Exclusive Feature: At the end of 2019 an outbreak of a disease now known as Corona virus or COVID-19 occurred in the city of Wuhan, it is not my place to say what are the sources of this disease and the reason for its outbreak.

So we will leave this to the scientists but what's important to understand today, around 4 months after the initial outbreak of the disease in China, is that the world has changed and probably also the future of mankind has changed.

We can already say that the Corona virus has changed and will change the face of the global tourism industry which will not be the same as it was in 2019 and before it.

As of today, the end of March 2020, a most of the world’s largest airline companies have already partially or completely shut down their activity. The IATA estimates that the impact on the global airline industry in the year 2020 will be a projected loss of 252 billion USD!

Over 2 billion people are either in quarantine or some sort of home curfew (just India alone has a population of over billion people)

The tourism industry is the largest employer in the world and it holds around 10% of the global work force. According to recent report from UNWTO (United Nations World Tourism Organization), around 50 million workers in the global tourism industry are currently unemployed.

The interior boarders in Europe between most EU members have been closed. Many countries around the world have blocked their aerial and land boarders for international means of transportation.

A crisis of this magnitude in global tourism is unheard of.

Global sport, entertainment and culture events have been postponed: the Japan Olympics, the 2020 UEFA Euro, the Eurovision in The Netherlands. Also, right now it is unclear if the 2020 Expo exhibition will commence at the scheduled October 2020 date in Dubai.

Nassim Nicholas Taleb’s “Black Swan” theory revolves around: “An extremely rare event with severe consequences. It cannot be predicted beforehand, though many claim it should be predictable after the fact”. The Corona virus is not another singular “Black Swan” like the fall of the twin towers on 9/11 or the crash of the stock market in 1987 and 1998; what we. Have before us is a new scenario- a flock of “Black Swans”.

At the times of this article, scientists around the world are working on developing a vaccine to the virus. Optimistic predictions are talking about a time period of 12 months until a vaccine is found. More cautious predictions say it will take 18-24 months. The question that should be asked is: what is going to happen until this vaccine is found?

In all of my years in the tourism industry, (lodging, travel companies, airline industry) 35 years did not prepare me to the day where the Israeli and global tourism industries will be in the shape they are now and that is why it is very difficult for me to assess the long term effects of the outbreak of the disease. A significant portion of my assessments has to with the spread of the disease, it’s continuation and the world’s attempts at “straightening the curve”.

With all of this said, I would like to present you with my predictions and time will tell whether I was right or wrong. I will be focusing on several key issues:

• The era of the great global tourism – 1.4 billion tourists around the world during 2019 out of which around 550 million in Europe has halted and probably will cease to exist as we knew it

• High-end tourism will suffer a critical blow and will need to adjust itself to a more “humble” world

• The expanse budget for tourism with citizens of developed countries will decrease

• We will see a dramatic increase in merger and acquisitions activities between tourism, airlines, lodging, cruise companies around the world

• The experimental technology currently being used to service and bring people in quarantine together will replace human workforce. We will see much more robots that will occupy service positions in hotels

• Old, global lodging brands will clear the stage for newer brands which will be more customized to local markets and geographical regions.

The era of the great global tourism – 1.4 billion tourists around the world during 2019 out of which around 550 million in Europe has halted and probably will cease to exist as we knew it.

High-end tourism will suffer a critical blow and will need to adjust itself to a more “humble” world

Since the early 60’s of the last century with the entrance of the big, fast jet airplanes into the airline industry, the world has become a smaller place. Destinations that were considered exotic destinations, only available for the wealthier people of the world have become very accessible in a short amount of time. Destinations like The Republic of Seychelles, The Maldives, Mauritius, New-Zealand, Australia, Hawaii and Fiji.

Together with the rise of new economic powerhouses with emphasis on the BRIC countries and the “Small tigers” of Asia. Available money, free time and faster means of transportation have made the tourism in the world into a huge industry. All of these processes went hand in hand with the removal of many regulatory limitations and visas that were required by many countries in the world.

The Corona virus has stopped all of this!

I estimate that many airlines will need to minimize their activities, merge into larger airline companies or just close down.

Many countries that were badly hurt financially will encourage their citizens to vacation within their own country. The Spaniards in Spain, the Italians in Italy, the French in France and yes, the Germans in Germany. The available income of many of the world’s population has taken a deep dive. The wealthiest generation in the world, the “Baby Boomers” which is mostly retired and has consumed vacations in large quantities will now have to minimize its expanses on vacations due to the global damage the stock markets and pension funds have sustained.

I feel that psychology also has a great significance. The virus has created a global trauma. Tens of millions of the tourists that were roaming the world the eve of the outbreak began had to stop their travels. Some of them were actually deported from the countries in which they were staying. These are memories that will not go away anytime soon. People would rather go on a vacation in a familiar environment, not far from where they live. The prime minister of England cited in one of his speeches the British saying “My home is my castle” which will take on a new meaning in the post-Corona days.

China which fueled the global tourism industry with 148 million Chinese tourists in 2019 will instruct its citizens to minimize their travels to far countries and will encourage tourism within China, to Hong-Kong and Macao in order to stabilize the tourism industry which is so crucial to these territories and economies.

We will see a dramatic increase in Mergers and Acquisitions between tourism companies around the world

“A crisis is an opportunity riding the dangerous wind” a Chinese proverb

On one hand, a crisis of this scope and scale is a disaster to medium and small companies, but on the other hand this makes for a huge opportunity for large companies with reserves and access to credit. We now witness big airline groups asking for financial aid from different governments. The governments usually assist the large companies and leave behind the medium and small ones. This is a matter of prioritization and lack of funds.

Germany will never let Lufthansa go under as the US will not let Delta or United Airlines to collapse. This is the name of the game: Evolution. The big and the strong survive!

One can estimate with a great deal of confidence that this is also true in regard to big global lodging groups like Marriott, Hilton and Wyndham.

We saw this back in 1998 when the US federal government was called in to help the American automobile industry and saved GM, Ford and Chrysler from a guaranteed bankruptcy.

It is as simple as that: the USA will protect Boeing and the EU will protect Airbus.

It is also possible that in the airline industry, local flagship companies will look to bring in low cost companies that will be bought and merged into the larger companies.
Examples that I can think of: The Greek Aegean Airlines, the Polish Lot, Royal Jordanian, Ethiopian, the South African SAA company , Alitalia and the list goes on.

In the hotel chains I can think of local chains that most of you probably don’t know: Maritim Hotels, Motel One, Steigenberger, Premiere inn, EASY HOTELS, GLH HOTELS, TRAVELODGE.

The experimental technology currently being used to service and bring people in quarantine together will replace human workforce. We will see much more robots that will occupy service positions in hotels.

The global tourism industry, with an emphasis on lodging and Cruises, are industries with abundant manpower. This manpower is not of the highest level but rather in simpler professions such as: housekeeping, waitering and front desk.

I estimate that the technology which is being used today to help isolated people communicate with their doctors from afar will be adopted and converted into use in reception tables in hotels. AI programs with high language skills will be used to answer visitors’ questions. Robots that are being used to deliver food and take samples of Corona patients will be converted to delivering food to the people staying in hotel rooms and will make room service personal obsolete. The cleaning of some hospital rooms of Corona patients in Korea and Japan is being done using robots and it seems that housekeeping in hotels will also be done by robots.

Old, global lodging brands will clear the stage for newer brands which will be more costumed to the local markets and areas.

When this crisis will end it will make the tourist of the world consume in a more moderate rate. The luxury hotels of the highest levels will continue to exist. The ultra-wealthy one percent tourist will continue to fly in private jets, stay at the 4 seasons, Ritz Carlton or Mandarin Oriental. However, in contrast, the global business tourism which constitutes as the base of large lodging brands like Hilton, Marriott, Sheraton and Radisson, will change.

I believe that in a post-Corona world there will be far less business travels: less conventions, less large scale exhibits, less international seminars. These are key segments for many of the international brands. They will have to find new business segment.

In this “new world”, the advantages international brands had will be shrunk down. This is a phenomenon that already started about a decade ago with the big penetration of boutique, lifestyle hotels to the global lodging industry. The “Millennials” prefer the local individual “No Brand” brands with their connections to the specific area in which they operate over the sense of detachment that they get from the international brands.

Local and not Global

In conclusion,

We are standing on the threshold of a new era with everything that has to do with global tourism and lodging.

I will not say if this is for the better or for the worse but what is certain is that it will be different from everything we knew up until the outbreak of the Corona virus.

“A lot of people resist transition and therefore never allow themselves to enjoy who they are. Embrace the change, no matter what it is; once you do, you can learn about the new world you're in and take advantage of it.”
Nikki Giovanni – American poet

Joseph Fischer is the CEO of Vision Hospitality & Travel - An international lodging & hospitality consulting firm. He is a veteran hotelier with over 30 years of extensive management experience in the global lodging Industry.

A strategic “out-of-the-box” thinker, visionary, with plenty of tangible and ready-to-be-implemented ideas. Joseph is a frequent contributing writer on 4Hoteliers.com global new portal.

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