Kearney Middle East's Georges Assy on the recovery of hospitality in the region

The principal at government & economic development talks to Hotelier Middle Eas about the path to recovery

Georges Assy
Georges Assy

With the summer months underway – usually prime time for tourism operators – the impact of COVID-19 is felt by many. The World Travel & Tourism Council (WTTC) estimates millions of tourism jobs will be lost, with the hospitality sector being dealt similar blows. Talking to Hotelier Middle East on the effects of the pandemic and hospitality’s road to recovery is Kearney Middle East principal at government & economic development Georges Assy.

What are the factors that will determine the rate of recovery for the regional hospitality industry?
There are four main factors will determine the rate of recovery:

  • Extent to which COVID-19 is contained in the region/country and its source markets
  • Ability of tourism businesses to survive
  • Ability to spur domestic tourism as an interim solution
  • Success of government’s staged efforts to recover the sector

The final point includes immediate actions while the crisis is ongoing, such as providing stimulus support to tourism businesses, and short- to medium-term recovery efforts to kick-start the sector once the situation is contained, for example, through incentives to re-attract tourists, strong marketing campaigns emphasising country and region’s safety, promoting domestic tourism, bilateral travel agreements or bubbles with safe countries.

Did you like this story?
Click here for more

How long will it take for indicators to return to normal levels?
The forecasts for global and GCC’s tourism sector for the rest of the year anticipate a 30% to 70% decline in international tourist arrivals in the region. Due to these forecasts, we do not anticipate international tourism indicators to return to normal in 2020. The good news is that the tourism sector has proven resilient in the face of previous pandemics and has typically rebounded to pre-crisis levels within a year from the point of recovery (however, given the unprecedented nature of COVID-19, this timeframe should be interpreted with caution). Though the domestic tourism sector indicates towards returning to normal much sooner.

Are we starting to see a recovery? If so, where and which products?
In the UAE, domestic tourism has been quick to pick up as the situation has eased, with domestic tourism in Abu Dhabi increasing from 20% to 43%, and  domestic tourism in Dubai increasing from 19% to 36% in January to March. This has been dominated by families and groups seeking luxury ‘staycations’ in hotel resorts, villas, and high-end properties that offer relaxing and entertainment facilities such as pools, beaches and outdoor activities.

International tourism has not yet recovered, but the stabilisation of the COVID-19 situation, the extensive recovery planning efforts underway and the re-opening of airlines indicate that the UAE is ready to re-welcome international tourists. We anticipate that international tourism will be sluggish initially as many countries remain in quarantine and tourists remain fearful of travelling and will be initially dominated by regional tourists and essential business travel. However, looking at other GCC markets, there has been no clear signs of tourism recovery yet.

What can properties do to prepare for future shocks?
Future shocks are inevitable and the key to navigating them is preparedness. Properties should develop scenario-planning capabilities that integrate the possibility of a future shock in the property’s strategy and develop associated contingency plans. Financial agility is also key to navigating a downturn – properties should revisit their liquidity, capital investment plans, revenue and cost models to ensure they are able to absorb a shock should it occur. Also, COVID-19 has taught us that domestic tourists are the first to rebound during a crisis, and properties should focus on developing tailored local offerings to domestic tourists in times of crisis.

Will any long-term changes come out of the current situation?
In the long run post-COVID-19, the global tourism sector is expected to rebound and resume its pre-crisis growth trajectory – tourists will continue to want to travel and discretionary spending will increase with the projected global growth of the middle class. Thus, no major long-term structural changes are anticipated for the sector itself. However, depending on the turn that COVID-19 takes, various tourism businesses might be subject to structural change, particularly small and medium enterprises. Various countries are already witnessing the closure of hotels, tour operators, and the renationalization of airlines. Potential structural changes could include mergers, divestitures, rebranding, reduction in geographical footprint, among others.

For all the latest hospitality news from UAE, Gulf countries and around the world, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page.

Most Popular

Newsletter

Reports

Human Capital Report 2017

Human Capital Report 2017

The second annual Hotelier Middle East Human Capital Report is designed to explore the issues, challenges and opportunities facing hospitality professionals responsible for the hotel industry’s most important asset – its people. The report combines the results of Hotelier Middle East's HR Leaders Survey with exclusive interviews with the region's senior human resources directors.

Hotelier Middle East Housekeeping Report 2016

Hotelier Middle East Housekeeping Report 2016

The Hotelier Middle East Housekeeping Report 2016 provides essential business insight into this critical hotel function, revealing a gradual move towards the use of automated management and a commitment to sustainability, concerns over recruitment, retention and staff outsourcing, and the potential to deliver much more, if only the industry's "image problem" can be reversed.

From the edition

From the magazine