The Devastating Impact of Covid-19 on the Tourism Industry

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In July 2021, Bookmundi conducted an online survey that looks into Covid-19's devastating impact on the tour industry, and more specifically, the package tour industry. More than 1,000 tour operators from across the world participated. From the beginning, we knew the tourism industry was hard hit, but we were still shocked to learn about the magnitude of the blow. A blow, that still continues to revage the tour industry at the time of writing this article

Among the tour operators who participated in the survey, over 90 percent receive more foreign travelers than domestic, which means that they are also the ones worst hit by the pandemic. As the survey revealed, 74 percent reported a staggering decline in revenue of more than 75 percent during the pandemic. Even among the remaining 25 percent, close to 20 percent reported a revenue loss of between 50 to 75 percent.

Customers that tour operators receive most
90 percent of tour operators who participated in the survey receive more international travelers than domestic.

 

 

Decline in tour profitability due to Covid-19 pandemic
Over 70 percent tour operators have seen their revenue decrease by more than 75 percent due to Covid-19.

The story does not end there. In addition to the loss that they have suffered due to a sudden decline in tourist numbers, tour operators have also been forced to sell tours at a lesser profit than before, with over 62 percent saying that the profitability of their tours have shrunk since the start of the pandemic.

Nearly a quarter of tour operators reached out by the survey said that the profit margins for the tours they have managed to sell have decreased by more than 30 percent, while 27 percent of the operators found that their profit margins have fallen between 10 to 20 percent. Similarly, nearly 90 percent of tour operators from around the world said that Covid-19 has affected their business for 12 months or more so far. In short, for period of more than 12 months nearly 75% of the tour operators have lost 75% or more of their revenue, and their profit margins have even tumbled for the few remaining tours that they have managed to sell!

All this despite the fact that over 90 percent tour operators have implemented flexible booking policies to retain existing bookings and encourage more travelers to book their tours.

Tour operators launching  flexible booking policies due to pandemic
Over 90 percent tour operators have implemented flexible booking policies to encourage more bookings.

 

 

Tour profitability after the pandemic started
Over 62 percent tour operators said that the profitability of their tours have shrunk since the pandemic started.

 

 

Change in tour profitability due to Covid-19 pandemic
Over 65 percent tour operators said that the pandemic has affected the profitability of their tours by 10 percent or more.

In order to curb their losses and keep their businesses afloat, tour operators have been forced to take some drastic measures, including staff termination. More than 60 percent tour operators reached out by the survey have terminated over 50 percent of their staff during the Covid-19 pandemic, while more than 30 percent have cut down their staff size by over 75 percent. 

Tour operators forced to terminate staff due to Covid-19 pandemic
Around 70 percent tour operators said that they were forced to cut down their staff size.

 Adding to the despair, a majority of tour operators do not think that their business will bounce back to normal any time soon. Over 40 percent of operators contacted during the survey said that they expected their business to get back to pre-pandemic levels in 2022, while nearly a quarter of the respondents think it will only happen in 2023. Since the tourism industry does not seem to be getting back on track anytime soon, over 65 percent tour operators are already pursuing opportunities outside of the travel industry.  

Expected time frame when tourism industry will rebound
Over 40 percent tour operators said that they expected their business to bounce to pre-pandemic levels in 2022.

 

 

Tour operators looking for business opportunities outside travel industry
Over 65 percent tour operators are already pursuing opportunities outside of the travel industry due to the pandemic.

The COVID-19 survey results reveal more than just shrinking revenues, dwindling tour operator profits and terminated staff. In fact, the pandemic might have altered the way people travel. While group tours were extremely popular among travelers before the virus swept through the world, more travellers seem to be opting for private tours now. Over 70 percent of tour operators contacted have said that most requests as well as bookings they receive now are for private tours.

Boom in private tours due to Covid-19 pandemic
Private tours demand increase due to Covid-19 pandemic

The Covid-19 pandemic has led to a surge in demand for private tours which the above graph at the top reveals, while the bottom graph above, shows the tour operators' normal tour type offerings. 

Fortunately, not everything is doom and gloom. An overwhelming sense of optimism for the future of the travel industry prevails if we are to account for the fact that more than 61 percent of tour operators think that the pandemic, despite the destruction it has wrought, has also lead to some positive impact on their business. One example is the way it has fostered innovation and creativity among those involved in the travel and tour industry. Improved tours and services tops the list of initiatives taken, followed by new marketing strategies and technical upgrades. 

Innovations introduced by tour operators during pandemic
 Improved tours and services leads the pack when it comes to changes implemented by tour operators.

Surprisingly, green initiatives is close on the heels of these three innovations, with over 62 percent of the tour operators having implemented some form of climate-friendly initiatives for their tours and services. The most popular step taken to address the issue of climate change is planting trees and conserving forests, followed by prohibiting single-use plastic and promoting eco-friendly products. The reason for green initiatives generating so much interest could be down to the fact that 40 percent of tour operators contacted have been affected by climate change.     

In addition to this, nearly 40 percent of the tour operators have utilized the break offered by the pandemic to carry out different CSR-related initiatives. According to the survey, over 55 percent tour operators stated that they might not have implemented such initiatives had it not been for the pandemic. 

Climate change's impact on travel industry
Forty percent of tour operators contacted by the survey have been affected by climate change.

 

 

Travel industry's position on green initiatives during Covid-19 pandemic
Over 60 percent tour operators have implemented some form of green initiatives.

 

 

Covid 19 contibution to Green initiatives and climate change
Over 50 percent tour operators agree that climate change did contribute to their decision to launch green initiatives.

The pandemic has wreaked havoc globally, taking millions of lives in its wake. It has exposed our worst vulnerabilities and forced many to face their worst fears. The tour industry is probably one of the hardest hit industries and despite of this, many tour operators have taken this as an opportunity to improve their business; built better tours and implement climate friendly initiatives to combat climate change along with the implementation of various CSR initiatives. Thus, while the global tour industry is still going through a very tough period at the time of publishing this article, there seems to be light at the end of the tunnel. 

Check out other survey results below: 

Revenue loss during worst months of Covid-19 pandemic
During the worst months of the Covid-19 pandemic, over 80 percent tour operators lost 75 percent or more in revenue.

 

 

Current revenue percentage compared to pre pandemic numbers
Nearly 80 percent tour operators still receive less than 25 percent of their pre-pandemic revenue.

 

 

Covid 19 pandemic's positive impact on travel business
Over 61 percent tour operators think that the pandemic has had a positive impact on their business.

   

 

Tour operators' position on introducing CSR initiatives
 Nearly 40 percent tour operators utilized the break offered by Covid-19 pandemic to implement CSR (social) initiatives.

 

 

Covid-19 contribution to CSR social initiatives
Of the tour operators who implemented CSR (social) initiatives, over 55 percent might not have implemented them had it not been for Covid-19.

 

 

Tour operators following Covid 19 pandemic health and hygine protocol
Almost all tour operators contacted during the survey have implemented a Covid-19 health and hygine protocol.

 

 

Destinations where tour businesses operate the most
Nearly 70 percent tour operators operate in domestic destinations.

 

 

Type of tours that most tour operators sell
Around 75 percent tour operators worldwide mainly sell multi-day tours.

 

 

Climate change issues faced by tour operators
Around 36 percent tour operators face the issue of decreasing wildlife.

 

 

Innovations introduced by tour operators during Covid-19 pandemic
Covid-19 offered tour operators a chance to introduce various innovations.

 

 

 

Published by Thomas Bech, updated on October 13, 2021
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