April 28, 2020 – Continuing his stimulating series look at travel in the post-corona era, Zoran Pejovic of Paradox Hospitality turns his attention to the burning question for many tourism businesses – to open or not to open?
I started writing about the post-coronavirus future of the travel industry back in mid-March, as countries throughout Europe went into lockdown, one by one. I have written on the importance of staying visible, maintaining the communication, protecting the team, building scenarios, protecting your cashflow, thinking long-term, rethinking your product, process as well as business model, and a number of other things. And then I stopped. The cacophony of information had gotten to me to the point that I thought the best thing to do is follow my own advice and take time to observe and to think.
In the meantime, the industry has contracted between 60 and 90%, and we in the travel and tourism industry are all hurting globally as never before. However, this global context should not prevent us from looking more carefully at local responses and local specific implications. We have gone down globally, almost simultaneously, but we surely will not be rising again globally and simultaneously.
A lot of friends and colleagues from the industry, from all over the world, have been asking me for advice whether or not to open their businesses, restaurants, cafes and hotels once the governments allow it – or to wait. Honestly, I do not know. I do not believe that there is one simple, straightforward and encompassing answer. What I do know is that opening in Portugal might mean something completely different than opening in Croatia or in Italy. In order to make this decision, you must look both inwards and outwards. I guess the most difficult point here will be to resist the peer pressure from the industry once your colleagues start opening or the guests start calling and inquiring. Also, there is the fear of missing out in case you decide to wait a bit longer. If you have done your scenario planning and crafted your cash flow predictions based on those scenarios, and have protected your team, you should be able to focus a bit more on understanding the outside factors that will drive this decision making. Besides the biggest questions that are on everyone’s mind that deal with the restoration of international travel and opening of the borders, I am going to list three factors that can help you inform that decision:
Country Reputation
Highly-prized Michelin starred restaurants as destinations, luxury boutique hotels as destinations will have to make way again for countries as destinations. People will first look to the country, its response to the coronavirus crisis, at least the one visible via media platforms, number of cases, strength of the countries health system, overall safety and security and the measure put in place for tourists and travellers. Then, within those countries they will look for places to stay, places to eat and so on. If you are dependent on international travellers, look to your partners and ask them how they and their guests perceive your country right now, safe or not. It is all about perception now, not so much about the actual situation. If your country has managed to get through the crisis without tarnishing its reputation, by luck or by good crisis management, the likelihood is that travellers will want to come to your territory. However, if it was luck that helped your country preserve its reputation, be aware that it can easily be lost. As they say, no amount of careful planning will replace dumb luck, however, that does not mean that planning is not paramount to long term success.
New Health & Safety Standards and Clarity of Instructions
This is a big one, or rather two big ones. Based on the instructions proposed by different governmental bodies in your respective countries, you will have to calculate the level of investment you will have to put forward in order to comply with the new standards. This might mean investing in the training of people, hiring specialists in hygiene and safety, implementing physical barriers, improving your HVAC systems, adding disinfectants all over the place and so on. However, you can make this calculation only and only if the instructions are clear, easy to understand and make sense. This is really paramount to your decision making. If you are going to open the business based on loosely defined, perhaps even contradicting instructions, either plan a line in your budget to pay for the fines and penalties or wait it out, until the instruction becomes clear and understandable.
Government Interventionism
While I personally don’t support major government interventionism that favours one industry over the other, or the model of subsidies, it is also important to recognize that these are extraordinary times in which businesses are not allowed to work and compete on the open market, based on quality and price. Hence, the reality is that many governments and tourism and travel bodies will be implementing different measures to save the travel industry, which account for about 10% of global GDP and accounts for 11% of the global workforce. These decisions are not global and unilateral, but country or region-specific. While the big companies will try to negotiate rescue packages directly with the governments, independent hoteliers, restaurant owners and other travel and tourism businesses will have to rely on the major government decisions. For example, we can read that the authorities of Sicily at the end of the pandemic will provide travellers with a 50% discount on tickets to the island. Decisions like these can help inform your own decision whether to open or not. However, you should not rely on these decisions, as they will be very temporary and might not even reach you due to the layers of bureaucracy involved in the process…
Good luck! We will all need it!
You can read more on this subject of post-coronavirus travel from Zoran here:
Travel Industry: Keep Communicating and Visibility
Build Scenarios! Be Present! Take Time to Think!
Post-Coronavirus Travel and Tourism: Some Predictions
Croatian Tourism 2020 and Coronavirus: Let’s Postpone the Season
Post-Corona Tourism Planning: Hope is Not a Good Business Strategy
Travel in the Post-Corona Era: Health and Safety
You can connect with Zoran Pejovic via LinkedIn.
