The last number of weeks have been surreal for many of us Europeans. At the time of writing I am on the peak morning train from Kraków to Warsaw, counting 7 passengers including myself. Final destination today is Dublin with a charter flight put on by LOT Airlines, only the second such connection to Ireland since Poland, a country of 40 million people closed its airports to ‘normal’ traffic on March 14th. Poland is the fastest growing aviation market in Europe. But ‘is’ seemingly becomes ‘was’ within the space of three weeks, as we try to forecast what the new ‘normal’ might be ,even in four to eight weeks from now. No space is untouched by Covid-19, if you are reading this you will already know inside-out how it relates to your industry. As ordinary freedom of movement was one of the first to feel the heat, and travel and tourism is something most of us engage in a few times a year, I wanted to share a few thoughts and predictions on how things might look for this season, and potentially into 2021/22.
Air connectivity as we know it will be different
In normal circumstances, competition among airlines is cutthroat, with a pattern over the last several years of well-established players no longer being able to compete. In 2019 alone, Thomas Cook, WOW Air and Germania ceased operations. Flybe was on life support, with the outbreak proving insurmountable at the beginning of this month, ceasing operations and leaving a huge 80% gap in Belfast City Airport’s outbound traffic. Lufthansa group which includes Austrian Airlines, Swiss Intl. and Brussels Airlines says it may need state aid, though it will hopefully survive. Many other airlines are cutting capacity by 85% or more. Whatever about schools re-opening by X date, air travel is already not returning to normal in the short term. This will be a challenge for countries that rely heavily on tourism with the season about to begin. Ryanair is not expecting a full resumption of flights until June. This is likely based on best case ‘China scenario’ but Europe is understandably more fragmented in terms of its response and outcomes related to Covid-19. Reduced capacity will be a feature way beyond June 1st. To sum up the knock-on effect it will mean lower numbers of arriving tourists for those working in the tourism sector and reduced routes for the consumer to choose from.
Staycations will be a thing again
After the previous economic crash, consumers had less disposable income for overseas travel either through reduced wages or job losses. Secondly, and to take Ireland as an example, the government was in need of income for the exchequer. The irony to this article is that tourism can represent low hanging fruit in revenue generation. The other factor was a new sense of connection to the country and our culture, post celtic tiger era. This period saw clever and successful tourism initiatives like The Gathering and the Wild Atlantic Way, which gave further rise to Ireland’s Hidden Heartlands, Ireland’s Ancient East as well as the development of new countrywide greenways and more sophisticated food and drink sectors. That period will be remembered as when Ireland got its act together in overall tourism infrastructure and offering for foreign tourists and those that live in Ireland. We can likely expect a push on your newspaper, radio and tv ads to stick around this summer provided that freedom of movement gets back to some degree of normality.
To expand on disposable income…
Employment levels are unlikely to return to normal in the short term especially in the hospitality sector, the knock-on effect will be felt industrywide. A key point is that many people will have already booked flights and accommodation for the upcoming tourism season. They may now have experienced cancellations of same, either through their provider or by choice, as well as lost deposits or refunds which may take months to process. The 2020 travel budget for a large number of people will have already been spent or is now being redirected for some other means. Having said that, if you have some savings put away you can expect to take advantage of huge competition in the market.
Led by government tourism departments, you can expect all countries will be doing whatever it can to attract tourists if there is anything to be salvaged for the 2020 tourist season. Italy, Spain and France will have a tough time attracting foreign visitors. EU wide, a price war will mean reduced tax on hotels, restaurants, bars and cafes that can be passed onto the consumer. There will definitely be pressure from the airlines to reduce airport landing and parking fees which may mean cheaper tickets on the carriers that are strong enough to come out of this the other end, on whatever routes are still viable. Those operating ‘on the ground’ in the hospitality service sector will and should go to war with each other, with whatever tools at their disposal, as provided by national government or otherwise. Do you see yourself taking a cruise? Probably not right now, but the offer might be too good to resist in a few months.
Pent up demand
This one is the big unknown and it will be really interesting to see what materialises. How are you going to feel after being under isolation and practicing social distancing for the next number of weeks, or possibly even months? It will likely take its toll, but when these restrictions are eventually lifted, what is the plan? We could be talking early to mid-summer here and consumers are highly likely to want to let off some steam. Flying in the face of question marks around disposable income, we are in a situation where many are still being paid in full by their employers or through government supports, guaranteeing up to 80% of wages in UK or 70% in Ireland. We are in a pretty bizarre situation that feels very different to 2008. Helicopter money being distributed, along with mortgage holidays and rent freezes may mean that people come out the other side with extra cash on hand. For the next while there will be little else to spend it on a part from food and utilities. What does it mean for travel? Coming back to blowing off steam, people will want to get away from the house and may see life as being too short to put on hold that place that they have always wanted to see. To what extent a country has been most affected by Covid-19 will undoubtedly influence consumer decision. It is unfortunately unlikely that Spain or Italy will see large number of visitors for the foreseeable future. Eastern European city breaks may prove attractive as countries like Poland, Slovakia and Czech Republic were among the first to lock down their borders. Balkan beach destinations like Croatia or Montenegro will be seen as attractive due to relatively fewer cases of Covid-19. Airlines getting back on their feet quickly, with sensible connectivity will be important, when and if countries reopen their airports.
Who will get back travellin’ first?
On this article we wanted to share some thoughts running through our head, as the last few weeks for us as an independent travel operator have been a total rollercoaster, although we always see opportunities in the challenges because there always is. Apart from international tours at Global Village Tours, we also run tours in Ireland for the corporate and sports sector which as a market will probably take more of a hit in the short term. We occupy a unique place in the Irish consumer travel space, in that our tours are planned for people looking for an off the beaten path experience. Solo female travellers are our main customers, followed closely by the guys, and this has been a cool revelation for us since we first started back in 2015. As regard to who will get back to travel in the short term, it will likely be our customer grouping, the small percentage of the overall travel market of solo, couples and/or small groups and who have a high degree of ability to move fast and just enough disposable income to make bookings at short notice to places they have wanted to visit for some time. Full cruise liners and herds of tour buses you are not likely to see again too quickly.