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The travel industry will suffer the most in the post Covid world

I wrote two weeks ago about the future of the food and beverage business.

My conclusion was that things did not look good for the eating-out business but that the drinking business might emerge relatively unscathed (especially the drinking-at-home segment).

 

I know less about the travel business but there too, my suspicion is that things will not go well. In fact the travel business might end up in worse shape than the restaurant business.

 

   The first thing to remember is that the travel business is fundamentally different from the food business. All of us need to eat to survive. Restaurants are just one way of meeting that need. There are always other options: delivery, ready meals, home cooking, etc. My guess is that many of us may gravitate to those other options leaving restaurants behind. But the food segment itself will keep going and at the top level, good restaurants will survive because everyone likes a memorable meal every now and then.

 

   The travel business is different because few of us really have to travel. Yes, there may be unavoidable work travel. We may want to see our families if we live away from them and we do enjoy vacations. But basically, if we don’t travel, we can still live relatively happy, contented lives.

 

   There is one other fundamental distinguisher. Look at your own expenditure over the last few years. You will discover that you always spent less per year on restaurants than you did on holiday travel.

 

   This applies to people at all levels of the economic pyramid. If you ate at Burger King or KFC and drove to vacation spots and stayed only at modest hotels, even then going to Burger King, KFC or Pizza Hut all year cost less than what all the holidays added up to.

 

   If you went to five-star hotel restaurants, even then you spent less on eating out than you did on your vacations because you almost certainly flew (business class, perhaps) to your destinations and stayed in five-star hotels.

 

   Eating out may be expensive but it is nearly always cheaper than vacation travel.

 

   If we were forced to choose, most of us would forsake our vacations and stick to eating out occasionally because eating out is the cheaper option and gives year-long satisfaction, which an annual vacation cannot.

 

   Given that we are on the verge of a huge recession it seems clear to me that most of us will cut our expenditure. And vacations may be the first things we choose to limit in an effort to save money.

 

   Yes, there will always be some work-related travel but the Covid lockdown has taught us that technology has advanced to the point where video-conferencing, Zoom calls and the like can, at a pinch, take the place of personal contact. Which company, in the middle of a recession, will pay for air-tickets and hotel rooms for its employees when video contact of some form is available?

 

   These observations apply to any recession. That’s how people always behave when the money is tight.

 

   But there is another factor at work here: fear of human contact.

 

   No pandemic in recent memory has frightened people as much as Covid has. Earlier, we always thought we could moderate our behaviour and avoid the risks of infection.

 

   In India, our health scares tended to be about things like dengue and malaria, so we knew how to protect ourselves. Even when the fear of AIDs was at its height, we believed that by avoiding sexual contact we could steer clear of the risks.

 

   Only the SARS epidemic came close to Covid. And because that was largely restricted to East Asia, most of us never knew what that kind of fear meant.

 

   The significance of Covid is that it has made us scared of other human beings.

 

   Forget about being scared of having sex with them (our fear during the AIDS pandemic), we are terrified of even accidentally touching other people. As we learn more about the epidemic, we have become frightened of even breathing the same air as them.

 

   Never, in the last hundred years has it ever been this bad.

 

   Add to that, a new fear: the fear of ‘abroad’. One of the most notable features of this pandemic is that we all believe that it comes from ‘abroad’. And indeed the majority of all Covid cases in India can be traced back to infectious people who contracted the disease abroad.

 

   Nobody, anywhere in the world, believes that the disease originated in their own countries: they all blame it on infections from abroad – whether in the shape of foreign visitors or their own citizens who visited other countries.

 

   The Americans say it came from Europe. The British say it came from Italy. The Italians say it came from China. And even the Chinese are spending millions on social media campaigns to deny that they were Country Zero.

 

"I really don’t see things getting back to normal for airlines for a while. Perhaps domestic travel will fare better than long haul but it is too early to say."

   There has rarely been a time when nations have been more cut off from, or more distrustful of, each other. This is bound to have an effect on international travel and tourism.

 

   And then, there is the means of infection. We are right to be scared of being too close to each other for too long. Many of the early infections came from cruise ships. And the recycled air of crowded aeroplanes can be a factor in infecting everyone on the plane if some passengers already have the disease.

 

   It is not hard to see what this means for the travel industry in the short term.

 

   Disaster.

 

   First of all, we will have less money to travel.

 

   Secondly, even those who can afford to travel will not risk going on a cruise ship. Aeroplanes will be a cause of concern. Would you, for instance, want to spend several hours inside a crowded aircraft when there is no swift and reliable way of checking that passengers are non-infectious before they board?

 

   You could argue that people may board short-haul flights, wear masks and take the risks involved because they need to travel, even if it is only to get away.

 

   Possibly.

 

   But such people will add up to only a quarter or so of the number of those who would have travelled in the pre Covid era. Moreover I imagine that airlines will have to abandon the sardine economics they currently operate on and keep passengers further apart – empty middle seats perhaps. This will reduce the number of seats they can sell per plane and cause havoc with their earnings

 

   So, I really don’t see things getting back to normal for airlines for a while. Perhaps domestic travel will fare better than long haul but it is too early to say.

 

   Hotels will face problems of their own. Yes, there will be some essential business travel but it will be a fraction of what it used to be. Every company will think twice before planning a large conference or a convention or a public event for many, many months.

 

   The era of the big wedding is over for the foreseeable future. Only a nut would host a wedding in Florence, Bali or Venice until the danger completely passes – and that won’t be for a while. And even if big weddings are planned at hotels, will guests be comfortable doing the garba or the bhangra in packed dance halls?

 

   Hotels may have more luck in persuading individual guests to stay in their rooms if they can convince them that the rooms have been effectively sanitised. This is more difficult than it sounds because the Covid scare includes suggestions that the virus can survive on flat surfaces (steel, plastic etc.) for 24 hours or more. But I am guessing that the global hotel business will invent a fool proof sanitisation plan.

 

   But will that be enough?

 

   Will people be comfortable getting into swimming pools at resorts? With lining up with strangers for the breakfast buffet? With sharing lifts on the long ride up to say, the 14th Floor?

 

   The hotel industry has faced crises (though nothing on this scale) before and has usually found a solution. One of the most famous stories in the Indian hotel industry is of Rai Bahadur MS Oberoi and the Grand Hotel in Calcutta. In 1933, a cholera epidemic killed over 100 guests at the hotel, forcing it to close. It came up for sale eventually and Oberoi bought it. In 1939, when the Second World War started, he rented the hotel out to the army to accommodate troops. The legend is that he re-assured the army by saying that he would supply bottled soda water free of charge to all guests. (Cholera can be spread by water.)

 

   It is an inspiring story though sadly, it is worth noting that the hotel closed before Oberoi came along to revive it.

 

   Perhaps there will be other men with innovative ideas to help turn the hotel industry around. And if we manage to control the pandemic in the next month then the scars it leaves on the minds of guests will not be so deep. But if social distancing becomes the new normal (which it might) then old concepts of hospitality, which involve personal warmth and attention by the staff may have to be completely rethought.

 

   My view, for what it’s worth, is that the hotel industry will revive in the medium term. But in the short run, hard times lie ahead.

 

   As for the airline industry, I am less optimistic. Speaking for myself, it will be a while before I take a long-haul flight or am willing to risk the virus-reservoirs that airports have now become.

 

   So here’s my perspective on the future. Delivery places will be the first to recover. Bars will be the next. Then restaurants, then hotels. And airlines will suffer the most.

 

  

Posted On: 18 Apr 2020 12:30 PM
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