I sincerely hope you are holding up in these unbelievable times – I can certainly confirm that I have never learned so much in so little time and never had to change my opinion so often about so many things – and those that know me no doubt remember that I can have rather firm opinions on certain topics.
Just to illustrate this, my worst-case scenario planning at the beginning of March had become my best case by the beginning of May. Who knew?! And after the recent Zoomcast by South African Tourism and the Tourism Business Council of South Africa (TBCSA) that new best case suddenly looked optimistic compared with predictions of our borders only opening by January 2021 to international travel. I sincerely hope that the continuous degradation of my cases reverses to something survivable, as seems to be the case in Europe.
There is so much dynamic movement globally that I decided to unpack my thinking about the medium-term development of our industry on the African continent for your input, comments and conversation.
Silver linings
Let me start with some silver linings on the horizon. European countries have started their economic restart at a surprising pace. Watching much of their media it appears clear to me that virologists, health care professionals and departments of health are receiving less airtime and attention, whilst economists are becoming far more visible and heard. To me the narrative clearly moves to a more balanced view between economic interests and risk mitigation.
Airlines such as Lufthansa and Qatar have started populating the GDSs with flights from July onwards and the good news is that Africa is still very much part of their route network – granted, at much lower capacity for the time being, but still there. My observation is that many African countries have benchmarked their response to the COVID-19 threat against some major industrial nations and then adapted these locally. My hope is that they will do the same on the way out of the crisis in an accelerated fashion.
Tourism is an industry where many things must come together so that a reasonable amount of people end up travelling. Firstly, there has to be an affluent customer segment with time to spare in our source markets, secondly there has to be air connectivity, thirdly there must be freedom of movement, fourthly the destination needs to be attractive, accessible and safe and lastly there needs to be a tourism product that is open and affordable.
From the above we can clearly see that none of the prerequisite requirements to have a tourism industry is currently even remotely in place and many might take very long to become a reality again. Currently there are no flights, hotels and lodges are closed, conference centres are mothballed, borders are shut and all of that not only here, but all over the world. In order to have a functioning environment again all of the above must normalise not only in our destinations, but also in our source markets.
The current projections assume very low levels of business for the next seven months to the end of the 2020 with a slow and painful recovery period during 2021. Our ‘new’ best-case scenario for 2021 assumes 50% of historic volumes using 2019 as a benchmark and from there a recovery to the new normal, whatever that might be.
But that is only one side of the coin. The question I struggle with is how will the shape of tourism change as a result of this control/alt/delete moment. Let me pick on a few topics, give my views and then I will sit back and look forward to reading yours.
The role of the traditional distribution channel
“Totgesagte leben laenger” is a German saying roughly translating into “If you are expected to die, you live longer”.
The historical Product-DMC-Overseas Wholesaler-Retailer-Consumer value chain was predicted to disappear years ago and, yes, with the arrival of OTAs, OTOs and bed banks to name a few, life in this channel has become sportier and disintermediation became our biggest threat.
However, I firmly believe that this ‘antiquated’ channel received a new lease on life. Post-COVID-19 consumers will want more peace of mind when travelling, better legal protection through a contract in their home country, a physical guardian in their destination of choice, a recommender, enforcer and inspector of health/safety/hygiene standards and, above all, a human emergency solution for anything… just in case. All these requirements are taken care of in the traditional channel.
The bed banks and the OTAs did not cover themselves in glory during this crisis…will that be forgotten one day? I sincerely hope not, and we will no doubt keep reminding the marketplace for years to come.
It is human nature, though, to only retain a learning for a few years, and in this period DMCs and all their stakeholders will gain in relevance and influence.
Price versus value versus cost
The above described value channel has for years been seen as inefficient and too expensive by the stakeholders at the two ends, namely suppliers and consumers.
This was largely as a result of both entities seeing the channel as a temporary (remember we were predicted to lose relevance) but unavoidable evil, whilst on a journey towards a highly digitised, extremely efficient and materially cheaper way of connecting and transacting.
This journey effectively turned all the intermediaries into a largely transactional commodity with continuous cost cutting and reduction of margin.
As a result of the corresponding impact on commercial sustainability, it is little wonder that many entities after just a few weeks of this crisis have run into a severe cash crunch.
To my mind, both suppliers and consumers will attach more relevance to the distribution channel as long as there is real value added in both directions, see them no longer as a commodity and consequentially reward them in a fairer fashion.
The question will no longer be who can get the commodity bed/car/seat into the consumer’s hand at the lowest possible cost? but who adds value to whom and when and at what cost? A ‘value-add’ in the past was something free, a sweetener to differentiate – a ‘value-add’ in the future needs to be a monetisable service to another stakeholder in the channel.
Experiential versus consumptive
A positive impact the COVID-19 Armageddon has had on the more affluent parts of the world’s population, our guests, is no doubt a more responsible outlook on life as a whole. Nothing is seen in the same light any longer, few things are taken for granted and I get a feeling that people live more consciously. One wonders if this is temporary in nature or if this event through its absolute and global ctrl/alt/del moment has created a permanent mind-shift… I suspect it is the latter.
If I am right, what does this mean for tourism to our continent? The purely consumptive, cheap, price-driven, inclusion-poor, experience-absent group series business that used to frequent our respective countries in volume will disappear and, if I may say so, good riddance.
The product development staff in our respective companies will need to create journeys rich in personal authentic experience, cultural deep dives, community interaction, wildlife involvement and culinary diversity and localness to name a few.
Yes, this will wipe out certain source markets and some customer segments – but it will recreate a richer tourism industry that is actually better for most once we are in the start-up phase again.
Group versus FIT
I have had many conversations around this topic. Most people think that group travel is a thing of the past. After all, it combines all the new evils: air travel, coaches, herds of people, queues, and a lack of social distancing, the word of 2020. Hence logic says, FIT self-drive is the travel of the future.
However, and very importantly, if we agree on the above new need of ‘peace of mind’ of the traumatised consumer, surely this is more easily achieved in a group and not as a self-drive.
Therefore, I think the answer is that group travel will have a resurgence, but with new rules and innovations. These revolve around maximum passenger numbers per vehicle size, routings into less populated areas, use of suppliers that are corona-fit, temporary reduction in community interaction (despite above-made point), and clever choice of dining venues to be more open air, to name a few. Let’s get cracking and invent group travel of the future.
I know that the above are just my opinions formed through hundreds of conversations with many individuals of our wild and wonderful industry. Please add to my ‘education’ through giving me your views and the reasons. In the meantime, keep healthy, fit, safe and, above all, with your head above water.
