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Travel industry may not return to normal

Travel industry may not return to normal

From a long-term impact perspective, the travel and hospitality industries will remain the hardest hit by the Covid-19 pandemic as players in these sectors will need to cope with the attendant psychological and structural changes.

Lockdowns and travel restrictions are presently the major drag for travel and hospitality firms locally and across the globe.

International think-tank McKinsey Global Institute says factors such as changes in countries’ travel policies, consumer sentiment and willingness to travel, and structural changes to demand (for instance, videoconferences instead of in-person events) should be taken into account.

Hospitality firms have sought to restructure and position themselves for a post-Covid-19 return.

“It is generally agreed that priority should be given to the urgent facilitation of domestic tourism in the current circumstances.

“Focus on regional and international travel and tourism is related to a number of external factors, but the facilitation of domestic tourism at this time is both achievable and desirable, as well as necessary for resuscitation of the sector and for national economic progress,” said Tourism Business Council of Zimbabwe (TBCZ) president Winnie Muchanyuka recently.

A fortnight ago, the Government allowed the tourism industry to partially reopen.

Under the new rules, restaurants can serve customers for sit-in meals during licensed hours, but at 50 percent of their sitting capacity.

The Zimbabwe Parks and Wildlife Management Authority (ZimParks) has been allowed to open national parks and other amenities, including the mighty Victoria Falls.

Further, safari operators can now open for local tourists.

But will business return to the “old“ normal?

A key to answering that question would be the development of an effective vaccine.

However, scientists believe it might take some time for it to be developed.

According to the World Health Organisation (WHO), there are 100 possible vaccines at different stages of development globally.

While some have begun human clinical trials, this process typically can take months or years (conservative estimates usually at between 12 to 18 months) to properly assess both the effectiveness of the vaccine and possible side effects.

Morgan & Co head of research, Mr Batanai Matsika, says a return to “normal” is not foreseeable in the near term.

“The outbreak and exponential increase of Covid-19 cases has tainted the investment thesis in the tourism and hospitality sector.

“The main risk that has emerged is that we are still some months away from the day hotel chains or resorts re-open on a large-scale basis.

“In addition, air travel is likely to remain massively below prior levels for at least the remainder of 2020.

“There are still no proven medical treatments for the highly contagious Covid-19, and it is hard to see travel and resorts being opened up in the near future,” he said.

Mr Matsika social distancing made it difficult for hospitality groups to earn revenues from events such as conferencing and workshops.

“While both African Sun and Rainbow Tourism Group have done well in terms of restructuring, reducing finance costs and adding value through refurbishments, occupancy levels will be abnormally low in 2020.”

Listed hospitality group African Sun expects to start receiving international traffic from the latter part of the current quarter.

“In line with expectation, domestic business largely driven by Government and Non-Governmental Organisations programmes centred on Covid-19 health responses and hunger alleviation resumed immediately, post lockdown.

“Taking into account the global trends, management expects international business to gradually resume starting from September as airlines rebuild their networks,” said the group’s managing director, Mr Edwin Shangwa.

However, moving guidelines for re-opening remains the prerogative of President Mnangagwa.

Added Mr Shangwa: “The negative outlook reflects our expectation that global travel restrictions related to
the spread of Covid-19 will put significant pressure on the group’s 2020 earnings.”

African Sun’s projections appear optimistic considering the continued increase in the number of Covid-19 cases both locally and internationally.

As at July 10, Zimbabwe had recorded 926, while globally cases stood at over 12,3 million.

Players in the industry may need to rethink what constitutes “normal” to them.

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