Travel in the Time of Covid

I’m no literary scholar and my knowledge of the travel industry while good is not comprehensive, but it’s just possible that the future of travel in a time of Covid and other future pandemics looks as complicated and twisted and nuanced as the how Gabriel Garcia Marquez imagined love to be in his novel Love in the Time of Cholera.

That said, there are a few bits of early data and a few areas of consensus emerging as to how a recovery might look in the travel industry.

Firstly, most of what I’m hearing in the travel industry is that 2020 is a wash. Whatever revenue a travel business booked in Jan and Feb represents all its revenue for the year. There might be a very slight uptick in domestic travel in Q4, but don’t count on it. 2021 will be stunted by concerns over safety, a second wave, and residual social distancing—all of which may mean that travel businesses see a fraction of their 2019 revenue. By fraction, some travel entrepreneurs and CEOs are thinking of something like 20% or 30% at best, which is a jaw-dropping figure. Welcome to travel in the time of Covid.

Domesticity

A common thought is that people will venture short distances at first, and the earliest green shoots we’ll see will be in domestic travel. This makes sense intuitively and is backed up by some early  data. MMGY, a travel marketing firm, and the U.S. Travel Association, the destination marketing organization (DMO) for the USA, have been running bi-weekly consumer surveys of about 1200 frequent travelers since late March. Currently, a majority of travelers are not planning a trip in the next six months due to Covid19. Of those that are planning a trip, most are planning domestic travel—36% of the tota—while only 16% are thinking internationally. Notably, however, domestic travel planning wobbled 2 points lower over the last two weeks, which, while inside the margin of error of the survey, at the very least indicates low confidence in the future.

Skift did a fun thought experiment about this recently, asking what the world would look like if all travelers spent the same amount of money in the future but just spent it all on domestic travel. While the net global turnover would be the same, it would completely shift the spending towards some winners and some losers. At the top of the heap is China and the UK, which annually spend much more on travel abroad than domestically. In this scenario travelers would spend those yuan and pounds within their own borders. Conversely, sitting at the bottom are Spain and U.S., which are big net importers of travel. (Remember that old rule of thumb that only 25% of Americans hold passports?) In this new world of staycations the U.S. sees a -$52 billion shortfall of tourism spending.

Spain’s economy will crater. So, will that of myriad small destinations worldwide that have built their economies around serving international tourists. Think of the Seychelles, Maldives, most of the Caribbean, and so on. Since February I’ve been in lockdown in Tuapejat, a tiny village in the Mentawai islands off the coast of Sumatra, which is known for some of the best surfing in the world. (I’ve posted before about my Covid19 experience in Indonesia.) Each year this area sees an influx of +/- 5000 surfers from around the world who stay in small resorts, homestays, and on charter boats. There are no international chains here. Instead, the ecosystem is dominated by small businesses, and surfers are their lifeblood. So far, the shutdown of the surf economy—much to my chagrin, surfing is banned during the pandemic—hadn’t been too painful. Locals have just resorted to their centuries’ old way of life: fishing, growing vegetables in the garden, etc. However, should this go on for more than a season, places like the Mentawais will see serious economic hardship.

Fear

A big part of when people travel again is how much they fear travel as a source of potential infection. Jared Alster at Wildeebeast, a travel marketing agency, picks apart some recent mental health survey data alongside this and the U.S. Travel Association customer surveys in a post about how travel companies can communicate effectively about their Covid19 policies to make travelers more comfortable. My view is that some people will be booking travel, and there’s an opportunity for smart companies to capture market share by being ahead of the curve with the comms much as Alster describes.

Another problem for travel companies and travelers is how locals in destination will view visitors post pandemic. It was unsurprising to me when reports started coming in from parts of Indonesia where I’m currently residing of locals screaming “You Corona” at visitors, accusing them of bringing in the virus. Not only were many of the first cases of Covid19 traceable to travelers but there’s a long history of disease brought across borders by visitors here in the Indonesian archipelago and across the Pacific.

In his ebook Unlearn Travel, Bruce Poon Tip, founder of G Adventures, rightly calls out the ludicrousness of this. Blaming travel for the virus is like blaming the internet for some of the garbage out there. Still, xenophobia is real, and it’s valid question that travelers and tour operators will be asking themselves in the coming months: Will I be welcome when I arrive?

An Opening for Sustainable Travel?

Sustainable travel advocates are actually some of the only people in travel who are upbeat right now. The first weeks of the pandemic provided a needed respite for places plagued by overtourism. Crowds disappeared from Venice and Ankor Wat, and ecosystems started showing early signs of rebound. Who can forget the iconic image of South African lions napping in the road. Sustainable travel circles have been trumpeting the hope that the pandemic signals a restart for travel, and that when travelers finally do start climbing on planes that they will adopt a better, more slow-travel approach.

I think this is possible. For one, it’s likely that in the early days—and maybe for the foreseeable future—travelers will gravitate toward less-crowded destinations because they want to avoid crowds. This could be good for tourism because it would spread spending more widely and away from large, multinational chains. In a world where you’re doing the maths around Covid infection probability, the thinking goes, travelers will gravitate toward quieter, less-discovered places. Bruce Poon Tip offers a list of these including Malawi, Laos, and Uzbekistan.
The dominance in tourism of large chains, resorts, and theme parks is a major source of tourism leakage, which is the phenomenon in which traveler spending ends up “leaking” out of the country they visit and into the bank accounts of foreign travel companies, agents, and operators. If travelers avoid all-inclusive hotels, theme parks, and other crowded tourist hotspots in lieu of visiting smaller, less discovered spots, we may see tourism leakage retreat from its current perch at 53%.

Melissa Biggs Bradley, founder of Indagare, a travel planning company, recently posted that she hopes people travel less in the future, but book longer trips. At first, this might seems incongruous, and you might assume that booking more trips is the zero-sum game of all travel companies. But, in fact, a travel planner like Indagare books its revenue on the total dollar size of the trip, which may inch higher with longer trips.

Some destinations that have suffered from overdevelopment of low-grade, mass tourism are thinking that Covid19 might provide an opening to wean themselves off tourism a bit. Take Phuket in Thailand, for example, which is overrun by huge groups and low-end, low-IQ tourism, an the related huge problems with traffic, pollution, and overall degraded quality of life. Locals there are beginning to imagine a life with a lot less tourists and turning their attention and resources towards green industries like bamboo products and seaweed farming. But it’s a huge question whether this crisis will provide the kind of opportunity sustainability advocates hope for. No one is predicting a quick, V-shaped recovery in tourism in places like Phuket, which overwhelming rely on foreign visitors. And, indeed, the local government there seems very far away from opening up. Phuket’s beaches and hongs may remain blissfully empty for some time.

My Traced Travel in the Time of Covid

Like many people I’m sick of the phrase “new normal.” But, undoubtedly travel will look different as we emerge from this lockdown. One aspect is how governments and businesses will intrude on our privacy when we go abroad. No longer will we just breeze through customs and immigration simply worried about the prosciutto in our baggage. Instead, we’re going to be tested for Covid19, given a piece of technology to track us, and asked to report several times a day with our temperature and state of health. South Korea is already doing this, as described on Twitter by a recent visitor. 

On reflection, I can imagine most frequent travelers being fine with all this like Michael Kim, the author of the thread above. We put up with the chaotic, poorly planned changed in security in the wake of 911 that have never been significantly improved. However, frequent travelers are a minority. Will your average tourist happily submit to such an invasion of her privacy? With all the brouhaha about lockdown infringing on freedom, I’m skeptical. Politico reports that there are already plenty conspiracy theories tied up with contact tracing.

Half W Correction

One problem with our crystal balls is that we believe that Covid19 was a black swan event, a once-in-a-lifetime crisis. As Elizabeth Becker, author of Overbooked, points out in a recent interview, it probably isn’t. In fact, regular outbreaks and pandemics will probably become the real new normal. Partly, this is due to the interconnectedness of the world and the fact that it’s super easy for a disease to travel the world in a few hours—even in a world of greatly diminished tourism. But, also, as Becker rightly points out, we’ve raised the probability of more novel diseases like this by damaging our environment through carbon emissions, overdevelopment, and pollution.

I tend to agree with Becker and also with the view that there will be a much worse second wave of Covid19 within a year like there was 100 years ago with the 1918 Spanish Flu. With that in mind, I think we’re in for a major correction in tourism that will blunt any shaped recovery. Picture half a lowercase (rounded) W, where tourism falls hard and never fully recovers. It’s hard to see mass tourism enterprises like cruise ships where the unit economics rely on big volumes and keeping people constrained thriving in a world of regular outbreaks. Similarly, huge theme parks, casinos, and all-inclusive resorts are going to face big challenges. They will all do their best to build in social distancing and tracing, to greater and lesser degrees. But, at their heart these places all follow the same model: The more people they pile into one spot the more money they make. And this is a model not built for the world of Covid19 and its daughters.

I do believe, however, that there’s an opening here for the small, smart travel company to capitalize on Covid by providing small-group experiences to less-trammelled places. I’m fairly bullish on startups in travel in the time of Covid19, especially if they have a robust customer communication process and can be clear about the way that they are hedging against infection. Some may even tailor themselves directly to new regulations and offer cool services like handling all the headaches around contact tracing and reporting to the authorities on behalf of travelers. By keeping the unit economics right at small groups and eschewing that old fashioned idea of keeping all traveler spend within the confines of the resort, theme park, etc., I can see a whole generation of new travel companies thriving on the back of models that are not only pandemic proof but also good for people, profits, and the planet.