Healthcare

Future Of Travel In Post-Covid World

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<p>Covid&rsquo;19 is undoubtedly a black swan (or if I could say Netflix&rsquo;s Black Mirror) event in the history of mankind and it will lead to irreversible changes in the way we shall lead our life in future. Globally, every life and every business sector has been hit hard by this unprecedented crisis. The travel sector has been the hardest hit and it may never be able to recover completely from the aftershock of Covid&rsquo;19. Future travel, as we will figure out in due time, will don a completely new look and will undergo what I call as &ldquo;Redistribution of Travel&rdquo; as well as &ldquo;Virtual Substitution&rdquo;. Let us deep dive to visualise future travel and the fate of the associated travel economy.</p><ul><li>Redistribution of Travel - Will people cease to travel in post Covid&rsquo;19 world? The answer to this is a firm &ldquo;No&rdquo;. In fact, if anything, we shall see a wave of &ldquo;Revenge Travel&rdquo; once the travel restrictions ease globally. There is a pent-up demand among consumers to step out of their houses and travel will continue to be a major recreational activity for individuals/families, all the more with given the decline in work travel in the post-Covid world. However, we will experience redistribution of travel as follows:</li></ul><ol><li>Local travel against Global - People will shun aeroplanes in favour of personal vehicles and thus would prefer travelling to nearby locations which are 4-5 hours drive away. As a result, we will see the emergence of new tourist hotspots in the semi-urban/less-commercial areas. Goa, Miami, Vegas may not attract the same number of travellers and lose out to lesser known weekend getaways in the vicinity of cities. This shall lead to a serious dent in the airline as well conventional luxury hotel business. On the contrary, alternative accommodation via OTAs/AirBnB shall get a definite boost along with budget hotels. This could very well be a silver lining for Oyo which has so far been struggling to prove its business model.</li><li>Green Zones vs Non-Green Zone - In the absence of vaccines, post-Covid world will be divided into Green Zones: those countries that have successfully flattened the curve and have almost zero new cases of Covid&rsquo;19 and Non-Green zones: those countries that continue to attract new covid cases. Countries such as Australia, New Zealand, South Korea will attract a lot of tourists while European countries, US may no longer be the popular tourist destination as they used to be. Home countries will impose force quarantine to their citizens returning from non-green zones further deterring people from travelling to non-green zones. Travel to the green zones shall become expensive due to demand-supply mismatch as well as because these countries may charge covid taxes from tourists to offer them safe horizons while non-green zones may only have few takers despite offering subsidised accommodation etc. The tourism economy in Green zones will get a serious fillip at the cost of non-Green zones and we may see the wealthiest of the world relocating permanently to the Green zones leading to the establishment of new power centres across the world.</li><li>Long Duration travel stays - Several organizations such as Twitter, Facebook, Shopify have announced permanent work from home for their employees and several others are encouraging employees to visit the office only occasionally. The travel sector will be an indirect beneficiary of this change and we shall see several individuals opting for long duration travel stays away from the hustle-bustle of commercial cities to work remotely. This would create demand for long term alternative rentals/Airbnbs at the cost of popular hotels. Clearly, luxury hospitality groups are in for a tough time and may have to pivot to cater to new emerging travel trends.</li></ol><ul><li>Virtual Travels - With nearly half the globe (non-green zones) not really safe to travel as well as soaring travel costs, virtual travel will come up in a big way in the post-Covid world. A lot of us will get a glimpse of the Northern Lights or hike the Great Wall of China through Virtual Reality. While Virtual travel has existed since the last 4-5 years, I believe the use case will explode in the post-Covid world (aka Paytm&rsquo;s Demonetization moment). This will pave a way for a completely new economic sector with VR sets becoming more sophisticated yet affordable and mainstream. Virtual Experience will find their way on listing of all OTAs/Airbnb, and we may find Thomas Cook selling more virtual tours than a physical one.</li></ul><p>In nutshell, I believe travel will never regain normalcy in future rather we will have a new normal for the travel sector that will have little resemblance with its pre-covid version. Having said that not all is lost for the travel economy especially for those stakeholders (OTAs, Hotels, Car Rentals etc) who can quickly adapt to the new digital, localized version of travel. It seems InterContinental loss will be Airbnb&rsquo;s gain and Indigo&rsquo;s loss will be ZoomCar&rsquo;s/Uber Intercity&rsquo;s gain. As the saying goes that great companies are built during the crisis, we may even see a great travel company emerging out of Covid&rsquo;19.&nbsp;</p><p>&nbsp;</p>
KR Expert - Amit Tandon