The COVID-19 pandemic caused total disruption in the travel industry. A spotlight review, ‘Mapping the travel sector’s recovery’ by Bloomberg New Economy Forum and McKinsey & Co suggested that the global travel industry can learn a number of lessons from China’s experience. Collaboration, including with governments, will be essential at every step of the sector’s recovery.
Learning from China, a Chinese airline CEO believes the government did its part by keeping the virus caseload down, which was crucial to restoring confidence in domestic travel.
Previous investments in infrastructure, in turn, paid off once consumer demand returned. The review suggests that China today is like the US post–World War II: the US built a new highway system, while in China, the network of high-speed trains and highways has increased domestic tourists’ ability to reach different parts of the country.
As cases fell, Chinese travel and hospitality players repositioned themselves to respond to a market looking for new experiences, with new types of consumers.
Several Chinese airlines began offering limitless tickets, which give customers access to unlimited flights over four months for a set price, allowing for easy weekend trips to domestic cities. Middle and Western China are now becoming more popular and demand for remote, nature-based hotels has increased.
In all of these markets, new and old, providers’ agility and speed when adopting digital channels has been crucial. Innovative methods such as live streaming allowed Ctrip to reach younger and high-end customers. Some hotel chains started offering online cooking and yoga classes and relied on WeChat to maintain customer interactions and to promote their services.
Implications for other countries
Unless they can duplicate China’s performance in controlling the virus, most countries will see their travel sectors follow a different path.
Many industry insiders expect the industry to continue to double down on domestic travel.
In those countries where the virus caseload is low, such as in parts of Southeast Asia, border closures and lack of international coordination on COVID-19 monitoring remain roadblocks for many travel players. Despite similarly low caseloads, most Asian countries are hesitant to open up and form bilateral or multilateral travel bubbles. Right now, low trust is the biggest barrier, and as a result, countries such as Vietnam and Thailand continue to struggle.
Help from health passes
A digital health pass, such as CommonPass, could help passengers demonstrate to airlines and authorities that they have tested negative for COVID-19, which would help lower the trust barrier across borders. The CommonPass initiative is already supported by airlines such as United Airlines and Cathay Pacific, and by more than 30 governments.
Travel players themselves can do more to ease border and health checks, by adapting their reservation systems to include COVID-19 test results online during the booking process, or by allowing customers to upload results on airlines’ websites to share with the government of their destination.
New collaborations
A deeper and lasting recovery will however demand a lot more innovation. The travel industry is interlinked so to survive it needs to collaborate. Airlines transport guests to hotels and hospitals, which in turn fuel aviation and rental-car demand.
Players are setting up new collaborations, such as between airlines and online travel agencies, and are even thinking beyond travel itself to explore collaborating to support logistics in transporting future vaccines.
Collaboration, including with governments, will be essential at every step of the recovery. Demand will not be an issue. The challenge is to open safely and with the support from governments.
Domestic and short haul focus
For many, the delights of staying closer to home may linger, even after borders reopen. Having been forced to settle for domestic or regional destinations, one study found that 30% of travellers declared themselves so satisfied with the experience that they plan to travel more domestically post-COVID-19.
In China and elsewhere, COVID-19 has created a rise in new travel occasions including short-haul and wellbeing retreats, depending on channels (social media, live streaming), and experiences.
The rise of remote work could translate in travellers prolonging holidays and, instead of heading home, working remotely from their destination, thereby turning one-week trips into multi-week stays.
Travel industry insiders are convinced that demand will rebound after the pandemic. People may start flying as soon as possible. But greater flexibility of travel is essential.
Leveraging digital technology will increase in importance, whether through common infrastructure, such as expanding the CommonPass solution into eventual digital passports, or through individual products, such as hotel apps that let travellers customize room settings from their phone.
In the short term, the pandemic will continue to test the industry’s resilience, and for many, survival remains top of mind. But as the recovery in China shows, players everywhere are already moving quickly to adapt and innovate. Ultimately, those responses, along with shifts in consumer preferences, will reshape the travel industry long after COVID-19 fades into memory.
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