This morning I was reading the financial news and an article called “Worldwide tourism collapses” got my attention. Unpredictable virus consequences demolished Tourism and Hospitality Industries. In March, number of international tourists dropped by 57% representing 67 million people less and the revenue generated fell down by $80 billion. Forecast for the end of the year is even worst with a potential decline of $1200 billion impacting 120 million employees worldwide. For Europe, in March only, we detected a drop of 22 million inbound travellers.
And what about France? In 2018 the country was welcoming more than 89 million foreigners. This activity creates over 56 billion of revenue, 8% of GDP and 2 million of direct and indirect positions. It is a dramatic news for the leading tourist destination that France has become.
What will be the outcome of such situation in the second half of the year? Today various scenarios are confronted with low, medium and strong recovery according to segments and travellers’ profiles. All hotels are going to be affected, initially I was thinking that the decline will be around 25% to 30%, I was wrong. Regression will be even fiercer, from 45% to +60%, because restraint measures are maintained in some areas and hotels will open in June only in others.
Who will be penalized and who will resist? Luxury segments (both hotels & restaurants) driven by international guests; MICE hotels, conference centres and venues hosting large number of delegates will be strongly hit because of governmental restrictions; Leisure Groups because of the social distancing. However, super-eco and eco brands are going to be the first one to recover. Sales representatives, builders, craftsmen will be on the road again. They will look for simple, cheap and transactional services properties with limited services.
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And the second half of the years? It is still very challenging to estimate the summer time activity just because states do not yet clearly define what will be the travelling policy, inside the countries, between European nations and internationally. I assume that international flights are not going to be fully authorised and, when they will be, some quarantine might be implemented at the arrival. Travels in the Schengen area will not be recommended either, so in July and August 2020, Leisure markets will be mainly local. Camping and all outside alternative accommodations should then benefit from the new safety regulations if sanitary measures are properly set up for toilets, showers, welcome areas. Other outside offers such as swimming pools and leisure spaces might stay closed. However, hotels could benefit from the local market as well, but their location, internal layout and design will be even more decisive to avoid a large density of guests in the lobby, bar and restaurant in accordance with official requirements. A careful follow-up of the sanitary procedures will help to reassure the customers.
Last quarter of the year could see a rebounding activity according to restrictions lifted and could be the good news before Christmas. Of course, 2020 will be reminded as the worst year for our industry, but in 2021 hospitality, restaurant, catering etc. will recover, slowly but surely. Obviously, human consequences for our teams will be dramatic but, together, with our partners, we will find some innovative solutions. Nevertheless, some owners will face difficulties but our governments, banks and landlords will tolerate some distortions. By the end, in few years Covid-19 will only be a sad story for everyone.