July 06, 2020

Tourism: Today vs. Tomorrow

Tourism: Today vs. Tomorrow

“Our tourism industry requires the mobility of tourists. Because of this stay-at-home order, people are not supposed to move freely across locations, which becomes a very big hurdle for our tourism industry. Basically, we can’t see people coming.” -Yang Yang, Associate Professor, School of Sport, Tourism and Hospitality Management, Assistant Director of the U.S.-Asia Center for Tourism & Hospitality Research

Remember when you were planning a trip to a wonderful summer destination before COVID-19 altered those plans? Well, it’s just as disheartening for those travel destinations. 

Thousands of popular tourist spots are feeling the pain from the current pandemic. Yang Yang, associate professor in Temple’s School of Sport, Tourism and Hospitality Management and assistant director of the U.S.-Asia Center for Tourism & Hospitality Research, takes us deep into the world of tourism in the times of a global pandemic. What damages has the virus caused to the industry, and how can it recover?

The U.S.-Asia Center for Tourism & Hospitality Research has spent several months researching the COVID-19’s impact on the tourism industry. In the United States alone, a combined $355 billion dollars is predicted to be lost in 2020, a drop of 31%.

Yang suggests that a voucher system could be used to aid recovery. In 2009, in the midst of a global economic recession, China utilized tourism coupon programs to stimulate its economy and give companies and cities a chance to get back on the right track. Could that work today, too?

Yang has created a modeling tool to track tourism recovery in more than 100 countries. It’s called the COVID-19Tourism Index, and it’s detailing a future prognosis for the industry in real-time.

Could voucher programs be the key to sustaining the industry moving forward? What will tourism look like in both the near and distant future? In this episode of Catalyst, we sit down with Yang to discuss the industry’s recovery from COVID-19.

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Catalyst is a podcast from Temple University’s Fox School of Business about the pivotal moments that shape business and the global economy. We interview experts and dig deep into today’s most pressing questions, such as: What is the future of work? Will the robots really take our jobs? And how is my company using my data? We explore these questions so you can spark change in your work. Episodes are timely, provocative and designed to help you solve today’s biggest challenges. Subscribe today.

Podcast Transcript

Host: Welcome to Catalyst, the podcast of Temple University’s Fox School of Business. I’m your host, Tiffany Sumner and today we’ll explore one of the industries most impacted by COVID-19: tourism. What does the future hold for the industry and when can we expect to travel again? [00:01:00] 

I’m joined by subject matter expert Yang Yang, an associate professor at Temple’s School of Sport, Tourism and Hospitality Management and assistant director of the U.S.-Asia Center for Tourism and Hospitality Research. I spoke with Yang about why tourism has been hit so hard and when the industry might return to a new normal and a modeling tool that he has created to track national’s tourism recovery around the world. 

In this episode, we discuss Yang’s index which compares the recovery level to the world before COVID-19. For your reference, a level of 100 indicates the recovery to a normal level. Access the tool and the index he created at fox.temple.edu/catalyst. Now here is what Yang had to say about the future of tourism. 

COVID-19 has had a negative impact on so many industries. How hard has the tourism sector been hit?

Yang: Oh, I think the tourism sector [00:02:00] was the one that’s the most impacted industries across the whole economy. So, I just pulled out some statistics. For example,  for the hotel industry, the occupance rate has been declined dramatically, especially for high end and mid-scale hotels. I received the data as the average occupance rate nationwide. It’s just a little bit about 10%. Considering that we are still having a lot of truck drivers working and interstate hotels can still accommodate kind of their occupance rate so the actually occupance rate by leisure travelers and business travelers at lower than 10%. 

Our tourism industry requires the mobility of tourists, right? Because of this stay at home order, people are not supposed to move freely across locations which becomes [00:03:00] a very big hurdle for our tourism industry. Basically, we can’t see people coming right? And likewise, for the hotel industry, restaurant industry, hospitality industry. Hospitality is the key, hospitality really relies on this face-to-face communication or interaction. But with this social distancing, with this social isolation, this hospitality—like foundation or the assumption of hospitality no longer exists. So that means basically, the natural or the essential part of hospitality experience is no longer—is heavily jeopardized by this COVID-19 crisis. 

Host: Yeah, that is unfortunate and with your research you are creating a tool for the U.S.-Asia Center that’s a COVID-19 tourism index designed to monitor [00:04:00] COVID-19’s global impact on tourism. Why is it so important to track the recovery of the industry?

Yang: So first, based on the index we can see the stage—the crisis stage, right? For example, whether you are still continuing declining or whether you bounce back or whether you’ve reached the bottom right so based on different stages of crisis recovery the government and the industry can come up with different solutions and at the same time, they can propose different strategies or different policies to help the industry. The data also helps for forecasting purposes for example if you see the number increasing that’s means you keep recovering from the bottom that means you can foresee the future. For example—in the last couple of weeks the U.S. index has been increased slightly [00:05:00] that means we observed slight recovery patterns based on the U.S. tourism so that we can draw some conclusions in a more confident way that in probably the next two to three months the tourism will come back to —let’s say 40% or 50% of the normal time. So, based on this forecast, we can allocate the appropriate resource or we can get better prepared for the next steps because we can get a better idea of the future. 

Host: What is the index ultimately tell us?

Yang: Hopefully, one day we’ll see that all the country reaches an index of one hundred which means they all back to normal right? So, it tells you—especially compared to other countries—the current stage of crisis you are experiencing because of COVID-19. For example, I checked the U.S. COVID-19 index, it’s about 20%. The good [00:06:00] news is that it’s a little bit increased from the last couple weeks so it’s good use for us, it’s not perfect, but still good for us. It’s coming up, so this historical trend tells us that we’re starting recovery even though the recovery rate is not very fast. But we are experiencing that, so based on this kind of historical trend, we can project how long it takes to hit certain benchmarks like let’s say 60% or 80% recovery so we can do some predictions based on these numbers. Also, you know we can learn from others…for example, China got hit the earliest and now they’re almost at the highest level of recovery and we can compare their data to predict our future and what our future is going to look like based on the Chinese data. 

Host: How often are you updating the index? [00:07:00] 

Yang: So, we update it every week so normally we collect all the data on Wednesday and some data vendors will send us the latest weekly data on Wednesday so we will try our best to get all the updates out by Wednesday night. At least, in the previous couple of weeks we have been following this timeline.

Host: So, your research also uses a model to show how vouchers could assist the tourism industry following COVID-19. China used a similar model in 2009, during the global financial crisis. How would this work?

Yang: This is something very, very interesting. In some Asian countries like China and the government is not just issuing financial aid. They are sending out this coupon of vouchers to the residents. I can use a voucher or their coupon to spend [00:08:00] it in the restaurants, to spend in a hotel or other tourism related facilities. Of course, the business collected coupons or vouchers and they can get the same value from the government as a type of their financial fund. So, by doing this, the government is not just simply issuing the cash to the business but is also trying to nurture the market to make sure the business will get back to normal as faster as possible. 

Host: Do you expect any business in the U.S. to use vouchers or coupons to stimulate activity? 

Yang: That’s a very good question. My take is that the government can see this as an option, but of course, there is a more complicated part like political situations or there’s other priorities, right? But if you [00:09:00] really want to help our industry to nurture the market, this is something we should consider and also it involves multiple parties, the business, the consumers, the government. It looks like a very win-win strategy for most parties.

Host: Are there other steps, like significant discounts, that could help the industry recover? 

Yang: I don’t think the price war is really something we want to see. If the pandemic still continues, I don’t think the price cut will really affect the demand because the security or safety concerns, I think, is way more important than price itself. If the pandemic is gone, everything is back to normal—we still face a high demand and at least time the price cannot be really acting as an effective tool from the revenue measure perspective because at least time you know—price is no longer a big factor, the business one to consider in front of [00:10:00] observing demands.

Host: How do you anticipate that will change the price of say, flights or hotels?

Yang: It’s hard to say, but I just tried to do some research. I searched some air flights and some domestic flights; their tickets are very high. I tried some from Philadelphia to San Francisco but I also tried some international flights for example, from the U.S. to Japan, and they are actually very cheap. Of course, I didn’t do a very thorough search on that but it’s just based on my own experience. I think that’s it totally based on the airline strategy’s expected demand but to be honest I expect—at least from the cost perspective, the airline ticket may increase a little bit because there are high costs associated with the hygiene and other factors. [00:11:00] And for the hotels, it is hard to see, at least at the moment, if we get a better picture, a clearer picture about the future, about pandemic situations so probably we can figure out a better idea about the pricing of hotels in future.

Host: Are there any silver linings for the tourism industry following COVID-19?

Yang: First, in the hospitality business we realize the importance of doing a crisis measurement plan, right? So, being aware of the potential risk of running a business because of this crisis is a good thing. Second is that tourists will really think about some travel insurance. Because nowadays even though you are traveling overseas you may not consider buying any travel insurance and now because of this event [00:12:00] from some research, they recognize professionally—the director of our U.S. Asia Center, his research indicates that people become more and more interested in considering the travel insurance no matter domestic travel or international travel. So that’s another business opportunity in the future. The third way is that when more businesses will spend more efforts or resources on keeping the higher hygiene standards like cleanliness of the hotels, the cleanliness of the restaurants because people—even though the pandemic will finally disappear, hopefully and people will still form these kinds of habits to check the hygiene conditions for the place they come to visit like the hotels, like the restaurants, like the resource and so forth. So, this is something I think will make our industry stronger [00:13:00] and even create some new business opportunities in the future. 

Host: That’s great to hear. Conservatively speaking, when do you expect things in the tourism industry to return to normal? 

Yang: That’s also a very good and a very hard question. Well, at first it depends on the pharmaceutic solution to pandemic, of course, and also depends on how you define normal. If you define normal as like I’m willing to wear a face mask to go to the restaurants and that could be like one or two years, or even sooner. But if you define normal situations as you know, we are not going to really care about this disease, we are not protecting ourselves by any measure when we are heading out. I think that may [00:14:00] take even longer, three or four years. And for the industry to be pitched against the previous era in terms of revenue, in terms of profits I think at least should take about three to five years and the confidence of the consumer which is also very important. It may take longer to construct the confidence for tourism consumption.

Host: And I’m curious, thinking about wearing a face mask in a year or two is even honestly something I never thought of. How much will things change in the future and how will the tourism industry be, say the next time I book a flight or check into a hotel? 

Yang: One thing I think is that, you may have less and less contact with humans with stuff when you are boarding on an airplane or checking into a hotel, right? So, they will advocate for everything like you know, contactless checking or contactless boarding. [00:15:00] You could put a robot there to help you, a robot bail man, something like that, right? There’s a lot of creative ways we can do that but they are trying their best to avoid potential contact between human beings, that’s one thing. And the second thing is that probably it takes longer to check in because they want to take your temperature, something like that or you know—asking you for more information about your past travels to any locations. So at least in the near future we see, the next one to two years a lot of things will be different but the good side is that you still get a chance to travel, to stay in the restaurant even though particular measures are required. You can still enjoy part of your tourism or hospitality consumptions. 

Host: Any closing remarks? [00:16:00] Can you leave us with something positive in this really uncertain time?

Yang: So, I think sooner or later, everything will get back to normal and the same for the tourism, hospitality industry. I know a lot of people miss the beach time, especially because the summer is coming and you know, we are trying our best. I think the whole industry, the whole society is trying our best to make sure its recovery is as fast as possible. And people in different industries, they are trying their best to allocate the potential negative impact because of COVID-19. So, I think the future is still there you know, for our students We are new to the industry for the long-term consideration or the industry, I think they are all having a very bright future and all will come back to normal. 

Host: Thank you,Yang, for joining me and sharing your insights on how COVID-19 has affected the tourism industry. This is a fluid situation [00:17:00] and there is still a lot of uncertainty surrounding when it might be safe to board a plane or take a cruise. What’s helpful about the COVID-19 tourism index is that it provides a forecast in real time for an industry that is still changing every day. Today, we also learned how a voucher system could assist recovery of the tourism industry. We’ll see if the idea is adopted as more states and countries begin to reopen. Cabin fever is very real and that’s especially true when you’re living through a global pandemic. Thanks to this research, we should all now have a better idea of when we can expect to travel safely again. 

Catalyst is a podcast from Temple University’s Fox School of Business. Visit us on the web at fox.temple.edu/catalyst. We are produced by Eva Terra, Megan Alt, Anna Batt and Stephen Orbanek, with help from Karen Naylor. Special thanks [00:18:00] to Joe Williams at Temple University’s Tech Center. If you like what you hear, please leave a review on Apple Podcast. I hope you’ll join us next time. Until then, I’m Tiffany Sumner and this is Catalyst.