Impact of the Coronavirus Pandemic on the Travel Sector
11TH May 2020
Impact of the Coronavirus Pandemic on the Travel Sector
Bertrand Mabille, former CEO of Carlson Wagonlit Europe and Expert in the travel sector, had the kindness to provide us with his insights on how the Coronavirus has affected the travel sector and the potential outcomes for the sector.
“The Business Travel Industry is one of the most impacted by the current crisis. The level of activity has been reduced to almost nothing, leaving travel management companies with virtually no revenues in most countries.
Beyond this dramatic short-term effect, which has been mitigated by governmental measures, the COVID crisis will have several mid and long-term effects on the business:
- The recovery will be slow due to the restrictions imposed by companies on travel and the new sanitary rules in aircrafts and hotels. It will probably take more than a year (and probably much more) before the pre-crisis level of activity will be recovered.
- There will be an increase of pressure not to travel due to increasing environmental sensitivity and new structural work habits (home working, teleconference).
- The situation of airlines and hotel companies will be extremely fragile after the crisis which will lead to a strong pressure on distribution costs. Supplier revenues will then be under massive pressure.
- The industry will accelerate the need for technological investments: on-line tools, direct connect to suppliers (NDC), …
This new situation will lead to a new round of consolidation. There will be a need for additional restructuring and new technological investments which create the necessity to refinance all travel management companies.
Large players like GBT, CWT will probably have access to the necessary liquidity to go through the crisis and eventually survive, which will not be the case for several mid-sized agencies. Large players could then benefit from the consolidation of the market in the long term.
New digital travel companies will also benefit from the crisis, taking advantage of disappearance of many brick-and-mortar travel agencies on the SME market.”
