Australia’s travel and tourism industry has been undoubtedly one of the hardest-hit sectors by the current pandemic. The complete absence of demand resulting from border-closures, isolation measures and travel restrictions is gravely impacting a community, which is still reeling from the most devastating bushfire season in recent history. The lack of tourism also has direct negative impacts on Australia’s retail sector. In 2017-18, it was estimated that inbound tourists from Asian markets including China accounted for up to 30% of luxury retail revenue in Australia.
However, as of the last week or so, we’re seeing the first glimpses of light emerging at the end of the tunnel. The federal government is urging Australians to start ‘dreaming’ about their next domestic holiday. Meanwhile, our states and territories are starting to relax their COVID19 restrictions. Despite having been subject to the most stringent measures in Australia, Western Australia’s tourism industry is particularly optimistic.
Over 2/3rds of WA tourism companies are expressing confidence that their business will outlast the pandemic. Notably, state and federal stimulus relief and support measures are being praised for their role in softening the blow.
According to Bain, intra-Asia travels are forecast to start returning as early as Q4, due to the regions’ comparative head-start on the emergency-response timeline. However, when we speak of ‘road to recovery’, it is important to recognise that this is only half of the equation. Equally important now is the task of adapting to a fundamentally shifted and increasingly digitised playing field.
For businesses reliant on tourism, several new truths are emerging:
As per usual, we look to China for insight into what the future may hold. Their comparatively advanced eCommerce, livestreaming and Online Travel Agency (OTA) ecosystems provide a strong reference point from which Australian businesses can learn and adapt.
Passions of Paradise, a Cairns-based aqua-tourism company, is leveraging the lull in human traffic to rebuild Australia’s Great Barrier Reef. Their Coral Nurture Program has seen divers plant over 1,000 pieces of coral since the lockdown began.
Airbnb China is rolling out almost US$10 million of COVID19 support initiatives to support affected businesses. Their ‘Rest Assured’ stays uphold strict sanitization standards. Meanwhile, their early payout program eases cash-flow pressures through enabling payments up to two months in advance. Other tourism companies are following suit. Notably, Lokalocal’s Online Experiences portal connects would-be travelers to unique cuisine, cooking, and cultural experiences.
The report, tailored for cultural institutions, recommends a number of integral tools for the new world. These include online collections, virtual exhibitions, WeChat Official Accounts and Mini-Programs, cross-border eCommerce, livestreaming and online classes/training seminars.
The New York Met is now active on TikTok, Pinduoduo as well as Alibaba’s Tmall. Their video and livestreaming initiatives are being leveraged to build awareness and engagement for their exhibitions, both online and offline. Meanwhile, embracing eCommerce is enabling the museum to offset their offline losses. In China, this trend has been booming for several months now. People are increasingly tuning into increasingly digitised and ‘Imaginary museums’ hosting virtual performances and exhibitions.
The new SATV platform brings South Australia’s Tourism industry to your living room. The platform works as a content and broadcasting hub; providing users with virtual access to distinctly local vineyards, musical performances, cooking seminars and much more. Importantly, it also enables users to support local industries through its’ eCommerce features.
Meituan’s ‘Tour via Livestream’ features saw users take tour Hangzhou’s West Lake, Zhangjiajie National Forest Park, Wuhan’s Yellow Crane Tower and many more. Similarly, 350,000 people tuned into Pinduoduo’s seven-hour live virtual tour of Hunan’s Ancient towns over Labour Day. Meanwhile, Little Red Book has rolled out Enterprise Accounts for Travel partners such as CTrip, Tujia and Meituan Homestay.
Currently operational in North America, shoppers can already search their local areas for over one million Shopify merchants. The platform is free for all users and merchants, does not support paid-ranking and provides merchants with access to customer data. The move comes as Amazon faces growing criticism for their growing market domination, withholding customer data from merchants, and leveraging said data to launch competing private-label products.
Across the world, restaurants and venues are adopting new layouts with diners spaced further apart, and embracing digital orders, payments and deliveries. Temperature checks, gloves, masks, hand sanitisation protocols and individually wrapped utensils are becoming commonplace. As shared plates and buffets take a back seat, venues will likely adopt automation technologies and robots to minimise costs, human contact and boost efficiencies. Some technologies posed for growth include digital concierges, AI-powered mobile check-ins and self-ordering platforms.
Health and hygiene standards are now vital evaluation criteria for prospective travellers. In response, Hilton has unveiled new hygiene measures under their ‘CleanStay’ Program. The initiative limits guest numbers (notably in fitness centers), de-clutters amenities to minimise human traffic and ensures that rooms are sealed after being cleaned.
Simpliflying has released a comprehensive report summarising the key changes to commercial airlines. Passengers can expect new procedures across the board. Some of these changes include ‘touchless’ check-in kiosks and cabins, in-flight janitors and ‘sanitagged’ bag procedures.
In anticipation of the China’s Labour day holiday last weekend, Airfare prices dropped 30% relative to 2019. Similarly, the lifting of China’s quarantine restrictions in April saw a surge in scheduled airline capacity, as airlines dropped prices across the board – some to as little as US$4.
When China went into lockdown, OTA’s were swift to adopt contingency measures. These included guarantees for order cancellations (i.e. hotels, flights etc.), which were counterbalanced with commission reductions, loans and even fee-exemptions for their suppliers (i.e. hotels, airlines etc.) The support is coming at a cost though. For example, Trip.com saw platform usage plunge to less than 20% of its previous year volume. Currently, they are seeking a loan up to $1.2 billion to offset their COVID19 losses.
Airbnb and a growing number of airlines are waiving cancellation charges for COVID19-affected customers. Singapore Airlines is extending the ‘elite status’ expiration dates for frequent-flyers by a year. Meanwhile, Cathay Pacific is rewarding their elite members with extra points. QANTAS is yet to announce how they will address the dilemmas facing their Frequent Flyer Program.
By start contrast, the ACCC is reviewing over 6,000 complaints made regarding Flight Centre’s treatment of cancellations. Threatened with legal action from the consumer watchdog, the agency this week announced they would be waiving their $300 flight cancellation fees. With sales down 95% in April, Flight Centre are closing over 50% of their retail outlets since the outbreak. When the world eventually emerges from the pandemic, it is likely that OTAs will play a much greater role in the global tourism sector.
According to the Australian Tourism Industry council, the domestic travel market comprises roughly 70% of the total industry. Intuitively, Government initiatives are likely to support and incentivise domestic tourism initially. Following this, New Zealand is likely to be the first overseas destination and market to open up to Australia, in a partnership dubbed the ‘trans-Tasman bubble’. NZ is consistently amongst Australia’s top two inbound markets.
The Chinese government is subsidising inbound and outbound international flights until June 30th. They are also extending flight hours and implementing 24-hour channels to support customs clearance in major cities. Meanwhile, the Australian government is supporting the tourism industry through a variety of fiscal and support schemes. These are tailored to support businesses, individuals and households as well as the cultural and creative sectors. There is also talk of a consumer-level stimulus to incentivise travel consumption.
Unable to travel and shop, many smaller Daigou traders are going broke. Over the past decade, Daigou have played a foundational role in the supplying and building western brands for the China market. Their limited capacity to conduct business is a likely factor behind the current surge in demand for cross-border eCommerce. Health and fitness products in particular are in high demand. Last month, it was reported that Tmall Global has stockpiled six million cans of imported milk powder, following an 80% YOY rise in demand over March.
A recent Dragon Tail Interactive survey found that half of the 89% of Chinese tourists who cancelled/delayed their plans still intend to travel once the crisis subsides. When China’s quarantine measures were lifted in early April, Trip.com saw a 60% rise in hotel reservations and a 50% surge in transport bookings. Similarly, hotel bookings on Fliggy shot up 60%, while train and hotel bookings rose 30%. Notably, 58% of these were short-notice bookings, up from 38% in early January. Several tourist destinations were completely swamped by tourists – notably Huangshan’s Yellow Mountain.
The trend continued over last weekend’s Labour Day long weekend, which was described as a ‘mini-peak season’. An estimated 43 million travellers toured China and spending an estimated USD$1.1 billion
China’s FIT market is poised for a faster rebound once the current pandemic is under control. Reports from 2019 indicated that more than 50% of Chinese travellers favour independent travel over organized group tours. On top of being currently banned by China’s government, group tours also entail greater planning and coordination for travel companies and are generally more favoured by older demographics; deemed less likely to travel.
Some reports estimate that 43% of FITs book their trips within two weeks of departure. These tourists are generally younger, tech-savvy, globally conscious but extremely fragmented in terms of wants, needs and behaviours. Notably, women are the driving force behind FIT: comprising an estimated 62% of the market.