Travel and Tourism, will it rebound?

 

 

 

Travel and Tourism, will it rebound?

 

Having been a part of the travel and tourism industry for many years, I wanted to run my own bed and breakfast one day, so I had to learn the industry from the inside perspective. Accordingly, I can see the signs of difficulty faster than the average analysist. Without the airlines being booked solid of tourists traveling to far off distant destination or just a few states away, the travel industry is the first to be hit hardest after a year of designated pandemic catastrophes. Car rentals are the next hit, then Hotels are the hit. Then we come to the restaurant industry that is hit and then the staffing, especially waiters and waitresses who make their living on tips.

Most people don’t realize that for every dollar spent on travel and tourism that one dollar reaches three or more other industries. Allow me to explain. You go into a restaurant and have a meal; the bill comes and you pay it plus leave a tip. For every dollar you spend on that meal touches the food industry (the meal you just ate), textile industry (your table, seating, napkins, silverware, etc.), trucking industry (because without this industry nothing would be delivered to that restaurant to consume) and the staffing industry (Cooks, dishwashers, servers). For every dollar you leave as a tip that server uses that money at the local store to buy food, buy gas, pays a bill) whereby adding to the community infrastructure It’s called basic economics folks you have to spend it in order to make it.

Even before the pandemic, people weren’t traveling as much as they had been in previous years due to a downturn in the economy, but it was starting to make a comeback with gas prices being reduced to below $2.00 a gallon in most states, food prices also being reduced to the point where families were able to plan a meal in a restaurant more than once a quarter. Life as we knew it was beginning to feel uplifting and motivating in all aspects of our lives. Unfortunately, then all hell hit the fan with this pandemic and government restrictions of not being able to socialize or even travel without a shot card like we were animals who required vaccination cards to prove we’ve had our shots.

Not only are local businesses suffering from this global shutdown, but every aspect of the travel and tourism industry is suffering. Air traffic has gone from a 4.6-billion-dollar industry to 1.8 billion within one year. Airport services lost over 115 billion dollars which has had catastrophic effects on the economy. Hotels have had sales plummeted down to 35% occupancy from a high level of occupancy of over 75% in 2019.  In America alone the decline in hotel profits of an average hotel room plummeted 85% in overall sales. Room rates went from $250.00 and 95.00 per night down to $90 and $15.00 per night head in the bed rate of operating. While the cost of a night stay in a hotel has lowered, the cost is not only a loss of profit, but also of Sales, restaurant and housekeeping staff due to layoffs whereby costing the hotel industry most in their having to retrain those they lost once things open up completely.

The restaurant industry lost over $700 Billion dollars in overall sales in 2020 and many long-time restaurants closed due to a lack of sales to keep them afloat.  Banks aren’t interested in issuing loans to help fledging companies sustain the pandemic and overcome any issues associated with a forced shutdown of thousands of businesses across their cities.  

The outlook for the travel and tourism industry is dim and won’t get any better in the next five years. No matter what the so-called experts will tell you, the industry is going to try to regain what was lost by increasing rates to a point of no return over the next two years. Unfortunately, the global economy won’t be able to sustain such an increase in room rates for at least 5 years and those hotels that produce a serious increase in order to regain what has been lost to fasts, will be forced to close their doors sooner than anticipated.

With gas prices the way they are these days, day trips will be limited which will impact tourism on the local level too. Don’t expect people to be traveling locally or every short distance from state to state because they still can’t afford the price of gas to do such traveling.

So to answer the initial question, will travel and tourism rebound? The answer is yes, but it will take a minimum of 5 years for it to rebound to the point where it was in 2019.