operational requirements will become more stringent, and diversification into adjacent business models becomes even more important.
What are the implications? Travel companies will need to carve out headroom in their operating model to foster innovation. They will need to build an innovation engine that runs in parallel to their everyday operations. They will need to show improvement in their contribution to the natural environment and human performance while also demonstrating they have a business model that can sustain the effects of another event like COVID-19.
Looking beyond the immediate future
The COVID-19 outbreak has resulted in dramatic disruptions to Travel leading to new paradigms and many cases, permanent shifts. Companies will be forced to make quick decisions to ensure short-term confidence and longer-term business sustainability.
What will be needed to meet the urgency of today and the demands of tomorrow? All Travel companies must immediately decide how they will improve in the six key themes we have outlined and address how to re-size and re-engineer their organization for a new normal. Many will apply new technologies to facilitate immediate responses, but these could pave the way for longer-term strategies that improve overall resilience and competitiveness.
About the author
Okosun is a Business logistics and transport management graduate with a master’s degree in transport management (Aviation Options), currently with the Federal Airports Authority of Nigeria, Nnamdi Azikiwe International Airport, Abuja, as principal operations officer, also a chartered member and chairman of the chartered institute of Logistics and transport, Abuja branch. He has over 16 years experience in various sectors of the transport industry before returning to Nigeria to join federal airports authority of Nigeria, in 2013 till date.