Tourism and travel: what COVID-19 has taught us

rethink sustainability

Tourism and travel: what COVID-19 has taught us

It has been a year like no other for the travel industry. And all working with or within the industry, from receptionists in hotels to airline pilots, will surely hope that it is a year the likes of which we will not see again.

Tourism around the world has been devastated by the effects of the coronavirus. Well over £20bn is expected to be wiped from the UK's domestic industry1 due to the pandemic and the knock-on effects on movement. The effect is all too evident on the ground. The piazza on which the Duomo di Milano and the Galleria Vittorio Emanuele II are situated in Milan2 was once thronged with visitors but during the peak of infections was populated by little more than pigeons. Tiananmen Gate in Beijing meanwhile remained closed and the Angkor Wat Temple in Cambodia3 had a fraction of the number of visitors that would normally be expected, these are two more illustrations of high profile tourist destinations silenced by coronavirus.

Companies are coming up with innovative solutions to survive - from reimagining holidays to rethinking how to travel

But against this gloomy backdrop, many are seeing opportunities. Companies are coming up with innovative solutions to survive - from reimagining holidays to rethinking how to travel. At the same time, the plunging levels of emissions that were seen during lockdown as a result of fewer flights and car journeys have given a fresh opportunity to rebuild the industries in a more positive way.


Rebuilding for the better

The pandemic has given a unique opportunity to build the travel industry back better and for investors to benefit from this regrowth. While there had been a growing awareness around excess flying and its impact on emissions and the environment prior to COVID-19, and 2019 air passenger figures are not expected to recover until 2023, according to Barclays. Conditions around state bailouts have also leant towards the green agenda - Air France has been told to cut domestic flights when there are rail alternatives in exchange for a government loan

…plunging levels of emissions that were seen during lockdown…have given a fresh opportunity to rebuild the industries in a more positive way

 

Holidaying, on screen

While bike sales have seen a boost4 during the pandemic as people embrace fitness and are finding new means of transport to go about their daily business while also avoiding public transport due to the coronavirus risk, cycling holidays have been cancelled as international tourism has stalled. That is, unless you are prepared to holiday in front of a screen. The rise in virtual activities has surged in the wake of the lockdown and now it is possible to race through the centre of Bologna on your bike or run with a group using Zwift, an online multiplayer training app.

For those who want to holiday without having to exert themselves, the Faroe Islands is using virtual tours for visitors to see the landscapes of the remote North Atlantic islands

For those who want to holiday without having to exert themselves, the Faroe Islands is using virtual tours for visitors to see the landscapes of the remote North Atlantic islands. Locals wear cameras and respond to commands from people in their home, directing what they see. The experience is navigated through a free app with each person having two minutes of control over a guide during the afternoon sessions. It is not just on land as the guides may be on horses or kayaks. It is hoped that the initiative will give tourists a taste of the territory so that they might return in the future when restrictions have lifted.


Just pay for half

With 13% of GDP coming from tourism, Italy has been keen to get its travel industry back up and running as soon as  possible after the events earlier this year, when it became the first European country to be heavily hit by coronavirus. In order to encourage visitors to return, the authorities in Sicily offered to pay for half of the price of plane tickets, one third of hotel bills and give free entry for museums and archeological sites. Some €1bn was lost from the tourism industry in March and April so a €50m fund was set up to pay for the new measures. The move shows a country eager to revive its tourism industry, but critics will question whether the move is sustainable in the long term with the move towards greener agendas and more limited flights.

Some €1bn was lost from the [Italian] tourism industry in March and April so a €50m fund was set up…

In an attempt to secure its tourism industry, the Canary Islands5 has also launched a scheme giving free insurance for coronavirus-related incidents. Both Spanish and foreign visitors, who are staying in tourist accommodation, will have their medical expenses paid for as well as any extended stay needed due to quarantine.


Making air travel safer...and cleaner

The airline industry has been one of the worst hit as a result of the pandemic with thousands of jobs cuts already announced6. Virgin Atlantic has filed for bankruptcy protection from US creditors while Airbus has slowed the rate at which it makes aircraft7. Efforts to make air travel safer are central to getting people flying again. In Seattle, tech company Teague has come up with a device which fits onto the vents in a cabin, improving air flows and minimising the spread of germs. Named AirShield, the makers claim that it works to create an invisible barrier around passengers. It operates by containing the respiratory drops from one passenger in their own space, meaning that their neighbours will not have to breathe them. The device is still a prototype but the finished project will be one 3D-printed component that will be easy to install, according to the company.

There have also been concerted moves by the airline industry as whole to reduce its carbon footprint…

Other efforts to make flying safer have focused on using the middle seat in passenger rows as a separator. Transport tech company Universal Movement has come up with a design for a divider, which sits in the middle seat and separates the window and aisle seats, preferably made in the same material as the existing seats are. Key to the idea, according to the creators, is that the divider is not a clear screen, which makes it more comfortable for passengers.

There have also been concerted moves by the airline industry as whole8 to reduce its carbon footprint - Virgin has reduced the amount of beef, palm oil and soy served on flights while Airbus has tested designs which may reduce emissions by 20% through less aerodynamic drag. Furthermore, Emirates has also removed single-use plastics from its aircrafts and has set targets to reduce emissions, develop cleaner fuels and move towards airline electrification. Although a clear step in the right direction, many of the targets are reliant on carbon offsetting. The challenge with this is that we should be cutting carbon emissions not substituting what we emit by protecting forests or restoring natural ecosystems. 
 

MakingTourismWork_ArticleLOcom.jpg


Dine out in your room

The slow reopening of restaurants will not make up for the effect the coronavirus has had on it since the start of the year. One Swedish hotel has tried to come up with a solution to socially distanced meals by opening up its rooms for diners. Stadt in Lidkoping has opened up its rooms as private dining spaces, in effect meaning that instead of getting a table in a room, they get a room with a table in it. Between two and 12 diners can be accommodated in each room and the meal is priced at about £25 for two courses with a limit of two and a half hours per sitting.

Repurposing hotel rooms has resulted in other innovative solutions during the pandemic. In Amsterdam, Zoku reworked its lofts as home-working spaces so that people could get away from home for a daily fee. The rooms were equipped with a kitchen, wifi and office supplies and a room-service lunch was included.


Rebuilding for the better

This year has thrown up many unique situations. And we are in another one with the future of the travel industry. Under the Paris Agreement, greenhouse gases must fall by 7.6% every year until 2030. This is unfeasible if we go back to business as normal. Now we have the opportunity to reimagine travel and tourism in all of its forms. Many innovative businesses and governments are already testing out new ways to overcome the problems that face them. It is time for us to establish a new industry, which benefits both the environment and investors.

1 https://www.independent.co.uk/news/uk/politics/coronavirus-pandemic-uk-domestic-tourism-industry-a9521686.html
2 https://www.businessinsider.com/coronavirus-before-and-after-photos-show-europe-landmarks-empty-2020-3?r=US&IR=T#after-again-the-scene-is-emptier-and-people-are-wearing-masks-8
3 https://www.standard.co.uk/lifestyle/travel/coronavirus-tourism-before-and-after-a4383506.html
4 https://www.ft.com/content/701599ae-4d64-4128-a56a-2b836a492216
5 https://www.independent.co.uk/travel/news-and-advice/canary-islands-coronavirus-insurance-tourists-holidays-tenerife-lanzarote-a9656751.html
6 https://www.theguardian.com/business/2020/aug/07/thousands-of-ba-staff-to-find-out-if-they-will-lose-jobs-due-to-covid
7 https://www.theguardian.com/business/2020/jul/30/airbus-slows-plane-making-covid-19-loss-aircraft-orders
8 https://www.irishtimes.com/business/innovation/how-airlines-are-working-to-reduce-their-co2-one-olive-at-a-time-1.4187942

Important information

This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

Read more.