In the years to come, we will probably look back at 2020 as the moment that changed everything. Lockdowns became the new normal, living rooms turned into offices, handshakes have been banished, pretty much everything went digital and although the pandemic had many positive effects on the environment, most sectors suffered and took an unexpected turn.
Tourism is part of them as we are clearly living a moment of crisis for the travel industry. Every sector of the tourism industry is impacted, including airlines, transport, cruise lines, hotels, restaurants, attractions (such as national parks, protected areas, cultural heritage sites), travel agencies, tour operators and even online travel entities. Travelling became challenging and we are now even struggling remembering our last flight.
However, the future of the tourism industry will depend on more than just travelers. Even if the outlook for this sector remains highly uncertain, some measures can be implemented, with safety as a top priority, to boost tourism and support its sustainable recovery. Let’s take a look at what happened and the different options available for tourism stakeholders.
A significant drop in tourism worldwide
As the world is facing an unprecedented emergency with the Covid-19 crisis, travel and tourism are among the most affected sectors. The pandemic brought with it a massive fall of international demand amid global travel restrictions including many borders fully closed, in order to contain the virus. Experts claim that a return to 2019 levels regarding international arrivals could take up to 4 years and, in any case, that it would not be possible before 2023. Let’s check out the current situation around the world.
A quick overview of the global market
With airplanes on the ground for several months, we are facing a billion fewer international tourist arrivals today. With hotels closed and travel restrictions put in place in most countries around the world, we talk about a loss of $1.3 trillion in total revenues from international tourism for last year, according to UNWTO.
Regarding tourism employment, 100 to 120 million direct jobs are now at risk internationally due to the health crisis. Experts consider travel restrictions as the main barrier weighing on the recovery of international tourism, along with slow virus containment and low consumer confidence, but the crisis has not affected all countries the same way.
The US tourism market
- The US has been the largest hit country by the pandemic.
- Available seats on US airlines were down 71% compared to the previous year.
- Hotels are at only 29% occupancy compared with 72% over the same period two years ago.
- However, we can expect a rebound in international tourism by 2022 for the American market.
The tourism situation in Europe
- In France, where tourism has become one of the strongest pillars of the economy, domestic market mobilization was quite low during the summer of 2020, only 53% of residents left and 94% of those leaving stayed in the country. Tourism consumption also has fallen sharply as international tourism revenue faces a loss of €13.2 billion in 2020 compared to 2019. Moreover, the potential loss of overall tourism revenue for the year is estimated at between €50 and €60 billion.
- In the UK, London saw the largest fall in room occupancy of any English region in 2020, with just 20% of rooms occupied during the summer. Turnover in travel and tourism businesses also fell to its lowest level. Regarding employment, the largest fall was in people aged 25 to 34 years working full-time. Passenger transport services, including passenger vehicle rental, made the largest negative contribution to travel and tourism employment.
- Germany, where the travel industry is crucial for the economy, the amount of money spent by tourists dropped by 82%. The country is at risk of losing nearly 5 million jobs created by the tourism sector.
The impact on Latin America travel industry
- In Latin America and the Caribbean, tourism has almost come to a temporary standstill. In Costa Rica, the fall of tourism revenues may be 48% in 2020, with a similar job loss. In Brazil, tourism activity has been paralyzed for more than a year. Consumers cancelled 96% of their planned holidays. International and domestic flights have also dropped to almost zero. As this region counts 13 of the 20 most tourism-dependent small economies in the world, these losses are unfortunate.
The Asian tourism industry
- Asia and the Pacific saw an 82% decrease in arrivals in 2020. South Asia is highly dependent on travel and tourism, especially as a generator of jobs, such as in the Maldives archipelago. The pandemic is affecting nearly 50 million travel and tourism jobs, many held by women and vulnerable communities.
- But despite the second and third waves of Covid-19, most countries in the region continue to efficiently manage the pandemic and some of them have now reopened their borders.
The gift card market boom during the crisis
In contrast, e-commerce has made a real leap in 2020. Online shopping and home delivery increased, boosted by health restrictions. In France, for example, online products and services sales for this year are up 8.5%. Moreover, over the last 12 months, 9 of 10 French people have ordered a product online.
Therefore, the online gift card market was on the rise as gift card uses strengthened with containment measures. Indeed, it allowed consumers to offer a gift without having to meet the person, a safer method in those sanitary conditions.
This can also be explained by the fact that most businesses were forced to close, at least during a few months. This has resulted in a reluctance on the part of some consumers to return to the crowd of stores which increased online buying, and especially gift cards purchase.
In addition, we can observe a clear increase in the B2B segment. Already in constant evolution for several years now and showing no signs of slowing down, the B2B gift card market is further enhanced by the pandemic. As a result, many brands and retailers have embarked on such a program, which represented around 20% of gift card sales before and now tends to represent 50%.
What actions should be taken to revive tourism?
As the tourism economy has been severely affected by the pandemic and its measures, countries are now preparing recovery actions, in addition to immediate measures, such as lifting travel restrictions, restoring confidence among travelers, adapting the sector…in order to support and revive tourism.
A strong governmental support
Governments in all regions of the world have now a dual responsibility: to prioritize public health while also protecting jobs and business activity. For that, most countries have responded quickly and strongly with policy measures on aid and relief packages. Those have been implemented to address the impact of Covid-19 and support businesses, jobs and households.
They can take the form of financial support (especially to SMEs and self-employed), job retention promotion, employment security, measures to restart tourism and domestic tourism, safety protocols…
Governments are also helping with liquidity in the sector. Latvia, for example, has introduced a reduced value-added tax rate of 5% for catering and tourist accommodation sectors. So have France, Greece, and Germany. Some countries are encouraging local tourism spending by introducing vacation subsidy programs. Korea, for example, provides workers with vacation bonuses equivalent to 25% of the cost of the vacation.
Security becomes a priority for recovery
As a consequence of these last few months, consumers want to travel safely. Indeed, health and safety now represent a major issue for consumers as 32% of them said they would more likely book into a “hotel with impeccable cleanliness”.
For that, some measures can be implemented:
- To accelerate digital transformation with the development of contactless payments and mobile wallets.
- To adapt the offer and show flexibility: for example, Airbnb offer customers longer stays to avoid an excessive turnover in accommodations and Accor proposes hotel rooms as individualized office space).
- To propose sustainable tourism offers as 71% of travelers worldwide consider that travel actors should propose more sustainable experiences such as carbon offsetting systems.
- Promote local destinations because 4 out of 10 consumers say they are willing to travel to their own region, it is necessary to enhance accessible destinations that are not too far away, by highlighting the advantages of proximity
A health passport had also been implemented for more security. As a matter of fact, since June 1st, this health pass allows EU tourists to travel to all 27-member countries with a single QR code (i.e. a vaccine certification or a negative PCR test).
Finally, a new safety label appeared in Europe. The European Covid-19 tourism safety label will help tourism businesses ensure safety procedures before the summer season, increasing the confidence of travelers, residents and tourism workers.
Include the gift card in brands’ strategies
Companies need to take advantage of the gift card market rise while boosting tourism. Some countries have already begun. For example:
- In Belgium, Croatia, Denmark, France and Italy, the cancellation of an event and trips travel packages due to the Covid-19 can be compensated via gift cards or vouchers.
- In Iceland, Lithuania or Korea, travel gift cards are issued by the government and granted to families to spend in domestic travelling .
- The city of Geneva, in Switzerland, welcomes visitors with gift cards that can be used at restaurants, bars, hotels or attractions across the city to boost tourism
Moreover, gift cards may have a positive impact on tourism, especially on some specific establishments such as hotels, restaurants or the transport sector.
Promoting hotels with a gift card
In this specific context where hotels are experiencing an unprecedented decline in bookings, gift cards can help out the tourism industry while allowing travelers to spend the perfect vacation. With this tool, hotels and tourist establishments can promote their property and differentiate themselves by offering unique experiences in gift cards. This solution being highly targeted, the receiver is certainly motivated to use the card, making it an even more efficient method of spreading your services to others and reaching consumers you would not typically reach. It also helps building the property’s reputation and raising brand awareness.
It is also a way to protect jobs: a win-win for travelers and tourism professionals. As an example, a new initiative called “Buy Now, Stay Later” gives travelers a great deal while supporting independent hotels. This project works similarly to treasury savings bonds. The idea is that future travelers can support their favorite hotel by purchasing a gift card that grows in value after 60 days of maturation and redeem it at a later date.
Restaurants boosted by the gift card
Offering restaurants gift cards can be another way for customers to show their support. As restaurants are beginning to open up again, not everyone is comfortable yet with the idea of dining in. Gift cards present a way for regulars to support their favorite restaurant until they are ready to return. For brands, it means immediate cash flow and an increased brand awareness.
The gift card as a new means of transport
Gift cards are also increasing in the transport sector. For the train, for example, it is an easy-to-offer gift that allows the recipient to choose where and when he wants to travel. As an example, with Rail Europe gift cards, travelers can go through Europe’s most interesting and exciting cities, research and buy tickets online without having to worry about currency exchanges or deciphering instructions in a different language. This travelling option can also be applied to cruises.
Regarding the airline industry, new consumer demands emerge with the crisis such as the need for alternative payment methods. A gift card program represents a convenient and secure means of payment designed to strengthen customer relationships.
For Christmas, for example, more and more airline companies are offering gift cards to purchase tickets, such as Air France, Ryanair, Icelandair, Air Austral…
In the end, it will take time to improve the global situation permanently. Both governments of the different states, tourism professionals and consumers who want to travel like before, must work hand in hand to hope for a future return to normality.
Nevertheless, today, the sector is experiencing a 30% increase in bookings for the 2021 summer compared to the previous year. Consumers’ confidence is gradually increasing as vaccination plans progress around the world. They want to travel again and enjoy what the Earth has to offer. We can therefore be sure of one thing: tourism will recover.
Suggestions for further reading
Digital Gift Cards : an asset in crisis management