The Devastating Impact of Covid-19 on the Tourism Industry
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.
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.
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.
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.
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.
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.
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.
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:
