IUBH TOURISM EXPERTS ON THE CORONA SITUATION: "THE INDUSTRY IS ON THE BRINK OF COLLAPSE"

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ASSESSMENT OF THE IMPACT AND CHALLENGES FOR THE HOSPITALITY INDUSTRY DUE TO COVID-19

Erfurt, 23 March 2020 – The tourism and hospitality industry is being shaken by the Corona virus. Whether tour operators, airlines, hotels or cruise companies: Almost all players in the market have had to scale down their activities in recent weeks or even stop them altogether. What does this mean for the tourism industry and what measures need to be taken to mitigate the effects? This is what IUBH professors Prof Dr Andreas Thams, tourism and airline expert, and Prof Dr Nicola Zech, expert for crisis management in the hotel industry, investigate in their current whitepaper. These are their statements - they are happy to be interviewed:

1 "The industry is on the verge of collapse"

The sudden slump in turnover is already moving the first companies to request financial support from the state. "The current crisis will lead to a total collapse of the global tourism industry," Thams predicts. "The cooling of the market even before the COVID crisis and the poor liquidity of the industry in the winter season will have fatal consequences for many players." This, he says, will greatly change the tourism industry: "Many established products and business models will disappear, consumer behaviour in the private and business travel sector will change drastically with a sustained shift towards online distribution."

2 "Due to the economic importance of the industry, state aid must be provided quickly and in a targeted manner"

Tourism is one of the largest economic sectors worldwide - which makes the current slump all the more fatal for the global economy. Thams therefore sees the public sector as having a responsibility to act quickly: "At this point, it will be a matter of consistent government intervention to mitigate the most severe effects of the crisis." The necessary measures that government actors must take now include the following areas, according to the authors:

·      Liquidity support in the form of bonds and loans

·      Tax relief, especially from transaction taxes for hotels and airlines

·      Debt cuts

·      Reactivation of markets through destination agencies

3 "Strict crisis management applies to companies"

To mitigate the most severe effects of the crisis in the long term, companies need to work with internal and external stakeholders. Besides employees and guests, competitors, suppliers or distribution partners can also provide important impulses for recovery. An approach to how this stakeholder management can look in a crisis situation is provided by Nicola Zech in the white paper. Since the crisis and the measures taken cannot be predicted exactly in terms of their impact, these measures must be adjusted regularly. A long-term strategy must then be implemented.

 

Click here for the whitepaper, which is supplemented by the African continent's perspective on the crisis by Dr. David Rempel: He explains the effects of the Corona crisis vividly using the example of Ghana.

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