As the Covid-19 vaccine rollout promises a glimpse of travel rebound, the Association of Asia Pacific Airlines (AAPA) warns that global economic recovery may likely be hampered by inequality of immunisation in developing countries.
Its director-general, Subhas Menon, cautioned: “Everyone is pinning their hopes on the vaccine and mass immunisation. No one is safe until everyone is safe. Unfortunately, this is not the approach taken by many. It seems like – with regard to immunisation – while the developed world will be done and dusted by the end of the year, the developing and emerging world is on a very long and slow road to achieving the same result. Even large economies that have vaccine production like India, China and Russia are struggling to remain on the chart (of mass immunisation).”
Data from the Economist Intelligence Unit predicts that the first countries in Asia-Pacific to have vaccinated 60 per cent of their populations by end-2021 are Hong Kong, Singapore and Taiwan. Australia, New Zealand, Japan, South Korea, Vietnam, Brunei, Thailand, India, Malaysia and China are expected to follow in 2022; with Bhutan, Indonesia, Bangladesh, the Philippines and Pakistan potentially achieving the milestone in 2023-2024.
Countries such as Afghanistan, Cambodia, Laos, Myanmar and Sri Lanka may only reach the target in 2025 and beyond. Menon observed: “(These) tourism-dependent countries are all very far down the road to mass immunisation. WHO has recognised the situation and is raising its voice for something to be done about this, but we need the whole world to go back to the basics of interconnectivity and globalisation to find a way forward.
“Economic recovery cannot just hinge on the recovery of the developed world, nor can air travel recovery just proceed with travel (within) the developed world.”
He also clarified that while vaccination has not been proven to stem the infectiousness of Covid-19, mass immunisation can give a destination the ability to safely receive travellers, regardless if they have been inoculated. This would afford a country the flexibility to reject the “no jab, no fly” stance.
As the industry looks towards taking flight once again, AAPA is pumping research into an integrated smart app that will provide travel identification, health status authentication, border control authorisation and other information for travellers of the future. This “Travel Pass” may also provide access to testing centres as well as necessary certifications.
It joins a brimming roster of other smart solutions in the making, such as IATA’s Digital Health App and SITA’s Automatic Border Control, spotlighting the need for these systems to undergo tight audits and standardisation before market launch.
“A very important aspect of the travel pass is the standardisation of the format for (immunity) certification, as well as authentication and audit of test certificates and testing centres. We would need (the involvement of) WHO and ICAO – who are working on this as we speak – and a multilateral agreement will be required for governments to sign. This will be a necessary condition for any travel pass,” asserted Menon.
Nan Dai, China market expert at ForwardKeys, noted that the number of tickets issued to travel within China for the Chinese New Year monitored throughout December 2020 was down 57.3 per cent from the same period in 2019.
“Travel to southern parts of China with warmer weather and fewer new cases witnessed the most advanced bookings. Guangdong tops the list and Hainan jumps to the second place with 33 per cent recovery in ticket volume as of 14 January,” said Dai.
“Nostalgic travel is having a comeback. Strolling in ancient laneways, eating traditional cuisine typical to a region is really in among the younger generation at the moment,” added Dai. Another trend to keep in mind is Red Tourism, particularly for the older generation as the Chinese Communist Party celebrates its 100th birthday this year.
It’s not often you see an industry that’s been around for decades and carved a place for itself, come of age. In the last three years or so, tours and activities is one such industry that has moved up the ladder and is now recognised as a major player in the travel business. A player worth an estimated US$180 billion annually, and as such, travel retailers and investors have shown a great deal of interest in this sector.
Then along came Covid.
Following a horrendous year, the travel industry is now feeling the very early signs of recovery, but as tourism starts to grow it will need to adjust to a world where everything we do, including all activities, will change. As travellers start to explore the world again, the desire to book tours, theme parks and trips will feature in their plans, however the likelihood is that they won’t be experienced in quite the same way as before. Heading into the new year and beyond, tour providers will need to make changes to future-proof their business and in order to do so they will need to focus on three key areas – product offering, pricing and sales channels.
Product
Many regional businesses compare prices with local competition. Two operators offering similar boat trips are likely to price their product at the same or possibly slightly lower level. But tours are about experiences and there are many opportunities to make your tour stand out at little or no extra cost – add a lunch or refreshment to the trip or a bit of theatre into the commentary and you have made a difference.
As tours and activities reopen for business, many will need to be managed in a very different way from what they have known before. Crowds are expected to be much smaller – and more controlled. In a coronavirus era, tours will be Covid-friendly, with smaller or private groups enjoying experiences in the open air. Theme parks may include mandatory temperature checks; visitors and guides in masks and seats spaced to allow for social distancing. Whether families, students, more mature or retired, know your market. Create products that these groups value and make the changes necessary to ensure trust and safety.
Pricing
In recent years, tour operators have penetrated the OTA industry, but while this has been a leap forward for many, they need to be cautious. Every business should understand its costs and profit margins, debts and so on. Selling product requires an understanding of the market, and tour operators are no different. However, they may struggle to market their product(s) to what could be a very diverse and disparate market. Distribution costs, fixed and variable costs and post-pandemic smaller group sizes are just a few areas that need to be factored into the cost of a tour, especially for operators that sell through third parties and not through direct sales channels.
Sales channels
According to a report last year by Arival, the percentage of bookings made online still sits below 30 per cent but continues to grow at a rapid rate. Walk ups will no longer work, and as people plan ahead and research the safety of tours, more sales channels will go digital.
New solutions are available, enabling tour providers to manage their inventory and sell directly online or through third parties – including OTAs.
They connect activity providers with travellers who have become accustomed to planning and securing their travel needs online. Some of the more advanced systems, such as our own reservation system TripAdmit Thrive, also enable operators to administer seasonal pricing variables.
Systems like these are designed to enhance online sales and distribution capabilities and are helping tour operators reach markets on a global scale. Great news for this multi-billion dollar industry whose shift to online is reminiscent of the early days of online hotel and airline booking.
The tours industry is fragmented, with the majority of businesses run by small teams of two to 10 people. These businesses are longing for travel to return to a sense of normality, as we all are, but in many ways, they are better equipped to deal with this crisis. With little monthly costs, many can sit tight and wait for the recovery to start. As most predict that this will be driven in the order of local, regional and international travel, tours and activities are best placed for each stage of the recovery.
Those businesses that are digitally focused, are adaptable and offer outstanding and safe experiences will succeed and secure their future when this crisis comes to an end. The operators that are also strategic in their product pricing will be the ones making a very healthy profit on top.