Vaccines May Soon Make Travel (and Travel Retail) Widely Possible – But What Will That Look Like?
The COVID-19 pandemic impacted the global tourism industry to an enormous extent in 2020. With vaccines starting to be rolled out, experts say that “there is hope that international travel can resume soon, but exactly when – and how – is the trillion-dollar question.” This is a question that is particularly relevant for fashion and luxury entities, as prior to the onset of COVID, many brands were looking to further embrace travel retail, with Kering, for instance, revealing in its 2019 annual report that travel retail “emerged as the fastest growing distribution sub-channel [in 2019],” especially for its Gucci brand, which was “able to capture new market opportunities across new, targeted travel retail openings.”
With almost no international travel in 2020, “the pandemic caused a 70 percent drop in international tourist arrivals globally from January to August, compared to the same period last year,” Joseph Cheer, a professor in Sustainable Tourism at Wakayama University, Colin Michael Hall, a professor in Tourism and Marketing at the University of Canterbury, and Jarkko Saarinen, a professor in Tourism Studies at the University of Oulu, wrote in December. “This has impacted businesses across the board, with destinations reliant on international tourists – many of which are developing countries, where tourism is a major export earner – have been the hardest hit.”
Meanwhile, the large-scale inability to travel has impacted fashion brands rising focus on travel retail. As travel numbers plummeted, sales at airport brick-and-mortar stores swiftly dropped, causing brands to lose out on a sizable stream of revenue that comes from duty-free shopping sprees at Louis Vuitton and Hermès’ airport outposts, particularly among deep-pocketed Asian travelers who view such consumption as “an essential part of their itinerary,” the Wall Street Journal’s Esther Fung wrote of brands’ airport-located cash cows this spring.
More recently, LVMH revealed in its annual report for 2020 that the suspension of international travel “severely penalized [its] hotel and travel retail activities,” hitting its Selective Retailing business group – including its duty free venture DFS – which saw organic revenue decline by 30 percent for the year. The group stated that it is cautiously optimistic, noting that “the hope of vaccination giv[es] us a glimpse of an end to the pandemic.”
“Attempts to reboot international travel on a wider scale have largely failed due to successive waves of COVID-19,” and the subsequent spread of “more transmissible and harder-to-control variants,” according to Cheer, Hall, and Saarinen, who note that such developments have prompted dozens of countries to introduce new traveler bans. “With borders closed, many countries have put a focus on attracting domestic tourists – and luxury goods consumers – instead, [which] has helped maintain economic stability in countries such as China and Japan,” where companies are readily looking to grow their real estate footprint and boost their digital operations, including by way of partnerships with the likes of Alibaba, which Gucci announced in December, on the Chinese mainland in order meet enduring consumers demand for luxury goods and their increased reliance on the newly-unfolding stay-home economy.
Nonetheless, hopes for a recovery of international travel abound, and “are now pinned on a silver bullet: the rapid and widespread distribution of a vaccine,” per Cheer, Hall, and Saarinen, thereby, giving rise to an array of critical issues. With that in mind, the three academics pose the following questions about the future of travel …
1) What travel regulations will prove effective?
Travel health requirements may soon start to resemble the past. In the 1970s, having appropriate vaccinations and health clearances was essential for travel to and from many countries. Coronavirus vaccinations will likely become similarly standard for international flights. This may be rapidly adopted by all countries, and could even be applied more broadly – in hotels, for example. However, any vaccination regime will need governments to pass strong laws and regulations, including ones that address the potential for discrimination and privacy issues should a digitally-based immunity passport system be adopted.
The latter is a particularly relevant concern given that digital travel passes and vaccination passports are being considered as a potential. In order to work, these will require standardization across borders, with one solution being the CommonPass, a new digital health passport that looks to be a trustworthy model for validating people’s COVID-free status consistently across the globe.
Other health measures will also remain vital, including mandatory in-flight masks, pre-departure and arrival testing, mandatory quarantining and social distancing. If vaccination uptake in destinations is low, these measures will become even more important. Touchless travel should also become standard at most airports through the use of biometric technology. And passengers should expect temperature screening and reduced in-flight services to be the new norm.
Lengthy quarantine periods are one of the biggest obstacles to restarting international tourism — few people can afford 14 days in a quarantine hotel on top of their holiday. There are potential alternatives being tested. Before the new COVID variant emerged, British Airways and American Airlines had piloted a voluntary testing program for some passengers as a way of avoiding the mandatory 14-day quarantine period in the UK. The British government also implemented its new “test and release” policy in mid-December, which could shorten the quarantine period to five days for international arrivals.
2) How will airlines restart their businesses?
The International Air Transport Association expects the airline industry will not reach pre-pandemic levels again until at least 2024. This means any tourism restart is going to require restoring transportation infrastructure and networks, especially for aviation and cruising. Many planes are now parked in deserts in the U.S. and Australia. They will need to be retrieved and thoroughly serviced before recommencing flights. Crews will have to be rehired or retrained. But it is not as simple as just getting planes back in the air. A more formidable challenge for airlines will be reestablishing air routes while ensuring their ongoing viability. As airlines slowly build up these networks again, travelers will have to put up with less frequent connections, longer journeys and drawn out stopovers.
There is some encouraging news, though. In the U.S., domestic airfares have dropped, and though international flight schedules have been drastically reduced, low demand has kept some prices down. Smaller and more nimble airlines should perform better. And expect smaller and more efficient aircraft to also become more common. Demand for long-haul flights may remain low for some time.
Airports, meanwhile, will require temporary or permanent reconfigurations to handle new public health screening and testing arrangements — providing yet another possible frustration for travelers. Cruise ships and port terminals will face similar requirements, as will hotels and other accommodation providers.
3) Will traveller confidence return?
For leisure travelers, the lingering fear of coronavirus infectionswill be the most formidable obstacle to overcome. The Thanksgiving holiday in the U.S. and Golden Week in China suggest the appetite for travel remains robust. Some analysts also anticipate leisure travel will likely recover faster than business travel. However, it remains to be seen whether travelers will have a high appetite for risk, or how quickly they will adapt to new safety protocols. The key to bringing traveler confidence back again will be standardizing safety and sanitation measures throughout the global travel supply chain.