With almost 25% of the world’s population under some sort of lockdown currently, we are actually living the unprecedented times.
Some major events and decision during the outbreak of the pandemic:
26 December 2019: China detects an unusual case of pneumonia
28 Feb 2020: First time in its 54 years of history, the ITB conference, one of the world biggest travel expos has been cancelled due to the spread of Covid-19.
11 March 2020: Coronavirus declared as a pandemic by WHO
17 March 2020: EU’s external borders have been shut for 30 days
19 March 2020: Mauritius closed its borders for the next 15 days
28 March 2020: China closes its borders to foreign travellers to prevent a new outbreak of the pandemic virus.
The above information regarding the outbreak of coronavirus is only the tip of the iceberg.
On Thursday 26 March 2020, around 3.28 million people applied for unemployment benefits. With this smashing record of the unemployment rate, the US is definitely sinking into a recession. However, the domino effect on the global economy is yet to be seen. While some argue that the impact of the recession will not be similar to what has been experienced in the 1930s and believe that it won’t last for long, others are surprised by the impact of this unprecedented crisis and find it hard to scale the damage.
Let’s dig deeper into how this is going to impact Mauritius and the hospitality industry.
The Mauritian tourism industry relies mostly on the purchasing power of the European countries. Unfortunately, these are the countries that are suffering a vertiginous growth of Covid-19 and it has become the worst affected region, with Italy having the highest number of fatalities and confirmed cases. As Italy prolonged its confinement to contain the virus, it will cripple the economy even more. As we all know, the higher the number of Covid-19 cases, the longer the outbreak will be and the more impactful the damage will be on the economy.
UNWTO estimates international tourist arrivals could decline by 20% to 30% in 2020.
The calculation is simple:
High unemployment + Low purchasing power = Low travel intent
Hotels are expected to suffer a major blow in their revenue with this prediction. In order to better manage cash flow, many measures have already been taken by hoteliers to preserve employment. However, the question is till when will they be able to sustain the pressure?
In order to encourage travel, many hotels have come up with cancellation strategies, allowing travellers to postpone their travel dates instead of cancelling their stay. However, since Mauritius got its first case of Covid-19, hoteliers are witnessing a decrease in the number of travellers willing to conform to these proposals.
Since Mauritius is a high-end destination, we are going to be hit very badly post the outbreak. With the collapse of consumer spending, people will think twice before making any decisions related to travel. Thus elongating the recovery time for the hospitality industry. Support from the government and MTPA will be highly needed to better promote Mauritius and enter a new potential market to exploit.
However, having said that, I believe that any kind of volatility and uncertainty can create opportunities for businesses. Hotels will need to come up with innovative ideas and be a market shaper to survive in this environment. Covid-19 will force the leaders to rethink their strategy and leadership style.