Paid and Unpaid leave and its impact on Travel and Tourism in 2020

by Rohit Jayakaran (with Anand Menon’s industry insights and expertise)

Right now, we are all trying to survive. While we #StayHome to help #FlattenTheCurve, businesses world over are finding ways to stay afloat with the hope of making a comeback in the remaining quarters of 2020.

One of the industries that was the first to be hit because of the Covid-19 Pandemic is Travel and Tourism. Most attractions around the world are closed and airlines have dramatically reduced the size of their operating fleet. Hotels, resorts and attractions have slimmed down staff and are on survival mode.

The hope is that when the world opens up again, people will travel, and tourism will pick up. This however will not happen if we look at running our travel and tourism businesses in the same way we have before the pandemic.

The year 2020 is quite unique. Those who have jobs right now are being asked to take paid and unpaid leave. This mean that if we remain in this situation for a little longer, most of the employed population will not have any leave to take in the second half of this year. To put this simply, paid leave reduces your leave balance and unpaid leave reduces your bank balance. The result is that when travel and tourism opens up again, there might be far fewer people who can travel.

The recovery might end up a with lopsided number of business travelers flying around the world while leisure travelers continue to go to work. A few years ago, business travel made up about 13% of travel. The rest of the travel was either categorized as leisure travel (53%) or Visiting Friends and Relatives (34%). The road to recovery desperately needs non-business travel to recover sooner rather than later.

To understand where this $9 trillion industry (10% of global GDP) is going in 2020, we need to articulate some macro parameters that we will experience once we overcome the coronavirus pandemic.

  • Nationalistic attitudes will influence citizens to prioritize local and regional travel to stimulate growth in their own countries.
  • Leisure Travel will be a strain considering those employed will not have vacation days and will most likely see slimmer pay cheques.
  • Business travel will not scale immediately because of companies being cautious, cost cutting and video conferencing.
  • Visiting Friends and Relatives (VFR) may be preferred as it makes travel cost effective.
  • School holidays will see some form of disruption in 2020-21 affecting peak and off-peak calendars.

This is not all doom and gloom. There is money to be made as long as you know what you are working with. Looking through the lens of the above parameters there are a few things the travel and tourism industry can keep in mind as they plot their return.

  • When restrictions are relaxed, many will choose to wait before they book for fear of a repeat in the virus spreading. This is mitigated if we develop a ‘miracle cure’.
  • A vast majority of people might not have any paid leave available to take and hence might be looking for shorter local breaks. This will help the domestic and staycation markets.
  • There will be a gap between when people go back to work and when they feel they can take time off. This might be a few weeks or a few months. It is difficult to take time off work when you are needed to help rebuild the business you work for.
  • Any restructuring in salaries or contraction in business will leave less disposable income in hand and hence the value proposition must be compelling.
  • Many people will prioritize saving money for a rainy day and hence delay travel.
  • The moment restrictions are lifted, nearly all travel and tourism businesses will start advertising campaigns leading to some of the highest levels of competition with the lowest yields.
  • Value might not be the only driver for a purchasing decision. As people re-emerge from their homes, they might be looking for holidays that are rooted in the outdoors enabling them to do things they have not been able to do for months.
  • Characteristics of Business Travel will change. Booking in advanced will be encouraged and costs will be kept under control to maximize return on investment.
  • VFR Travel will be a priority as families check in on each other after prolonged periods of separation.
  • Local events will be lined up every weekend and provide stiff competition to the travel industry.

There are no easy answers and solutions. Government stimulus, exemptions and visa regulations will all have an impact on the industry. Technology will be used in an even stronger way and will connect consumers and suppliers with much lower intermediary margins. Travel agencies will have to re-evaluate their value proposition and will have to get creative by offering what no individual supplier (hotels, airlines, etc) or online travel agency can provide.

The rules have not yet been written and the road ahead has not yet been built. The impact in each country will be different. Be bold, be strong and most importantly, be creative.

(Thank you, Anand Menon, for your valuable inputs and industry expertise.)  

Photo by Amos Bar-Zeev on Unsplash

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The rapid spread of COVID-19 at pandemic proportions has left us in challenging times. However, in the inconveniences that we face today, there are opportunities for us to help one and another. This is the chance for us as individuals to band together and work together to help sustain progress of the human race.

With this in mind, we are calling out to all those of you with Business Skills to make them available to Small Business Owners who need them the most. All we are asking for is for 3 hours of your time, spread across a period of time to consult with Small Businesses in the UAE to help them grow from strength to strength.

This project is a completely voluntary and all we ask is for those who benefit from the Business Skills of others to pay it forward to others in the marketplace. By sharing and spreading our knowledge we can create an #ImpactPandemic across the country and the globe. 

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