How has Hospitality and Tourism sectors been impacted by Covid-19 and what can we do to improve it?

We all are facing probably the worst crisis of our era, COVID-19, coronavirus, and as any periodo of our time we need to learn from it. I wanted to analyse and understand the current situation on one of most impacted industry, Tourism and Hospitality and for this I count with two experts on the sector, Stefano Potorti and Javier Navas-Migueloa.

Italian entrepreneur founder of various companies ranging from catering consultancy and agri-food promotion (Sagitter One), to training tourism abroad (Sagitter Training), real estate (Sagitter Estate) and the digital sector (Sierra Digital).

Always passionate about food and catering, he started working in London as a manager in the restaurant sector in 2003.

Stefano is also Vice President of the Italian Chamber of Commerce for the United Kingdom. Graduated in Economics at the University of Pisa, with a specialisation in international marketing, he then completed a specialist course in marketing and communication in the hospitality sector and human resource management in the tourism sector.

Javier Navas-Migueloa, from Madrid, Spain. He is currently leading the Hospitality, Travel & Leisure sector in everis UK since 2016 with special focus on the airline industry. Has been working in consulting since 2005. During his career has had the opportunity to work in other industries such as Auto, Retail, Banking, etc.

We have seen the industry sector is one of the most impacted for the coronavirus crisis, airlines that have shut down, Erasmus program cancelled, most retail forced to shut.

How has the industry, tourism, formative tourism, and hospitality sector been real impacted by the corona virus crisis?

Stefano: At this stage it’s still difficult to asses the impact of the Covid-19 on the industry as the emergency is not over. It is clear that nobody was ready for that and all the above sectors have already received an economic negative impact.

Javier: This pandemic situation, and specially the containment of it, has had an unprecedented impact on the industry. The standstill request or mandate to an estimated 4.5 billion people has had an immediate effect on all sectors, people not traveling, working from home, holidays cancellations, etc. Generating unseen before pictures like the ones of fleets of plains in the runways of different airports waiting patiently for the world to recover.
The airline industry, for example its virtually grounded with over 80% of the flights on the ground by early April.
The biggest problem might be the uncertainty of what it is to come. This situation is going to transform the way we travel, and the industry must prepare for this, either acting and leading that new ways of travel, or adapting quickly to it.

How is your company adapting to the COVID-19 situation and what is your opinion on remote working?

Stefano: I’m currently rethinking the business model as it’s not clear yet when and how students will start travelling again. The first step I’ve taken was to reduce costs immediately to be sure the business survives.

I’m restructuring some services and planning new ones. Also I’m in touch with other operators to share ideas and common issues.

Javier: Our company has reacted very quickly, in the UK for example, we were asked to stay at home a week before the official mandate from the government with the objective of protecting our core asset, which is our people.
Since we have the right tools, we have been able to adapt quickly and work from home, and we have also adapted to our clients and necessities, supporting them as much as possible to cope with these circumstances.
From our People team a big effort has been made to take the necessary actions and provide support to all employees, specially to those that have more difficulties.
As a company we are also our clients, proactively offering support, solutions, and assets that can not only help getting through the bad times, but also leading the way to the new future that we are facing.
It makes me very proud to see how everyone has reacted, providing flexibility, adjusting our homes and personal lives to this situation, and specially getting the recognition of our partners and clients as a company that is loyal and is trying to honestly help.

You know I am a passionate about digital transformation and digital evolution. I have seen schools teaching online with limited tools, big retails companies selling by phone, personal trainers providing live workouts on Instagram, clearly the majority of the world was not ready for a lockdown situation.

I think it is time to change, to improve, to see new business opportunities, to move to cloud services and Solutions as a Service, because, Could a Gym not offer an online subscription apart of the on-site one? Could not a retail sell online or provide live instructions on how a product works or is mounted reaching thousands of potential customers at time instead just one?  It will create new opportunities, business cases and more important companies will be more resilience from an economical point of view-

How do you think it will transform the current market? Will digital business transformation finally fully happen? Will we see a mass movement of companies offering Cloud Service or Solutions as a Services?

Stefano: I agree with you that digital transformation is the future and there is not way back. This experience has definitely given a boost to the digital world but it will take time for it to become an essential part of our daily life. Let’ not forget that right now people are forced to work or exercise from home but once the lockdown will be over I’m sure they will tent to go back to old habits. We should maximise this experience and rethink the way we live.

Javier: Is this the end of low-cost traveling? Not sure, but it will for sure change. As we mentioned, the travel industry has probably been the first to be majorly impacted, and it sadly looks like it will be one of the last ones to recover because of the nature of the pandemic, and the reaction of the world to it.

Many questions arise such as when will countries open their air space again for foreign travellers? what conditions we will need to meet to be able to fly? But also, when are we going to feel safe and comfortable to travel again? Etc.

IATA is currently estimating a loss twice as large as the one suffered during 2009 Global Financial Crisis, and around $314billion loss of passenger revenue compared to 2019.
The recovery will be seen earlier with domestic travel and later with international travels going back to a new normality.

But again, on the positive end it is a great opportunity to think, analyse and model the future and, why not, establish the foundation for a fully digital business transformation, which was already ongoing.

But the focus will initially be to make companies slimmer and more efficient and sustainable, since the economic impact and the recession we will face are going to be long and tough.

The transformation, recovery and survivor of the industry will be linked to the support and generosity of everyone, the companies that make it up, governments, the partners and suppliers that collaborate within but also with the costumer, which will be key in this recovery period.

Continuing talking about digitalisation, tourism and formative tourism, a part of the digitalisation we see it is happening in airlines, offering their services online, improving their booking systems and on boarding, it is mostly based on experiences, in theory, physical experiences, travel to a new country and learn their culture, to do a work experience or studying abroad giving you the possibility to meet people from different cultures, etc.

How do you think this will change, if it will? Could tourism and formative tourism be digitalised? could it be transformed it into for example a “cloud services”?

Stefano: Formative tourism can definitely became more digitalised even thought I believe that the human contact must remain part of the experience. Otherwise the risk is to live in a digital reality. Technology will help in many ways but I can’t see it replacing the physical experience at least in the short medium term. It might happen in the long term.

Javier: The digitalisation of the industry is a fact. With online booking, mobile apps evolution, and ancillaries and additional services offered through digital channels. From the customer point of view, it is true that the way we book a flight hasn’t evolve much. Departure, destination, date, we see the cost, and we book the flight. We have seen airlines trying to different things such as auctioning flights, search with a destination with a picture, etc., but with limited results.

Now, as you are implying, it is time to be brave and transform this situation into an opportunity to bring new alternatives to customers.
One interesting thing that is happening during the confinement period is the growth of online or digital travel and tourism, where many apps and websites that offer virtual visits to museums, cities, nature, safaris, etc, have seen a tremendous growth in visits and downloads, as people crave to be out, explore, learn and visit new places, living that experience a different way.

I also think it is important to mention that this digitalisation its not only for the customer, but also if no more, used internally to improve operations of the airlines. Training, engineering, MRO, for example are areas that are already using VR in their daily work, airports are improving their efficiency applying solutions like automatic boarder control and self/boarding, baggage control is being automatised and improve with digital means, etc.
This still has long ways to improve, unfortunately the recession that’s coming will delay this evolution, but it will happen.

During this period we have seen many governments acting,  applying measures to reduce the impact as much as possible, some of them right other they could have been better, but we cannot change the past.  Where we have control is over the present and the future.  What would you do to reactive the sector once all this finish?

Stefano: I believe that the government is strongly supporting the SME. I never seen similar financial support in the past. Once the emergency is over is essential to reinstate confidence into consumers as the only way forward is to relaunch the economy. It will take several months (somebody is saying a couple of years) but we will get there.

Javier: Difficult question, there is a big part that comes with the confidence of people to travel again. If people feel safe and they know that the actions have been taken to preserve their health we will travel again. Governments will play a pivotal role as they will decide when, where and how people will be able to travel again.

Finally, any tip you would like to give?

Stefano: Use this time to rethink your business model, your strategy and yourself. Things will be different and you must be ready for the new scenario. Positivity and resilience are key factors.

Javier: We need to be patient and generous, helping each other and understanding that this is going to be like a marathon, not a sprint.

As we can see the impact is deeper than we believed, but with so in my opinion a bigger opportunities. I think it is time to change our mindsets, invest in digital, not only by improving customer experience, but to restore the confidence of our customers, to reduce costs in operations and improve efficiency.

I would like to thank Javier Navas-Migueloa and Stefano Potorti for sharing their time as I well know how busy are their agenda nowadays.