Pandemic has tilted the scale in favor of domestic travel, experts say
Restrictions on businesses of all kinds as a result of the COVID-19 outbreak left the majority no choice but to shut down, at least temporarily. The tourism and hospitality sector has been among the hardest hit.
More than 75 million hospitality and tourism employees worldwide are expected to lose their jobs in 2020 as a result of the pandemic, according to Statista.com. Furthermore, the industry’s revenue is projected to fall by about 35% over the previous year, with Europe being the worst affected.
More than 4.5 million tourists visited Israel in 2019, injecting over $5.5 billion into the economy.
In the first two months of 2020, 3.3 million stays were registered in Israel’s hotels. Over 200,000 workers were employed in the industry, accounting for 2.5% to 3% of gross domestic product.
In the Red Sea city of Eilat, whose economy is highly dependent on tourism, the unemployment rate has soared past 70%, to the highest level in Israel.
Following six weeks at a virtual standstill, the hospitality and tourism industry is preparing for a gradual return to business.
The cabinet has tentatively approved the reopening of guesthouses and ground-level hotel rooms starting this coming Sunday, provided that the national infection rate does not rise by the scheduled opening date. However, pools, hot tubs and dining rooms will remain closed. According to experts, a return to the pre-COVID-19 occupancy level may take between 18 and 48 months.
Inbound air travel, thus far limited to a handful of flights from Newark, Moscow and Addis Ababa, and assorted “rescue” flights from other cities, will resume from next month, despite the continued barring of entry to all non-Israelis. Israelis returning from abroad are required to enter 14 days of isolation in government-supplied hotels.
One after the other, foreign airlines have announced the resumption of flights to Tel Aviv. Wizz Air, British Airways, Delta and Air Canada flights can be booked online for next month. As for new outbound air travel options, Israelis will have to wait until June. Then Air India may start Tel Aviv-Delhi flights and Alitalia will offer Tel Aviv-Rome.
While the airline industry is preparing itself for a return to business as usual in the very near future, not all travelers may be ready to book their next flight quite so soon. Experts believe the recovery of the airline industry is likely to be gradual. An even slower recovery is seen as possible but less likely, depending on how long national economies are shut down.
A study conducted on the behalf of the International Air Transport Association (IATA) shows that 60% of travelers are likely to return to flying within one to two months of containment of the COVID-19 pandemic. However, as many as 40% of respondents reported that they would put off travel for at least six months.
In the same study, 69% reported that they were likely to defer a return to travel until their financial situation stabilized. This is not surprising given that hundreds of millions around the world either lost their jobs or are at risk of losing them due to the coronavirus pandemic. In the US alone, more than 24 million people lost their jobs. In Israel, over a million employees were sent home, either laid off or furloughed without pay.
A breakdown of international and domestic travel prospects shows an interesting outlook for the hospitality and tourism industry. Experts believe that for the foreseeable future, domestic travel will be more dominant than previously.
“Initially travel is likely to be domestic rather than international,” Omry Litvak, chief operating officer and co-founder of Hotelmize, tells The Media Line.
“Drive holidays such as regional travel within the US and Europe is a likely scenario,” Andy Owen-Jones, CEO at Bd4travel, tells The Media Line.
There are several possible reasons for this. There is concern over mandatory quarantine upon return to one’s home country. Another possible reason is the perceived risk associated with traveling abroad.
The experts’ views are supported by recent research data. An international study this writer conducted with his colleagues suggests that over 50% of individuals were likely to travel domestically in the next six months. The number of those likely to travel domestically in the next 12 months is considerably higher, with about 70% saying they would do so.
As for international travel, roughly 30% of respondents reported they were likely to travel abroad in the next six months. However, over 50% reported they were likely to travel abroad in the next 12 months.
Although a majority of tourists may be deterred from traveling abroad in the next 12 months, tourism-dependent economies may be able to compensate for at least some of the lost income with the help of domestic tourists.
“People will not give up on their vacations,” Litvak says.
As for Israelis, “The fact that Tel Aviv is expensive will not deter Israelis from booking rooms at hotels located in the city,” Litvak says. “The city has a lot to offer. Israelis are likely to flock to the city as previously popular destinations such as Greece and Cyprus along with all other foreign destinations no longer top their list of holiday destinations.”
Which destinations are likely to be travelers’ favorites once they resume international travel? A study this writer and his colleagues are conducting shows that Europe and the US top the list. Despite reports of racism toward ethnic Chinese around the world, including in the US, Canada and the UK, two-thirds of respondents stated a willingness to visit China in the future, with over 50% saying they would travel there mainly for vacations.
(The author is director of the Marketing Clinic, ExLab, at Sapir College,
and the head of Digital Marketing Specialization in its Technology Marketing Department)