Travel may get cheaper for short term post coronavirus pandemic

As the COVID-19 outbreak worsens, the travel and tourism sector stand the worst affected, not only because of lack of business, but also the worrying uncertainty around recreating demand in the future.

Industry experts suggest that as the sector is more dependent than others on the free movement of people, the main challenge for companies will be to work on the perception of the travellers, who would be hesitant to travel post the pandemic.

The immediate option, say experts will be to cut down on prices for a short term, to incentivise people.

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Travel companies are, in fact, seeing a drop in bookings on their online websites. For instance, FABgetaways is seeing a drop of about 80% in the number of new bookings, following the imposition of travel restrictions in the country.

“As the very act of travel contributes to the spread of coronavirus, understandably, whilst many of our members may be planning future trips, they are hesitant to book at the moment,” said Kaushal Gandhi, Director of Business Development, FABgetaways.

On the concern of recreating demand, he said, “Historically, companies that have opted for a blanket price-drop after any crisis have generally struggled to regain rates once demand levels increase. However, this crisis is unlike any other and we may have to keep in mind that a lot of those willing to travel in the near future would also be hurting financially and a discount may just incentivise them to travel.”

FABgetaways also plans to offer flexible cancellation options and 'Buy Now, Book Later' options to allow travellers to book worry-free.

According to the KPMG report, the World Travel and Tourism Council (WTTC) estimates the crisis to cost the tourism sector at least $22 billion, the travel sector shrinking by up to 25% in 2020.

Closer home, travel and tourism contributes to around 8.1% to India’s employment, or 42.7 million jobs. As per KPMG assessment, it is expected that about 10 to 15% of these jobs will shrink.

Experts in India are estimating 50% of business loss for the whole year if the COVID-19 continues for 2-3 more months.

Varesh Chopra, Regional Director, South Asia, and the Middle East, Cosmos Vacations, on the impact of COVID-19 on pricing of vacation packages post the pandemic said, “I think the situation is very fluid right now and a lot will depend on how quickly the various components of a typical tour offered by us – destinations, hotels and attractions, open up and price themselves for the future.”

However, he added, “If I think of this on a purely industry level, I have a feeling that for a short term, pricing may become lesser as all vendors, service providers would try to attract business back.”

The company has already introduced a plan allowing reschedule of travel across destinations all the way upto 2022, without any cancellation fee & along with a credit of upto $200 per person.

“We feel that it is only a matter of time before we get back on track but the main challenge would be to work on the post COVID psyche of any traveler and inspire them to dream travel once again,” said Chopra.