The world has been hit by COVID-19, a virus that has the global health community of experts very concerned with its ubiquitous and insidious nature, having to date (18/3) resulted in 204,610 reported cases, 8, 269 deaths with 82,866 recoveries in 170 countries and territories. It is estimated that a vaccine to combat the spread of this virus is likely to be available by December 2020 and no later than June 2021.
Understandably, the focus of many governments has been on saving lives and preventing the spread within national borders; and so, what might be considered draconian steps by some, have been taken by the majority of governments. Some of the immediate actions are well known – national shut down of non-essential businesses, grounding of flights, imposition of travel bans, cordoning off of borders, quarantining of citizens, isolating the elderly, up-scaling public information, limiting the size of public gatherings, social distancing education, and closure of schools and other educational institutions. Citizens have also predictably responded by hoarding of provisions and public germicide goods.
All of these government and citizen actions are likely to escalate in the coming weeks and months. But what of the future? Based upon my review of local disasters with global implications, I would like to proffer the following for consideration. The focus is mainly on the travel and tourism industry but in some areas, might extend to broader industry and retail.
1. Online shopping – there will be a significant increase in online shopping as persons use retail therapy to combat the psychological effects of quarantine. In 2018, the global digital penetration rate for online shopping was 53.5 per cent (which was about USD $3.2 trillion) and in 2020, the prediction is that this will increase to USD $4 trillion (this figure does not account for the effect of corona). Some of the hardest hit countries of corona cases are the ones with the highest levels of online shopping penetration such as the US, Sweden, France, Japan, Spain, China and Russia. Amazon, the leading online retailer (43.5 per cent of all online sales) indicated two days ago that it will be hiring more staff.
2. Slow down in long haul travel – the remnants of the fear and anxiety post corona are likely to make persons reluctant to travel too far from their region or locality; in the event of a resurgence of the virus, they would prefer to be as close to home as possible so that they can access their own health care services.
The World Tourism Organisation has estimated that international tourism would decline by 1-3 per cent, which represents a loss of USD $30-50 billion dollars. They are optimistic of a rebound in travel and tourism using the examples of SARS 2003 and the Iraq war of 2009 where there was strong and rapid recovery. The caveat for me here is that these were localized events, with some global reach; but COVID-19, from all appearances, is an invisible global enemy which has touched every continent of the world either through cases or deaths. In this regard, there will be a global travel reticence and reluctance by potential visitors in the wake of the event.
3. Staycation campaigns – the significant slump in tourism exports would lead national governments to react by asking their residents to “holiday at home” and utilise the traditional accommodation sector, attractions and restaurants. This might not be a difficult sell to residents based on point 2. Following the global economic recession of 2008, Argentina, Australia, the UK and some Caribbean countries leaned heavily on the domestic market to buffer the effects of declining revenues. Post 9/11 there was also a rallying call by President George Bush for Americans to visit New York as a show of nationalism and to bolster investor and visitor confidence.
4. Decline in demand for sharing economy services – businesses across all sharing economy platforms – accommodation, food, transport – are likely to experience a fall off as persons might be reluctant to utilize shared services due to the protracted anxiety and fear associated with the virus. While there are no concrete figures on revenue effects, anecdotal data suggests that bookings to sharing economy properties have plummeted by 50 per cent and this is even greater in urban cities like Beijing, Rome, Milan and New York. The mandating of quarantine also means that very few persons are using Uber, Lyft, Grab and Ola.
5. Business closure – many businesses across a number of sectors are likely to close, have scaled down services, go online or develop a mixed mode between a scaled down and an online presence. This would lead to a drastic fall in employment, with minority groups, migrants, and women being the worst affected. Marriott International has already taken the decision to furlough employees at every level of the organisation. Throughout the Caribbean region there are reports of restaurants and hotels closing, at the moment, temporarily. The Barbados Hotel and Tourism Association has stated that member hotels have lost $1.2 million in earnings and 2, 853 in room cancellations. In its quarterly meeting on Tuesday 17 March, the Chairman advised that the situation has worsened. In St. Lucia, there is already a major hotel closure with others to follow. This is but the tip of the iceberg and small and medium-sized properties are likely to be the hardest hit.
6. Resurgence of the tour operator and travel agent – there is the possibility that there would be a resurgence in demand for travel agent and tour operator services as the post corona traveller would want to be assured that there is an agent who can work on their behalf should they be faced with any situation akin to COVID-19. This prediction reflects the trends which show that eight per cent of US travellers used a travel agent in 2018, with an increase of five per cent in 2019; 85 per cent of consumers who used an agent said they did so because of their ability to provide an extra level of service when things go wrong.
7. Increase in robot and drone technology – as persons adopt to the new cultural norm of social distancing, it is expected that robot and drone technology will become the new normal to deliver online purchases at the door steps and mailboxes of customers. There could also be an increase in robot technology to service hotels. In fact, hotel brands like Yotel and Aloft are already using robots to achieve competitiveness and improve the guest experience. The increased adoption of these new technologies has the potential to displace female hotel workers who often constitute the majority of hotel employees.
8. Wider embrace of working from home – as employers seek to cut costs and recalibrate their position in a new post COVID-19 reality, employees in certain professions are likely to be given the option of working from home. Already, working from home has become the new normal for many in countries with epidemic levels of the coronavirus, and brings with it both positive and negative social and psychological effects. While this is not a new phenomenon in many European countries, New Zealand and Australia, for various reasons including commuting times and higher levels of productivity, this practice has never quite taken root in the Caribbean region. However, the dry run occasioned by the virus might convince many in the private sector that this is a workable and productive solution. Further, there is a new group of employees – the millennials – who are willing to challenge existing systems, and might increasingly be clamoring for this ‘new’ work modality. It is left to be seen how many local and regional businesses shift gears.
9. Insistence on certification and quality – consumers of tourism and hospitality services would be even more insistent on assurances of quality services and seek out establishments and services (destinations, airlines, cruise ships, hotels, restaurants) that are aligned with recognisable certification schemes that insist on HACCAP, GFSI and other safety quality standards that can potentially protect the consumer. This trend has implications for many Caribbean residents who are owners of sharing economy assets, and who have flown under the government’s radar with respect to payment of taxes. They would now be forced, due to consumer demands, to register their businesses with the local destination management organization, so that they can access training and be granted government assistance in certifying their operations.
10. Bankruptcy and consolidation in the cruise and aviation industry – The highly capitalised airline and cruise sectors have been at the centre of the storm, their revenues falling catastrophically as a result of bans on travel and landing and berthing prohibitions at various ports around the world. The picture of the Diamond Princess quarantined off the coast of Yokohama, Japan will live with us forever. The cruise ship that was once associated with wanton enjoyment has now been re-imagined as a prison of sorts.
The post-covid-19 scenario is likely to see extensive consolidation in the airline industry as many of the smaller, cash strapped regional airlines go into bankruptcy. Already Flybe, Europe’s largest regional carrier that serviced 170 destinations transporting nine million passengers on a yearly basis, has collapsed. Air France, Lufthansa and Norwegian are already requesting significant assistance from their respective governments. The US group of Airlines for America has asked President Trump for USD $50 billion in assistance and American Airlines has taken a decision to cut international capacity by 75 per cent until early May.
Legacy carriers and bigger airlines have begun and will continue a process of rationalizing their routes, airline guarantees notwithstanding. In other words, they would be working the more profitable routes rather than flying to destinations that would have given them subsidies for servicing their destinations. That would possibly leave many Caribbean, and indeed, small island developing states and remote areas, cut off from the international markets for a while. Already, British airways has begun the process of employee layoffs.
On Monday 16 March, the Cruise Line International Association (CLIA) announced that 97 per cent of its membership will engage in a partial or full suspension of global operations. Some ships are still at sea, trying to find a port. Acting in a preventative mode, some Caribbean destinations such as Tobago, Jamaica and Grenada decided very early to ban major cruise lines from docking. Cruise line losses are still being calculated, and it is expected that there will be significant loss of jobs, directly and indirectly, as cruise lines repair their damaged image and probably seek covert retribution from those islands who dared turn them away. The leverage for Caribbean destinations, if we band together, is that we are the number one cruising destination in the world, and in the world of economics, supply follows demand.
Implications for Caribbean countries
It should be evident to all that we would have a changed world post COVID-19. The depth and breadth of that change is difficult to determine at this point. However, in a region that has been cast as ‘the most tourism dependent region in the world’, the fall out would be economic, social, psychological and environmental, for in the face of economic imperatives, environmental, and sometimes even social policy agendas are often subordinated.
Trinidad and Tobago, with its development agenda pivoted on USD $60 for a barrel of oil, also faces an uncertain future. It is likely that as all countries touched by the virus, the region can expect significant job losses, business closures, loss of property, which will lead to a number of social consequences.
Already, as citizens, we are witnessing the political tension between lives and livelihoods; do governments keep businesses running until there is a ‘red alert’ or do we have a national shut down as a preventative measure? Grenada chose the latter. It is a difficult call for many Caribbean governments.
Despite the setbacks, I also see an opportunity for a re-imagined Caribbean; my thoughts at this time are nascent, converging around the need to utilize scenario planning tools, so we think through the possibilities and resource requirements for all possible scenarios – best case and worst case, long term to short term; however, I will share with you once I have a better skeleton. What I do know is that navigating out of this pandemic will require a great deal of skill, vision, sacrifice, kindness and generosity, innovation, fortitude, willingness to change and collaboration within and without national arenas.
Our international partners would also be preoccupied with getting their own economies and societies back on track, and therefore less inclined to lend assistance to the region. The onus is, therefore, largely on us as a Caribbean people to figure our way out of this. We have weathered many storms, and it is our resilience and our faith that have brought us through. It is on these attributes that we must rely on the upcoming weeks and months.
Sherma Roberts, PhD.
Senior Lecturer in Tourism & Deputy Dean Research, Faculty of Social Sciences