Overview of the industry today
COVID-19 is likely to be one of the most harmful crises to face the world in generations. It has already taken an enormous toll on human lives and the global economy, yet there is no clear end in sight as some countries still battle the virus even today. Although all sectors have had their share of economic crisis due to the virus, tourism has taken the brunt of the damage. For an industry that depends entirely on human movement, and given the pervasive expanse of the virus, it’s no surprise that social distancing restrictions and lockdowns have taken an instant and heavy toll. Human movement to and from other exotic locations has all but come to a standstill as countries attempt to curb the virus spread.
The impact of the crisis is especially critical for tourism-dependent economies where, until recently, the expansion of the tourism sector was a key pillar of sustainable development. Tourism is a significant global economic driver. Many economic sectors are dependent on its performance, such as accommodation, transportation, retail, and dining. With its complex supply chain, tourism contributed more than 10% of global GDP and over 300 million jobs as of 2019. The pandemic has led to an unprecedented collapse in economic activity and significant travel restrictions amid great uncertainty as displayed by the chart below.
A rough but guaranteed recovery
It is common knowledge that the road to recovery will not be easy, and the current unfolding of events does not seem promising. Some of these circumstances are:
- Reduced discretionary spending
- Closing up of small tourism businesses, and
- Insolvency of major airlines
The industry might need to observe some structural changes in the short and medium terms, such as the provision of incentives to promote travel and tourism, renationalization of airlines, and price hikes to recuperate losses as it moves toward the longer-term stage where demand for travel and tourism returns to normal. Despite the huge losses experienced in the wake of the pandemic, several industry experts predict that the recovery of tourism may be bumpy but is inevitable. Two major reasons for this belief are:
- Vitality of tourism to the economic health of all regions: Tourism contributes significantly to the world’s GDP and accounts for about one in 10 jobs (319 million).
- Historic resilience to previous pandemics: Tourism has also proved resilient in the face of previous economic shocks, such as former outbreaks of infectious diseases like Ebola, severe acute respiratory syndrome (SARS), and Middle East Respiratory Syndrome (MERS), as well as the 2008 financial crisis.
These factors show that, although the short-term impact of the pandemic is not to be underestimated, recovery, once the crisis is over, is almost guaranteed.
Some market leaders in the tourism sector
GetYourGuide operates an online platform for booking tours, attractions, and activities worldwide. The company offers tourist services online via the internet and mobile applications. GetYourGuide offers tours and excursion activities, including cooking classes and tickets to many tourist attractions. The company runs a thriving and viral business curating, selling tickets for running walks, and other exploration experiences for people touring different parts of the world.
GetYourGuide was founded by Jochen Mattes, Johannes Reck, Martin Sieber, Pascal Mathis, Tao Tao, and Tobias Rein on June 1, 2009. It has its headquarters in Berlin in Germany with additional offices in Europe and North America.
Klook is a developer of travel activities and services booking platform designed to connect travelers with experiences. Through Klook’s innovative technologies, travelers can book on the go and redeem the services using QR code-enabled e-vouchers. Each day, Klook empowers countless travelers to indulge in their wanderlust and spontaneity through more than 100,000 offerings in over 400 destinations.
The company was founded in 2014 by Bernie Xiaokang Xiong, Eric Gnock Fah, and Ethan Lin. Klook has its headquarters in Hong Kong Island, Hong Kong.
Vacasa is a vacation rental management company that helps homeowners buy, manage, and sell their vacation homes. The company is a full-service vacation rental company that drives revenue for homeowners and provides unforgettable experiences for guests. The company manages a growing portfolio of more than 14,000 vacation homes in the U.S, Europe, Central and South America, and South Africa. In nine years, Vacasa has grown from two to more than 2,500 employees. It also offers property management and other real estate services directly through Vacasa LLC and Vacasa LLC’s licensed subsidiaries.
Founded in 2009 by Cliff Johnson and Eric Breon, Vacas has its headquarters in Portland, Oregon, United States.
KKday is an e-commerce travel platform that connects travelers with local experiences around the world. KKday offers over 10,000 experiences around the world. The company provides a wide breadth of events, including theme park tickets, multi-day tours, cooking classes, airport transfers, sim cards, and hidden sights off the beaten path. KKday was incorporated in 2014 by Ming Chen and has its headquarters in Tai-pei, Taiwan.
Although the pandemic has undoubtedly changed life and travel habits beyond all recognition, the current crisis state will most likely be ephemeral. Even while the battle against the virus continues in some parts of the world, countries and their governing administrations are looking ahead and planning what must be done to restart economies and return society to some semblance of normality.
Tourism is not only a key building block of those economies but something that allows people to understand other cultures and regions and is a source of great pleasure in many lives.
Although the immediate impact on the industry has been severe, radical structural changes may not be needed unless the industry falls prey to further unforeseeable blows in rapid succession. It is, however, expected that with careful management and the adoption of a staged system, governments will be able to move their tourism sectors into recovery and that global tourism will eventually rebound.
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