SURVIVING THE DOWNTURN-2


SURVIVING THE DOWNTURN -2

Background

This is an update on my previous post of April 16th 2020.

By way of a background, I spent many years as a senior risk executive in a large banking group followed by 13 years running my own in-bound tour company. Furthermore, I have published an 800 page book entitled a Visitors’ Guide to Scotland. These experiences provide a useful foundation from which to assess the future of the Scottish tourism industry in context of the current pandemic.

Current state of pandemic

At time of writing, there are some indications that the U.K. authorities are in control although death rates are still high. The ‘lockdown’ is working, albeit at enormous economic cost. As in many other countries, unemployment is at historic high levels and travel heavily restricted.

Impact on tourism businesses

From press and other media sources it is evident that many tourism related businesses are suffering and approaching end of their cash tolerance levels. For reasons rehearsed previously and below many tourism businesses will have to face up to around three years with negligible income which is, clearly, not sustainable.

Vaccine

A vital part of the solution is production of an effective and safe vaccine. Many pharma and biotech companies are working hard on the vaccine project but it would be prudent to assume that such will not be available (tested and approved) until around September 2021 and even there is the massive logistical effort to vaccinate billions of people around the globe (assuming they are cooperative).

Managing the virus risk

With the possible exception of self-catering (vacation rental), tourism is an intensive people facing business, e.g. hotels and accommodation providers, tour buses, tour guides, etc. Firstly, visitors from overseas may not wish to visit this country due to the actual and perceived risks of catching the virus. Secondly, there is the key issue of how to manage the virus risk of incoming visitors.
It seems to me that owners and managers of in-bound tourist business will have to find ways of managing the potential infection risks from clients and, in particular, protecting staff and other clients to whom they owe a duty of care. There is zero likelihood of insurance cover being available for the specific coronavirus risk. In this regard:


  • Screening at airports and other embarkation points (if available) will be an unlikely panacea. Asymptomatic persons may not be detected and self-isolation for 14 days is clearly not an option.

  •  Self-certification of vaccination may be possible but how can such be independently verified?

  • Do businesses ban clients from certain countries where the virus has not been effectively contained?

  • ·What about the virus risk of visitors from visiting cruise ships?


Guest experiences in Scotland

There is another angle in that, exactly, what sort of experiences can be offered to guests? Major sites such as castles, grand houses, Edinburgh Fringe and the like can attract high volume, ‘lava flows’ of people which is unthinkable in the current environment.

Implications for intermediate future

Looking to the intermediate future, the historically high levels of unemployment alone (in the major economies) will suppress discretionary spend on travel. I have to conclude that this consideration allied with the virus risk rehearsed above will result in such low visitor numbers that many tourism businesses will be forced to close. On a five year view this may be necessary anyway, in order to match capacity with demand.

Climate considerations.

On a final point, maybe we are facing up to an historic ‘inflection point’ in the relation between people and the planet. Reduction in airplane travel, heavily polluting cruise ships and hundreds of tour buses will certainly help in the drive to control climate change.

DISCLAIMER

The foregoing information and observations are provided in a spirit of helpfulness in context of the current business environment. They does not purport to be exhaustive and individual circumstances may vary. Crucially, no legal liability can be accepted. Whenever possible business owners should seek advice from their appropriate professional advisors.

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