No easy return for medical travel

The European Travel Commission’s (ETC) latest quarterly report “European Tourism: Trends & Prospects” warns European travel will never be the same again. How will this apply to medical and health tourism? Ian Youngman looks at the report findings and suggests ditching expectation of an easy return for medical tourism in 2020 or beyond.

The latest ETC report is partly statistical and partly prediction. While it does not deal specifically with medical tourism or health tourism, we know that historically medical and health tourism partly follows holiday tourism trends, so it’s worth understanding where people are going and why.

2020 European tourism decline

The report has found that the European tourism sector has dealt with a surge in cancellations, a decline in bookings, and rising unemployment across the sector.

During the first four months of the year, Europe saw a dramatic 44% decline in international tourist arrivals compared to the same period in 2019. Travel to Europe is expected to be 52% lower overall in 2020 compared to 2019, and growth is expected to remain below 2019 levels until 2023.

Data reported by destinations to the months of April/May reflect the level of the disruption caused by the pandemic:

• Croatia (-86%) and Cyprus (-78%) saw the biggest declines reflecting the sizeable losses of key source markets, such as Italy and the UK, which were heavily impacted by the pandemic.
• Despite Iceland’s (-52%) steep decline in arrivals, success in taming the spread of the virus owing to its rigorous tracking and tracing system has allowed the Nordic island to confidently open its border to international travel this summer.
• Latest data available showed a -96.9% decline in bookings to Europe across all sub-regions over the period January-May 2020 compared to the same period last year.
• On a positive note, as consumer activity is starting to pick up, data has also shown a jump in flight bookings for destinations such as Greece, Portugal and Spain.

Uncertainty still dominates however, and the duration of pandemic restrictions will be key to determine the losses in the sector.

Patchy and unstable recovery predicted

To minimise the knock-on effects of the outbreak, economies in Europe are starting to reopen while stimulating tourism to salvage the summer holiday season and limit the financial fallout from the pandemic.

The report states that the pace of recovery by destination will vary and will depend on the extent to which they rely on international source markets and the revival of consumer confidence.

But as ongoing events show, changes to what outbound and inbound countries will allow can happen overnight, and this is destabilising demand. Potential travellers do not want to book a trip and either cancel at the last moment or suddenly find that they have to quarantine for 14 days on returning home.

According to the World Travel and Tourism Council, the recovery of travel to all destinations worldwide will depend on economic factors, the speed with which travel restrictions are lifted, the health of the aviation industry, and the risk aversion of potential travellers.

The likelihood of a stable and quick recovery of travel demand is likely to be greater for destinations that rely more heavily on domestic and short-haul travellers. Lower cost of travel, remaining international travel restrictions, uncertainty around transport availability as well as a heightened risk aversion is likely to increase consumer preference for travelling closer to home.

Potential European winners and losers

The average share of domestic travellers is at 44.5% within European country destinations, while short-haul arrivals amount for 77% of all travellers.

Combining both arrivals from within the country and reliance on short-haul travel, Germany, Norway and Romania are the most resilient and likely to be quicker and more stable in recovery.

Iceland, Montenegro and Croatia have the lowest score with greater risk in recovery. These destinations have small domestic tourism markets and a much higher reliance on international demand, including a sizable proportion of travel from markets outside Europe that will be more likely to be subject to restrictions for longer. The chances of most countries allowing US tourists in at any time in 2020 look slim.

Opportunity to re-set tourism

The ETC report notes that tourism as we knew it has ceased to exist, while success lies on swiftly embracing digitalisation and leveraging new technologies to adapt to the new normal and to shifts in consumer behaviour. A sector traditionally characterised by human interactions will now have to provide the same valuable intangible aspects through more touchless methods in a more digitalised world. Sustainability will be key in building a resilient and more competitive sector through the implementation of a model that is economically, socially, and environmentally viable in the long-term.

Eduardo Santander of ETC stated: “The COVID-19 pandemic has had a profound impact across the sector. We have been talking for so long about sustainable growth, climate change, digitalisation and innovation, this is an opportunity to press the reset button, challenge pre-established models and finally take all these matters seriously. We must use the recovery from this terrible situation to accelerate the transformation and shift to the tourism of tomorrow.”

There will be changes in travel patterns. This may involve substitution of destinations due to income effects, travel restrictions or changing preferences. This can present an opportunity to target new markets and types of travellers to minimise visitor losses and speed up the recovery.

Some European countries for example have already moved to promoting health and wellness domestic and international trips, rather than medical tourism. However Mediterranean destinations such as Croatia, Greece and Turkey are heavily dependent on international tourism and cannot easily replace this with domestic demand.

Other factors may impact on a destination’s ultimate growth path in travel recovery and the extent to which potential is realised. The demographic profile of visitors is important and destinations which have traditionally been more reliant on older travellers may face greater disruption if those travellers are more risk averse due to health concerns. The quality and access to health care for potential travellers of all ages may affect their choice of destination.

This is important for the type of medical tourists, as typically they tend to be older. But health tourists tend to be younger.

What does this mean for medical tourism?

How this will impact medical tourism is not known, but with predictions that tourism may take five years to recover rather than the one year forecasted only a few weeks ago, medical and dental tourism may never be the same. Some countries may never recover as a medical destination, while others will expect far fewer numbers.

Medical tourism is far from dead, but the predictions that it will grow, year on year, everywhere should not now be taken seriously.

Nothing will revert to ‘normal’.

Countries that are established medical travel destinations will need to dial down their ambitions and predictions. Those hoping to launch in this market should perhaps reconsider, as only those committed for the long haul, with strong financial and governmental backing, a sound strategy, and workable safety and health measures will survive.

Onerous safety measures could also present a risk. Countries that have multiple tests and lots of safety measures and rules could make inbound travel a chore rather than a pleasure. People might choose to take a risk in a country where they do not feel the process is too burdensome.

Medical tourists themselves will probably change from those who must and can go abroad for treatment, to only being those who have no choice but to go abroad.

Hospitals and clinics in countries where many people go overseas for treatment have a once in a lifetime opportunity to change behaviour by offering fixed price packages, safety guarantees and treating patients as customers rather than a commodity.

The big gain will be health and wellness tourism, but countries must be careful in their marketing not to over-promote COVID-19 protection measures. There is an already overwhelming number of destinations, hotels and travel businesses claiming health and safety accreditations, certifications and compliance with hospital-standard cleaning programmes.

No one knows the scale and direction of how medical tourism will evolve in the next few years. But ditching the old strategies and removing any expectation of easy returns from medical tourism in 2020 or beyond would be a good place to start.