Op-Ed: The global economy won’t fully recover until the travel industry recovers
Glenn Fogel is CEO and President at Booking Holdings (BKNG), which provides online travel and related services. Yahoo Finance will air an interview with him as part of the All Markets Summit on Oct. 26.
When I look at the state of travel today, I see a traumatized community. I see an industry ravaged by the COVID-19 pandemic, far worse than any global crisis I have faced in my career. The blow to the industry has been unprecedented and far-reaching: In the U.S., 51% of the workforce has been lost and the sector is projected to contract by $1.2 trillion by the end of 2020, the U.S. Travel Association estimated in July.
In the EU, the tourism ecosystem accounts for 12% of employment, and the OECD said in April that it expects a 45% to 70% decline in the tourism economy, depending on the length of the health crisis and on the rate of recovery in travel and tourism. Globally, the industry is expected to contract by between 275 and 400 billion euros.
However, the desire for the travel industry to recover is not in question. Neither is the need: Travel is a foundational pillar of the global economy, and as such, the global economy cannot fully recover until the travel industry recovers. Currently, the travel recovery is uneven and uncertain around the globe with disjointed governmental restrictions and other barriers to consumer confidence.
In certain locations and businesses, there are some small signs of how we’ll move forward: airlines continue to respond to new health measures, hotels are embracing contactless travel and redesigning their spaces to prioritize guest health, and governments are creating plans to support the travel industry at large.
What is in question is how this industry will rebound from the once-in-a-lifetime setbacks it currently faces. Over the last few months, here’s what I’ve learned about the future of travel and how we can make it stronger than ever before.
We must harness political will
As the global travel industry attempts to move forward and get back to business after one of the deepest shutdowns in nearly 100 years, government decision-makers and private-sector leaders need to collaborate more closely together to drive long lasting growth. The steps taken by governments to step up and sustain the industry will influence the speed and shape of recovery. A strong partnership between governments and the travel industry is essential in order to spur travel and tourism industry growth.
As politicians around the world look to reinvigorate the global economy and stimulate spending, continued government intervention both nationally and locally is critical. This intervention has popular support in many places: A recent poll commissioned by the American Hotel and Lodging Commission shows that 70% of Americans are in favor of additional government support for the industry. In fact, one-third of a billion jobs around the world are associated with travel and tourism in 2019, and the industry is predicted to lose 100 million to 200 million jobs around the world during this pandemic.
We cannot let the fight against this virus become political. In order for travel to fully recover, we need to do everything we can to stimulate both the local and global economy to ensure people’s livelihoods are protected. One way governments can support businesses and consumers is by introducing tax credits and subsidies to help aid in the recovery while the pandemic continues to create uncertainty. Extra incentives will be needed to allow businesses to survive while determining how to rebuild consumer confidence during the “new normal.”
Many communities rely on tourism almost exclusively to power their economies, so this is a financial necessity, not a consumer luxury. In some developing countries, tourism accounts for one-fifth of the GDP, and losses in the tourism sector have been staggering in nations like the Dominican Republic, Turkey, and Vietnam. If we let the travel industry continue to collapse, we will be abandoning millions who had found a lifeline out of poverty.
I am encouraged to see (and work with) some governments already taking initiatives to incentivize travel — such as in Japan and Thailand — but we need to increase collective efforts around the world to see a true recovery for the entire industry.
Transparent safety standards are mandatory
Successfully navigating consumer concerns and nervousness around travel in light of COVID-19 is another key factor. The industry won’t be able to fully recover until there is a vaccine or treatment for COVID-19. Before boarding a plane or even booking a night away from home, many will want full reassurance that, firstly, their health will not be put at significantly greater risk through travel and secondly, that the chance of getting stranded abroad is minimal.
Technology can help somewhat. Rapid testing before someone is allowed to board a plane could be helpful, as would fast contact tracing if someone on a plane tests positive within a few days of the flight. Hotels could do rapid testing, too, in order to minimize the chance that guests are infected. People are used to security measures and while rapid testing would add friction to the journey, the added assurance that the trip will be safe would outweigh the inconvenience for most people and induce many people to travel who would not otherwise.
Sharing up-to-date information so governments can come up with informed solutions and decisions is also a pivotal way to solve these concerns.
The pandemic has affected behaviors, attitudes and beliefs on a scale that none of us could have predicted. As the situation continues to evolve and we all seek said reassurance, it’s critical we have clear and concise information and adhere to the latest guidance from scientific experts and governments around the world.
Regulation must be clear and consistent
As we rebound, it's even more important that the travel and tourism industry operates as a competitive and fair one. Consumers are increasingly demanding transparency from everything from health and safety to business operations.
If regulations remain opaque, we run the risk of eroding trust. Without trust, the industry will never achieve its true potential.
We must ensure that as new businesses pop up and established ones seek to rethink their business models that we give them every opportunity to rebuild better. Collaboration between governments, regulators, industry bodies and businesses such as an employee retention tax credit and/or programs for small business loan assistance can build a better travel industry in the future than what we knew before. What would hinder these efforts is if we continue to see piecemeal regulation affecting different geographic areas differently, making it difficult to do business across borders.
The path ahead
Throughout this pandemic, we’ve seen moments of shared humanity that remind us why experiencing the world is indispensable — from 7 p.m. “thank you” applause moments for front line workers, to videos surfacing out of Italy of people joining in a choir from their balconies to fill the empty streets with beautiful melodies, to seeing healthcare workers travel to the most deeply affected areas around the world to provide medical support.
Travel is fundamental to not just the global economy, but to the human spirit. It creates experiences that open our minds and teaches us to embrace empathy over apathy, a lesson that is desperately needed now. It is our collective responsibility to safeguard the possibility of free and safe travel not only because of its financial importance, but because of its vital role in determining who we are — and who we will be — as individuals and as a society.
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.
Find live stock market quotes and the latest business and finance news
For tutorials and information on investing and trading stocks, check out Cashay