The travel industry will need to think far outside of its usual box in the future and work with partners and rivals in fundamentally different ways, says a new report by the influential McKinsey consultancy.
The role of governments and regional organisations will also be forced to come to the fore if the globe is to get back to the US$9 trillion tourism economy that it had pre-pandemic.
The outlook in the numbers is gloomy: the events of this year will most likely trigger a 60% to 80% plunge in tourist arrivals to destinations around the world, and spending is not likely to increase to 2019 levels again for another four years.
From a human perspective, some 120 million jobs across travel, tourism and hospitality are at risk.
This catastrophic collapse of one of the world's largest and most important, diverse and dynamic industries is going to require rebuilding both at micro and macro levels.
MicKinsey's report argues that four actions are required to support the industry's programme:
- Public-private "tourism nerve centres" to oversee coordination of recovery efforts.
- New financing mechanisms.
- Transparent and consistent communications on recovery protocols (health, reopenings, etc.).
- Digital and analytical transformation.
These proposals are not to be put into play in isolation but through a coordinated response from both industry and states, financially and logistically – an idea that goes beyond the airline bailouts and stimulus packages that have so far been introduced in a piecemeal fashion in different markets and helping a mostly random array of brands.
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Two, in particular, are noteworthy for the collaborative and revolutionary way in which they could be introduced and maintained.
McKinsey proposes that hotels, for example (although the same could be applied to attractions and other elements of the destination industry), become part of a "revenue-pooling" structure.
This action sees hotels given incentives to become part of collectives whereby revenues and losses are combined while they operate at reduced capacity.
"Instead of having all hotels operating at 20 to 40% occupancy, a subset of hotels could operate at a higher occupancy rate and share the revenue with the remainder," the report argues. "This would allow hotels to optimise variable costs and reduce the need for government stimulus."
How such a scheme would play out in the competitive world of digital distribution, where hotel brands compete with one another and, often, their online travel agency partners, is unclear.
But the idea is to allow properties during low-capacity periods, when others are taking in guests, to use state funds to invest in their properties and improve the overall attractiveness of a destination.
The use of data in the industry (remember "Big Data" a few years back?) in the recovery is not something that should surprise many.
But a specific application of it is unusual and would've been unheard of at scale just six months ago.
McKinsey points to Singapore and Australia as examples of where data has been used in a collaborative way to help channel and manage visitors to destinations.
The Tourism Exchange Australian platform "acts as a matchmaker" and connects suppliers with distributors and intermediaries to create packages that are aimed at different segments.
This works at a brand level, in distribution and at the top of the funnel during the inspiration phase of travel search, allowing states, countries and entire regions in the case of the European Union to woo tourists to areas where they might be needed more than others during a particular period in time.
"The tourism sector needs to undergo an analytics transformation to enable the coordination of marketing budgets, sector promotions and calendars of events, and to ensure that products are marketed to the right population segment at the right time," McKinsey says.
"Governments have an opportunity to reimagine their roles in providing data infrastructure and capabilities to the tourism sector, and to investigate new and innovative operating models."
Singapore's Tourism Analytics Network is already doing this, providing tourism businesses arrival data, passenger profiling, spend and revenue details and feedback from visitors.
McKinsey is convinced that such intervention from states, at scale, will give the industry the "opportunity to reimagine tourism operations."
Governments or regional organisations will be well-positioned to oversee these programmes and, it says, steer tourism "safely into the next normal."
It is perhaps difficult to foresee an endeavour being possible given the competitive climate in which the industry usually operates, where the role of the state is typically (and simply) to bankroll the destination marketing efforts of a destination or country.
Supply of product is probably not going to be a problem, but determining demand will far more difficult to forecast, especially during intermittent lockdowns as infection rates rise and fall in different countries.
But cooperation could be the only mechanism that works during a recovery period that has never been required in the history of the industry.