Our tourism industry is devastated, but can recover

Roger Sharp
Roger Sharp
Tourism may enter the recovery leaner and meaner, but — like the rest of our economy — it will need our support, writes Roger Sharp, the Queenstown-based chairman of global digital travel business Webjet. 
 

There’s plenty of debate about whether the lockdown is good or bad for New Zealand, and especially whether the economic cost is too high.

I see no point in debating its merits: we simply ‘‘are where we are’’. Our most pressing need is to understand what the other side will look like, and how we can seize the opportunities ahead.

Most of us share the same concerns. How are our family members, scattered around the world? How are our mates doing? How do we put bread on the table? What will our nation and our world look like afterwards? When will ‘‘afterwards’’ actually start? And how can we help others who are affected?

I have a particular concern about the future of travel and tourism both in New Zealand and around the world.

The tourism and travel sectors have been devastated globally. Make no mistake — this isn’t just a downturn. In many places, there simply is no industry anymore. Without planes, without travel, without tourists, so much of the life that we considered ‘‘normal’’ only a month ago is gone. With it will go brands that we’ve grown up with, jobs, livelihoods, lifestyle and basic necessities.

This isn’t just a financial crisis where revenues fall by 20%-30% and businesses operate at reduced profitability or at a temporary loss. It is a devastating 100% loss of all revenues for many businesses. Tourism hot spots around the world will quickly become unemployment hot spots, with all the attendant challenges. Places etched into our national identity are going to have empty shop-fronts, fewer places to eat and drink, and probably queues for the dole. It’s going to be hard on families, especially when the Government support runs out.

This is already taking billions of dollars out of the economy, including GST that we use to fund all sorts of services including education and health.

So, here’s the dilemma: we need the planes to start flying again and for people to move around freely for business and leisure, to get the travel and tourism economy moving again. It’s New Zealand’s largest export industry, and it employs hundreds of thousands of people.

But we cannot do that safely until the virus is gone, and we probably won’t open our borders to foreigners until there’s a vaccine, or a method of being certain that the people we invite in don’t infect our community.

A travel and tourism recovery isn’t going to happen overnight. The Government is marshalling its forces to rethink the sector, and one suspects that the first step will be to get Kiwis travelling around New Zealand. The strains of that 1984 advertising campaign from Tourism New Zealand — ‘‘don’t leave home until you’ve seen the country’’ — suddenly ring true again! The next logical step will surely be to form a collective bubble with our mates across the Tasman, to restart a large and vibrant Australasian travel and tourism sector.

Here are a few data points to evidence the carnage. A global online travel business that I chair, Webjet, turned over about $4billion in travel bookings per annum until just a few weeks ago. That went to practically zero in just three weeks. We jumped into gear very quickly, reduced our cost base by nearly 50% and raised $350million to weather the storm. We took our medicine early and with hard work we will survive, then thrive. At Webjet we reckon we won’t see any material uptick in revenues until later this year or early next year, so we are using the time to adapt to the new normal, and think about new and innovative ways of serving our customers. We aren’t Robinson Crusoe; everyone in the industry is doing the same thing.

However, many companies won’t be so lucky and will fold. When we come out of the other side there will be fewer airlines, hotels and tourism operators to choose from. The strongest will survive, while those with lots of debt, low cash reserves or inflexible leadership and culture will find it difficult to get through.

Travel and tourism’s dark days will last a while. We will gradually get through this as a leaner, meaner industry, and hopefully with a huge emphasis on sustainability. The effects on the community will be tough in tourist hot spots, and will be felt in every corner of our country. But our indomitable Kiwi spirit will get us through this. We will do what Kiwis do: shake ourselves off after getting crunched in a Jonah Lomu-sized tackle, and work out how to win the game when we are down 30-nil at halftime.

Make no mistake though, when the recovery eventually comes, it will be huge. There will be significant pent-up demand. Travelling is something that we regard as a right. Within a couple of years, by and large, life will resume. The same, only different.

In the short term, however, when we leave the lockdown in the next few weeks, our first concerns will be for our families, our friends and for our own financial security. Do spare a thought for the small tourism operator who lives next door or has a struggling business in town. If you can afford to, please book something with them. When it’s safe again, we should all start to think about what we can do to see our own country — after all, we probably won’t be able to fly overseas for a while.

Roger Sharp is also deputy chairman of Tourism New Zealand. These are his personal views.

Comments

New Zealand was a much better country for New Zealanders before tourism exploded in the 80's. The total collapse of the tourism industry would not upset me at all.

 

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