A few months ago, business was as usual for companies and startups in the travel and hospitality space. Billions of trips were being undertaken yearly, with the industry accounting for 10.4 percent of global Gross Domestic Product (GDP) and 10 percent of global employment.
The growth of the space has been steady for the last few years. In fact the United Nations World Tourism Organization predicted further growth of between 3% – 4% in international tourist arrivals for 2020.
Fast-forward to few months later, precisely now, the COVID-19 pandemic has humbled the global economy. Among the worst-hit sectors include the travel and hospitality space. Globally, international flights have been disrupted as many counties have rolled out lockdown protocols. In some other heavily affected countries like Nigeria, domestic flights have also been grounded.
This is as a result of the pandemic which has brought businesses in this space to a standstill. Airlines, hotels and industry players have admitted a tough season for business, recording massive losses. In many places, employees are being laid off en masse as companies can no longer pay their salaries, while some others are issuing pay cuts/unpaid leaves to employees.
Share prices of major airlines, Hotels and tourism companies have been dropping several percentage points.
Many experts are already saying 2020 will go down as the worst in modern history for hotels and travel businesses around the world. Numbers are also coming in. The World Travel and Tourism Council has projected a global loss of 75 million jobs and $2.1 trillion in revenue, should the pandemic continue.
The International Air Transport Association (IATA) has estimated that the travel industry revenue could fall $252 billion (44%) year-over-year. The African space is predicted to lose about $4 billion or 32% from its 2019 revenue, while about 2 million jobs will be lost.
In Nigeria, IATA has also projected a disruption that might result in $170 million (62bn) loss in revenue for carriers. Should the pandemic stretch on for long, the revenue loss could rise to about $434 million (N167 billion).
With no one able to place a date for business to get back to normal globally, regulators are calling on various governments to help their businesses with bailout funds. In the US, airlines and hotels are beneficiaries of the $2 trillion stimulus payment passed by the Congress.
In Nigeria, the Central Bank of Nigeria (CBN) has also announced some measures to alleviate the impact of the pandemic on the nation’s economy. This includes a N1.1trn intervention fund to support critical sectors of the economy. Hopefully, the aviation and hospitality sectors are also being considered for this loan.
Beyond the traditional players in this space, the government should also consider including online travel agencies and other players in the digital travel and hospitality sector, like Hotels.ng, Wakanow, Konga Travel, in its plans. This is as they are also facing a similar downturn in business, the same as their traditional partners.