Here’s looking at you, 2021, Part 4: Disappointing start for China, proceed with caution and hope

WE kick off the year with a gathering of views and opinions from our community of industry leaders on their outlook for 2021, from their level of optimism and their plans to get through the year.  Here’s the fourth collection.

Steve Saxon, partner with McKinsey & Company, China (from a China perspective)

Q: How would you describe the start of 2021? 
For China, sadly, disappointing. Many were hoping for a tentative restart to international travel. But, sporadic outbreaks of Covid-19 in China, and resurgence in many other countries has dampened this. Rises in cases in for example Thailand and China have pushed back any talk of travel bubbles between countries who have previously been successful in controlling the virus. 

Q: What is your data telling you about the first quarter? 
Chinese New Year was hoped to be the domestic recovery, but governments in China are now discouraging travel and many are cancelling vacation plans. We are seeing demand and prices fall for this critical holiday period. If there’s one positive coming out of the data, it’s a rise in staycations. With China’s travel advice, this is staycations in your home city.

Q: What is your gut, data and guesswork telling you about how 2021 will pan out?
China will likely control the virus again, and domestic leisure travel will restart by Q2. It will spike to record levels over the summer. International leisure travel will open with select countries once vaccines are widely rolled out; this is likely Q4. The international restart will be tentative at first.

Q: What are you telling your teams/partners?
We are telling our clients to make sure they’re ready for a prolonged downturn. Many original business plans were based on demand coming back in Q3 2020. With the latest resurgences, these plans are in tatters. Ensuring liquidity and cash control for a long winter is essential. 

Q: Who do you fear for the most in our industry?
A mutation of the virus that makes vaccines ineffective will hurt every recovery, travel included.

Q: What’s the one key thing you’re doing to prepare your business for whatever lies ahead?
For our clients, now is the right moment to reshape distribution. Customers have turned online massively during lockdowns, and post-Covid, we expect this to continue. Hotels and airlines especially have an opportunity to shape how they approach customers directly through digital channels. Travel agencies will need to continue to innovate with value-added services and product development (e.g., the in-city Chinese new year packages, which is not only for vacation but also family gathering tradition). Also a good timing to think through digital transformation, as consumers are more likely to understand and adapt new way of doing business, such as in channels, product experience (VR, AR), or in operations (contactless self check-in, robotic room service, etc.).

Q: What is the biggest opportunity for your business?
For our clients in China, it’s clear: refocus on domestic markets. Whether it’s hotels, attractions, cruise lines, you need to have a strong domestic proposition. The top-end and luxury domestic resorts are a particular opportunity. Affluent consumers in mainland China used to head across to Japan, Korea or Hong Kong for a weekend. That’s not possible now, and they’re spending the same money exploring destinations at home. There are investment opportunities in new destinations with nature, outdoor, health elements (such as mid and west part of China) – many of these destinations have natural beauty, but are lacking tourism infrastructure.

Q: On a scale of 1-10 (10 being highest), how much are you pinning your hopes on the vaccine saving travel? 
For the China market, only a 2. Because the bulk of the market is domestic, which will come back if the current lockdowns are effective. Vaccines are a longer-term solution for China, enabling international borders to open again.

Q: Finally, on a scale of 1-10, rate how optimistic (10 being most) how you feel about 2021?
8 for the domestic China market
2 for China international travel restarting

Q: What’s the one word you’d like to embrace for 2021? 
Caution: control the virus, then encourage leisure travel

Kerry Healy, chief commercial officer, SE Asia, Japan & South Korea, Accor

Q: How would you describe the start of 2021? 
We were all hoping that the clock would tick over into 2021 and the world would suddenly be back to normal, but of course the start of 2021 was very much like the end of 2020. Unfortunately, Covid-19 doesn’t seem to appreciate dates. We have, however, seen some pockets of hope in our region – with the Maldives open to international visitors, Singapore in discussions to open more green lanes and hotel openings continuing apace, particularly in the luxury and lifestyle sector. There is still a lot of confidence in the long-term future of our industry and we see the first positive steps in the long journey ahead.

Q: What is your data telling you about the first quarter? 
The first quarter is still going to be difficult. The data is telling us that people are booking very last minute because they are worried about sudden changes to borders or opening hours in different countries. Domestic business will be about all that we can hope for in the first quarter, so we are focusing on creating extraordinary packages for our guests and members and devising exciting events for them to take part in. People are looking for new ways to explore and enjoy their own backyard and our hotels can provide a safe, fun environment for them to celebrate all those lost moments from 2020 and reconnect with family, friends and colleagues. While hotel occupancy is down, our F&B sales are strong, which tells us people want to get out of their own homes and want to feel normal again.

Q: What is your
gut, data and guesswork telling you about how 2021 will pan out?
I believe that we won’t see too much travel until the second half of the
year and I am hopeful that widespread introduction of the vaccine will see more
confidence in the final quarter of the year. We know there is a lot of pent-up
demand for travel and we know everyone is desperate to return to travel just as
soon as it’s safe to do so. This gives us great hope for the second half of the
year and beyond.

Q: What are you
telling your teams/partners?
What we are saying to our team members and partners is that we are all
in this together and we will get through. One of the greatest things that Accor
has done in this pandemic was to create the €70 million ALL Heartist Fund to
help our most vulnerable team members and partners whose incomes have been
affected by Covid. We have provided funding to more than 45,000 team members
and partners across SE Asia, Japan and South Korea, and we continue to provide
assistance where it is most needed. We have reached the worst of this crisis
and there is light at the end of the tunnel. We now have to work together to
optimize any opportunities that come our way, to pivot our business model and
innovate new income streams. By being agile, creative and collaborative, we
will emerge from this stronger and better than ever.

One of the
greatest things to come out of this crisis is a bigger focus on our social
responsibility and I am proud to say that, as a company. Accor has done more
than ever to give back to communities. Our teams have been heavily involved in
providing care for quarantined or isolating guests, and accommodation and food
parcels for doctors, nurses and local communities as well as providing shelter
for homeless people, victims of domestic abuse and the most vulnerable. I hope
the whole world will be more socially responsible as a result of this pandemic.

Q: Who do you fear for the most in our industry?
My biggest fear is that many great businesses – airlines, travel agencies, TMCs, conference event organisers – will go under as a result of this crisis, impacting amazing people who have always worked so hard and been so passionate about tourism and hospitality. I hope that governments will continue to provide assistance to get our industry through this so that we can rebuild and continue to grow.  Tourism is not just vital to economies but plays a very important role in breaking down barriers between people, in promoting cultural understanding and in supporting global trade. We need governments to recognize the important role tourism plays in supporting so many other industries – restaurants, bars, events, attractions, property, meetings etc.

My other biggest
fear is that international borders will remain closed longer than is necessary
and this will be devastating for certain countries. Countries like Australia,
where you have a 70% domestic tourism market, will perform alright but in a
place like Singapore where up to 90% of our guests are from overseas,
staycations will never be able to make up for the shortfall in inbound business
and places like Myanmar, Bali, Phuket which are heavily reliant on foreign
tourists will be heavily impacted.

Q: What’s the one key thing you’re doing to prepare your business for whatever lies ahead?
The one key thing we are doing is focusing on our hotels and owners because we know they have suffered greatly over this period. We have recovery plans in place for every country in which we operate and our teams are working hard to adapt and innovate our business to the conditions we find ourselves in. The other key thing is ensuring that people feel safe to travel again and our ALL SAFE program provides this reassurance, alongside our partnership with AXA that provides free telemedical assistance for our guests when they stay with us.

Q: What is the biggest opportunity for your business?
We are seeing good opportunities in the ‘workspitality’ space – in creating new ways for people to utilize our hotels and our services and also in the area of ghost kitchens, using our incredible restaurants and bars, the kitchens and talents we have, to deliver five-star meals to our guests both inside and outside our hotels.

Q: On a scale of 1-10 (10 being highest), how much are you pinning your hopes on the vaccine saving travel? 
I would say about a 7 – it won’t be an instant fix and we will probably continue to rely on other measures including our ALL SAFE hygiene and sanitation protocols, the wearing of masks and contact tracing for a while to come.  Just as 911 led to changes in the way we fly, this pandemic will probably lead to long-term changes in our behaviour; however, what won’t change, long-term, is our love of travel, exploring new places, discovering new cultures and meeting new people.

Q:  Finally, on a scale of 1-10, rate how optimistic (10 being most) how you feel about 2021?
For the first half, probably around a 5, if we can optimize any opportunities, encourage domestic travel and continue to develop our staff. For the second half, I feel much more confident, say 7-8 depending on the results of the continued vaccine roll-outs.

Q: What’s the one word you’d like to embrace for 2021? 
Grit

Johnny Thorsen, vice president, travel strategy & partnerships Mezi/American Express Digital Labs

Q: How would you describe the start of 2021? 
2021 has started very slowly which I personally expected would be the case – the industry is still suffering from the lack of standards around the world which is controlled by the politicians and there is not much which can be done about that.

Q: What is your data telling you about the first quarter? 
I expect Q1 2021 to be on same level as Q4 2020 in terms of travel volume – perhaps slightly lower as we going through the final phase of restructions before the effect of the vaccines start to deliver significant improvements.

Q: What is your gut, data and guesswork telling you about how 2021 will pan out?
I expect 2021 to deliver about 50% of the 2019 total travel volumes assuming there is no new serious mutation of Covid-19 and international travel restart in Q3 2021 – however, a majority of the travel volume will be leisure with very little rebound in corporate travel until Q4 2021.

Q: What are you telling your teams/partners?
I am telling people in my network to start work (if they haven’t already started) on eliminating any manual workflow process they can as the focus will be ion 100% digital service models with high degree of personalization and human support as backup when needed – any company (TMC, Airline, OTA, Hotel etc) who fail to streamline their processes will go out of business shortly after surviving the Covid-19 crisis. It is important for people to understand that the downtime is the best chance ever to upgrade the legacy tech stack without the normal complications of a maxed out daily operations environment.

Q: Who do you fear for the most in our industry?
I expect a large number of TMCs to disappear as the volume of future business travel will be too little to support all the existing players – I expect one mega TMC and up to a third of the mid-sized TMCs to disappear either as a result of a merger or a “sale of the customer base” before a shutdown.

Q: What’s the one key thing you’re doing to prepare your business for whatever lies ahead?
As stated in Q4 they should focus on upgrading all elements of the legacy tech stack to be ready to restart operation in a native cloud-based open architecture model designed to manage open data sharing and integration with any relevant 3rd party solution provider. For airlines and hotels the opportunity is even more critical as there never will have a better chance of upgrading the 20-30 year old core tech stack ad be ready for the next 20 years.

Q: What is the biggest opportunity for your business?
I believe we will see the emergence of a new type of corporate travel service provider who is prepared to share tech ology with other TMC’s in order to accelerate overall speed of development and create significant scale benefits. This type of player can become a real threat to the GDS monopoly and provide airlines with a new path away from the current GDS centric model.

Q: On a scale of 1-10 (10 being highest), how much are you pinning your hopes on the vaccine saving travel?
I would rate that as an 8 as travel will find a way to work even without a vaccine – in my view Covid-19 will result in a new definition of travel which is “to enable people to meet and experience life together” either visually for in person – travel service providers should be prepared to sell virtual travel services side by side with physical ones. Even airlines would consider re-designing their value proposition accordingly.

Q: Finally, on a scale of 1-10, rate how optimistic (10 being most) how you feel about 2021?
I am super optimistic about 2021 on behalf of the travel tech industry and rate it as a 10 – companies who develop and deliver the next gen solutions for the travel industry designed to provider virtual and physical travel services along with tackling the much bugger sustainability challenge will have a fantastic year ahead of them.

Q: What’s the one word you’d like to embrace for 2021?
I use the word DIC as my 2021 term – it is short for “Disruption, Innovation and Collapse”.

Mark Meehan, global vice president and managing director, Asia Pacific, Travelport

Q: What is your gut, data and guesswork telling you about how 2021 will pan out?
Travelport’s Confidence Index, which tracks how confidence in travel is returning based on search and booking patterns, held steady in December globally. Here in APAC, India is going strong with domestic air sales almost back to their pre-Covid levels. Australia and New Zealand also showed some progress with the lifting of domestic travel restrictions – mirroring the global trend of domestic travel recovering more strongly than international.

We are cautiously optimistic about 2021 – not that 2021 will look like
2019, but that it will continue to recover positively. We’ll continue to see
some volatility – the various countries dealing with new waves of Covid cases
as we speak are a reminder that we’re not yet out of the woods, but this
volatility, we hope, will be tempered once a more harmonized approach to
managing travel restrictions is introduced across the world or vaccines are effectively
distributed.

Looking further ahead – there’s clear pent-up demand to travel as soon
as restrictions allow it. For instance, across the world last year we saw more
bookings made 200 or more days in advance (i.e. for travel in 2021), compared to
2019 bookings with the same lead time. Closer to home, the nearly 500% spike in
bookings the day the Singapore-Hong Kong travel bubble window was announced
last November was another clear sign of the strong desire to travel. We
anticipate similar spikes as the world slowly opens back up, particularly as we
move into the second half of 2021. While its postponement came as a
disappointment to all of us, it was also a great example of the clear medical
protocols in place working exactly as intended.

Q: What are you telling your teams/partners?
That while 2020 was the most challenging year we have ever faced, we have emerged a stronger and healthier company with our strategy unchanged. More importantly, we are on a transformational journey that will give us a strategic advantage as the world begins to emerge from the pandemic. And most importantly, that 2021 will be a better year for us all! 

Q: Who do you fear for the most in our industry?
While the Covid-19 pandemic has been incredibly difficult for our industry, we know people want to travel and will travel again as soon as they can and feel it is safe, so there is no reason to fear for any particular part of our industry. One trend our research last year uncovered is that people will increasingly look to tap into the expertise of travel agents as they navigate our changed world so there is opportunity ahead for those who present real value for travellers. 

Q: What’s the one key thing you’re doing to prepare your business for whatever lies ahead?
Staying agile, which is crucial in today’s rapidly-changing environment. Our next-generation platform is a great example of this. Throughout the challenges of 2020, we remained focused on making the required investments to develop it quickly. Now that we’re into 2021, this agility is not going to go away. We will not only be revealing our next-generation platform soon, but over the coming months, we will show a speed-to-market that our competitors will find hard to keep pace with.

Q: What is the biggest opportunity for your business?
Our biggest opportunity lies in ensuring we position our customers to take advantage of the rapid change the industry is going through. Covid-19 ultimately hasn’t changed what we see as the industry’s three foundational priorities: multi-source content, retailing excellence and maximising the value of every trip.

  • Multi-Source Content is all about ingesting, normalizing and delivering access to a wide variety of content types, whatever the source.
  • Retailing Excellence is enabled through next generation tools creating an environment of easy up and cross-sell, and flexible and customisable displays.
  • And, by maximising the value of every trip travel sellers will grow revenue or reduce the cost to serve at every point across the trip.

Q: On a scale of 1-10 (10 being highest), how much are you pinning your hopes on the vaccine saving travel? 
I’d put it at a 7. There’s no doubt that we’ve seen hugely encouraging progress in just the last few months – in terms of promising trial results from multiple vaccines, as well as the beginning of vaccination programs in various countries around the world. As the vaccine roll out reaches meaningful levels, we expect a significant uptake in travel given the pent-up demand.

That said, a vaccine is just one pillar of what must be a multi-prong
approach. To look at it more broadly, we believe that industry and governments
across the world must unite around a consistent set of clear, practical, and
meaningful protocols backed up by medical evidence, and we’ve been supporting
the advocacy efforts of industry bodies such as the World Travel and Tourism
Council accordingly. Some of the other things they’re calling for include the
creation of an international framework and standards for testing; and
determining the best risk mitigation, rather than risk elimination, strategies.

Q: Finally, on a scale of 1-10, rate how optimistic (10 being most) how you feel about 2021?
I would say a solid 8. We’re seeing steady progress on many fronts – certainly in terms of progress with the various vaccines, but also with a steady introduction of the new technologies and protocols such as digital health certificates and new travel bubbles. These will build traveller confidence, and enable travel to return in a safe and responsible way.

While we fully expect some volatility at an individual country level as
governments adjust their containment strategies, we’re confident that overall, we’ll
see travel take a gradual upward trajectory over the year

Q: What’s the one word you’d like to embrace for 2021?
Agility. The industry still has much ground to regain, and 2021 may well throw some curveballs our way. Furthermore, Covid-19 has brought about many changes at both micro – such as shifting consumer booking patterns and expectations, as well as potentially at macro levels – such as changing attitudes towards travel, both business and leisure. We’re confident, however, that an agile, can-do approach to delivering the insights and technology our customers will need to respond to these changes will serve us well. 

David Peller, managing director, travel & hospitality, Amazon Web Services

Q: How would you describe the start of 2021? 
I think for all of us in the travel and hospitality industry 2020 was a truly humbling experience. I think the industry feels optimistic about what lies ahead in 2021.

Q: What is your data telling you about the first quarter? 
We know from talking to travel and hospitality companies that they are looking to AWS to help them save costs and do even more with even less. This is where the elasticity of the cloud comes in to play to help customers scale up or down to match their needs and not pay for excess capacity. 

Q: What is your gut, data and guesswork telling you about how 2021 will pan out?
Customers are telling us that now is the right time for them to focus on their digital transformation efforts. I feel very optimistic that even more of our travel and hospitality customers will see the potential of cloud services and how these services can help entire organizations work faster and more collaboratively, and spin up new services, like mobile apps and call centres, to help customers in new ways.

Q: What are you telling your teams/partners? 
We work with industry customers across many different parts of the world, of every different size and segment of the industry. This includes industry leaders such as Airbnb, Avis Budget Group, Best Western, Choice Hotels, DoorDash, Dunkin’ Brands, Expedia Group, Korean Air, McDonald’s, Ryanair, Sysco, United Airlines, and Wyndham Hotels as well as start-ups like Cloudbeds, SiteMinder, Toast and Volara. In talking to our customers, we are advising them on opportunities for optimizing and automating their technology systems and processes, while enabling new services and capabilities to meet new safety protocols in a changing environment. Similarly, there’s demand for proven industry expertise and technical proficiency, which is why in December 2020 we launched the AWS Travel & Hospitality Competency with 27 inaugural partners. Our partners are telling us that that this is the right time and program to assist customers in their business transformation.

Q: Who do you fear for the most in our industry?
2020 was a year like no other, and our industry has been through a challenging time. I think what keeps me up at night is making sure the industry is ready to handle the scale that we are expecting as demand increases and the world begins to travel again. 

Q: What’s the one key thing you’re doing to prepare your business for whatever lies ahead?
I think that many companies, including AWS, are taking a step back and rethinking what they’re doing and what they want to stop doing. In talking to customers, many have accelerated their move to the cloud and we at AWS believe that when we look back on the history of the cloud, we will see that the pandemic accelerated cloud adoption by several years. So for us, we are going to continue to reinvent on behalf of our customers. 

Q: What is the biggest opportunity for your business?
I think the current disruption presents an opportunity for companies to become more resilient and agile in forecasting, operating, and reacting to market dynamics. We have customers coming to us that are eager to set themselves up for the future when global travel restrictions begin to ease and customers resume flying, staying at hotels, and dining out regularly. They want the scalability to increase their capacity to accommodate demand and the agility to develop new services and applications that make travel easier and safer for guests and passengers, and insights from data to become ever-more successful.

Q: On a scale of 1-10 (10 being highest), how much are you pinning your hopes on the vaccine saving travel?
I don’t have enough data to answer this.

Q: Finally, on a scale of 1-10, rate how optimistic (10 being most) how you feel about 2021? 
10

Q: What’s the one word you’d like to embrace for 2021? 
For our travel and hospitality customers, 2020 was all about building resiliency for the long-term. Entering this new year, we see that customers are now building for “what’s next”. So the word is reinvention.

Featured image credit: kasto80/Getty Images