Global GDP took a staggering $4.5 trillion hit as a result of the pandemic’s effects on travel and tourism, with an estimated 62 million jobs lost across the industry. Of course, the players in this space aren’t the only ones to feel the effects of limited consumer mobility. Organizations worldwide have struggled to find new ways to connect with their customers and employees. Many have adapted their business models and ways of working accordingly. They’ll have to remain flexible in the years ahead.
Nevertheless, thanks to the distribution of COVID-19 vaccines and success in combating the virus in certain regions, consumers are once again eager to travel, meaning that spikes are expected in the short and medium terms. This is particularly true for leisure travelers, who in some domestic markets have returned to—or exceeded—their prepandemic habits. But many businesses do not expect to return to prepandemic travel levels until at least 2023; more than 50% of travel managers anticipate reduced budgets and increased employee flexibility.
In this environment, the travel and tourism industry will need to grapple with fluctuating consumer demands, shifting policies, and strict safety protocols. To accommodate passenger needs and maintain revenues, travel companies should refine their demand-sensing platforms and develop omnichannel capabilities that support customer loyalty. They must identify and implement new ways to become sustainable; this was a growing priority among consumers before the pandemic that has accelerated in its wake.
From an operations standpoint, players have to embrace the lasting changes to cost structures brought on by the coronavirus—related to staffing models and capital assets, for example—and establish new baselines. Now is the time to invest in digital and organizational capabilities that allow for quick and accurate scenario planning. From there, operations can be scaled up and down as needed.
Other industries should take heed. Travel-demand volatility and changing consumer expectations have significant implications for businesses everywhere.
Did you miss our previous editions on critical global topics? Keep up to date on all of BCG’s Executive Perspectives by downloading the materials below.