Three ways online travel and tourism will change for good

In summer, thoughts usually turn to a holiday. South Africa has traditionally been a favourite of international tourists, particularly of those from Europe, but in this respect, like so many others, 2020 is different.

With the travel and tourism sector already reeling from the last four months of global lockdowns and the suspension of almost all travel, local and international, it’s hard to see how the travel and tourism sector will recover in the near- to mid-term.

The impact of COVID cannot be underestimated. This is by far the worst result for international tourism since 1950 and puts an abrupt end to a 10-year period of sustained growth since the 2009 financial crisis.

While the crisis continues to play out, we believe we will see the sector evolve and change significantly before we can anticipate a full recovery.

Domestic tourism will be the first to bounce back

Domestic travel and tourism, local business travel and budget leisure trips will be the first parts of the industry to recover. Research among global tourists shows that as many as 90% of those ready to travel want to start domestically and that safety concerns play an important role in deciding the next travel destination.

Domestic travel and tourism will be expected to substitute foreign tourism demand, at least for the time being.

Changing traveller demographics

Small groups of friends, families and budget travellers will be the first to resuming travel in the first wave after the crisis.

Fewer and smaller travel groups are anticipated as people plan to travel mainly with immediate family members. Group and guided-tour packages have dramatically declined in popularity: a McKinsey report shows that only 10% of travellers would be likely to take big group tours for their next trips. Sixty-eight per cent regard them as impossible even to consider.

Some suppliers see this as an opportunity to target affluent leisure travellers with so-called “high-roller” packages.

Acceleration of digitization and automation in the hospitality industry

Technology-driven hospitality automation will be crucial to the industry’s recovery plans.

With social distancing rules likely to remain even after lockdown restrictions are lifted, hotels, tour operators and transport companies will need to find ways to minimize contact between guests and staff. Contactless technology from online bookings and digital keys to taps with sensors will be a baseline for many businesses. Accommodation establishments will have to follow enhanced safety and hygiene protocols. The challenge will be how do we get automation and digitization at scale and at a cost that the industry and consumers can afford.

History is no guarantee of future success, but we know that international tourism has survived and grown over the last 20 years, surviving challenging world events such as the 9/11 attacks, the SARS outbreak and the 2008 financial crisis. Each time the industry was knocked back, growth eventually resumed an upward trajectory.

The young will go first. Travel will involve nearby destinations. Economy travel will recover more quickly. And outdoor and nature-related destinations will be more popular than congested cities. Like many other sectors and industries, travel too will largely be local and regional in the near future.

This is a region where start-ups in travel and tech have thrived. Not all of these will survive this crisis - that is the nature of early-stage investing. But start-ups have the advantage over established businesses of being small enough and nimble enough to adapt and change.

Now is the time to look beyond the traditional travel tech sectors and seize the opportunities that more regional travel, changing demographics and younger travellers will bring. This could well be the beginning of new technology, start-ups and sectors that don't exist yet.