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Hi readers! Nikki here.
It’s been six long months since I’ve breathed the fresh air of a foreign country. There’s nothing I long for more than to sit at a coffee shop and munch on a pain au chocolat without fear of contracting a deadly respiratory illness.
Unfortunately, the nature of this pandemic makes it difficult to step outside and live a little. Cases could spike at any given period and we could go back to more severe lockdowns.
Is this the end of travel as we know it? I guess, in a way it is.
While there’s no vaccine, travel’s going to be a little different—but at least, not impossible. People can stray closer to home but they also need to take the proper precautions. Technology is going to play a big role in reinvigorating the travel sector and keeping everyone safe.
Let’s explore the way Southeast Asian travel is going to be different from here on out:
TL;DR:
- Covid-19 has devastated the travel sector
- Trends and opportunities in the new normal
- Domestic tourism will resuscitate the Southeast Asian travel industry
- Agreed international standards for Covid-19 can reignite regional tourism
- New kinds of “travel” are emerging
- Traveltech and digital adoption will shape the near future of travel
- Traveltech applications in a post-covid world
- Biometrics and facial recognition
- Artificial intelligence (AI)
- Machine learning
- Augmented Reality and Virtual Reality (AR/VR)
- Thermal scanners
- Confidence and trust are key to recovery
Covid-19 has devastated the travel sector
The travel sector has been fundamental to the economic health of Southeast Asia. According to the Global Economic Impact & Trends 2020 report by the World Travel & Tourism Council (WTTC), travel & tourism (T&T) accounted for US$380 billion or 12.1% of the region’s GDP.
The lockdown measures and travel bans brought about by Covid-19 threaten millions of jobs and developing economies.
Orchard Road, one of Singapore’s biggest tourist attractions, is suffering from the “worst crisis” it’s had in years. From a sprawling hub filled with queues of Chinese tourists, the 2.4-kilometer strip is looking eerily empty these days.
There were only 2,200 international visitors in Singapore last June 2020. That’s 1.6 million less visitors from the same time last year.
Aviation is unsurprisingly one of the hardest hit industries in the T&T sector due to travel restrictions. Singapore Airlines Group announced that it is potentially cutting 4,300 jobs across its three airlines, which will result in approximately 2,400 furloughed staff in Singapore and overseas stations.
Tourism in Singapore accounts for 4% of the country’s gross domestic product (GDP). Nations with a more substantial reliance on travel and tourism, like Thailand and the Philippines, are even more vulnerable during this time.
Virus resurgence in several countries has dampened the hope that mass travel will resume in the near future. Travel companies have little choice but to adapt to the new normal and reimagine the future of travel if they want to survive.
Trends and opportunities in the new normal
Governments are seeking opportunities to revive tourism while simultaneously maintaining the health and safety of their people. Meanwhile, “wanderlust” still exists for most individuals, but the economic downturn and fear of contracting Covid-19 have changed the script for travelling in today’s world.
Here are some important trends and opportunities for the T&T sector:
Domestic tourism will resuscitate the Southeast Asian travel industry
Without a vaccine, international travel is off the table this year—but domestic leisure tourism is shaping up to be a key driver in the sector’s initial recovery.
The WTTC report showed that domestic travel made up the bulk of revenue generated by the global T&T industry. In 2019, it accounted for 71.3% of global spending, as opposed to the 28.7% from international visitors.
Leisure travel also trumps business travel, with the former accounting for 78.6% of total spend.
Thailand, Vietnam, and Singapore are already working on promoting domestic travel. The Thai government issued a 22.4 billion baht (US$718 million) domestic tourism stimulus package to capture at least 75% of Thai international travel spend last year. Vietnam launched a stimulus program that featured 260 tours and 280,000 vouchers with discounts of up to 70% off.
The Singapore Tourism Board (STB) followed suit with its S$35 million (US$32.4 million) domestic tourism campaign called the SingapoRediscovers campaign with the goal of capturing 10% of Singaporeans’ international travel spend in 2018.
The STB recently announced that they’re giving out S$100 SingapoRediscovers vouchers to all Singaporeans aged 18 and above, which can be used on staycations, attraction tickets, and tours between December 2020 and the end of June next year.
Private players are also doing their part in reigniting interest for local tourism. Grab Indonesia partnered with Booking.com to launch GrabCation, which allows users to book hotel rooms at discount prices via the Grab platform. Grab claims that all featured hotels have implemented standard health and hygiene procedures.
Malaysia and the Philippines also have plans to push domestic travel in the near future.
Agreed international standards for Covid-19 can reignite regional tourism
Regional tourism is another opportunity for the travel sector but it requires collaboration.
ASEAN member countries are working together to revive tourism in the region. They came up with a seven-point action plan outlining the measures they can take:
Knowledge sharing will be vital in implementing best practices across the region. And establishing international standards and standard operating procedures (SOPs) for travel and Covid-19 can accelerate the return of regional tourism.
As a number of both public and private stakeholders are involved in a traveller’s journey, multisectoral collaboration in the development of these guidelines is crucial.
Singapore and China launched its “fast lane” initiative to allow essential business and official travel between Singapore and six provinces of mainland China. By creating a “travel bubble,” citizens can move back and forth without having to undergo the 14-day quarantine measures. Instead, travellers will have to undergo stringent health checks before and after their arrival in the destination country.
This is similar to agreements made between China and South Korea, and Australia and New Zealand. Singapore is currently in discussions with Canada and South Korea for a travel bubble or “corridor.”
While this “fast lane” is restricted to business travel, it should be able to provide incremental support to the aviation industry in light of travel bans.
New kinds of “travel” are emerging
Today’s travellers are likely to be younger, fewer, and on a budget.
The young and non-family segment are more open to resuming travel in the first wave after the crisis. They are also less inclined to travel in big groups and prefer to make plans with immediate family members. And due to the economic downturn, they will be more prudent with their travel spend.
Some believe that it’s the budget hotels that will benefit from these changes in consumer behavior. As tourists have less disposable income and are concerned about the economy, there will be lower demand in the premium and luxury segment.
Others hold the opposite opinion and believe that this is an opportunity to target the affluent leisure travellers who want to vacation with minimal risk. Thailand’s tourism-revival strategy follows this line of thinking—rather than try to attract large numbers, its focus will be on high-end visitors who can spend up to five times a regular tourist.
The T&T sector should also be ready to accommodate long-term guests. There have been two types of long-staying customers observed in Malaysia and Vietnam:
- Those who have been unable to return home due to lockdown
- Frontliners quarantining themselves in hotel rooms
The pandemic has normalized long-term “travelling” in this sense, and it’s happening all over the world. Hoteliers in New York say that they’ve been receiving dozens of reservations for month-long stays in August and September this year, compared with only a handful last year.
Hygiene will also be top of mind for travellers, meaning there will be a change in the kinds of leisure activities they partake in and how they will be conducted.
Traveltech and digital adoption will shape the near future of travel
Traveltech in the region has been developing gradually over the years.
It was only in the early 2000s when traveltech verticals were first introduced in Southeast Asia. Reviews (TripAdvisor), fare aggregators (Kayak), accommodation marketplaces (Airbnb), and online travel solutions (Travelport) came into the picture and disrupted the online travel scene.
Capital investment into traveltech startups has also seen a gradual increase. While there were less deals in 2019, average deal size grew by 67% from 2018. Indonesia and Thailand are the largest markets for traveltech.
Some of the biggest investments in traveltech last year were in Indonesia-based Traveloka (US$420 million) and Travelio (US$18 million), and Singapore-based RedDoorz (US$115 million).
As one of the first services to move online, the online travel sector is one of the most established in the region.
In fact, it was the biggest sector of Southeast Asia’s internet economy up until last year when it was overtaken by eCommerce. Online travel still made up US$34.5 billion in gross merchandise value (GMV) in 2019, up from US$19.4 billion in 2015.
The online travel sector was poised to grow to US$78 billion by 2025, with personalization being the key trend driving the industry. Unfortunately, Covid-19 had other plans.
The new opportunity for the traveltech sector is in ensuring the safety and security of travellers.
Traveltech applications in a post-Covid world
For potential travellers, hygiene and safety are now top of mind when choosing leisure travel activities and accommodations. Creating a contactless environment will be crucial for the industry’s recovery in light of current trends.
T&T companies will need to find ways to minimize contact between staff and guests and ensure the hygiene, safety, and comfort of travellers. Technology plays a part in enforcing such guidelines as well as building trust and confidence in the safety and security of establishments.
Here are several technologies that are shaping the near future of travel:
Biometrics and facial recognition
Airlines and hotels are employing facial recognition technologies to provide a contact-free and self-check-in experience for guests. Not only will this make check-ins safer, it can also cut waiting times by 70%.
These technologies are already being rolled out in Singapore. The STB partnered with the Singapore Hotel Association to launch the E-Visitor Authentication System (EVA) to verify identities during check-ins. It is currently being piloted in three hotels: Ascott Orchard, Swissotel the Stamford, and Grand Park City Hall.
Singapore-based startup GTRIIP is a digital identity platform that uses artificial intelligence (AI) and machine learning to help guests verify photo IDs and owners via their smartphone. Think of it like a pocket concierge where guests can skip the queue and be issued physical key cards to their rooms straight away. Park Hotel Group and Amara Holdings Limited have been implementing GTRIIP in their respective chains.
Artificial intelligence (AI)
AI is also playing a role in revitalizing travel in the region. AI-powered chatbots, for example, can be used at hotels to provide 24/7 customer service to clients without the face-to-face interaction. Guests can do everything from make health declarations to request for more towels through their phones.
For Singapore-based digital concierge service, Vouch, business is booming right now. The company was able to sign on more hotels onto their platform and now have “15% of the total Singapore hotel room stock on board.”
Business travel management startup Travelstop is also seeing increased business as more companies are digitizing their workflows and processes. The company uses AI for business travel-related expense monitoring and reporting, which can automatically detect fraud and forged receipts. This technology is intended to improve the experience of travelling through automation and reduce manual reporting.
Machine learning
Considering the changes in consumer behavior, new data sets are required to best understand new trends and optimize services for such.
For example, budget-hotel booking platform RedDoorz is currently using machine learning to establish dynamic pricing according to supply and demand. By analyzing bookings across the region, the platform can determine the need for new price points, tech points, and SOPs for doing business.
Augmented Reality and Virtual Reality (AR/VR)
We’ve all heard of the virtual tours where you can visit the Louvre in Paris or take a stroll through Disney World via 360-degree panoramas on Google Street View. While none of these experiences have gained much traction in the past, the pandemic has given tourist sites and attractions little choice but to look for “alternative forms of escape.”
Indonesia has been kicking off virtual reality (VR) tours amid the pandemic. Ancol Dreamland Park in North Jakarta and Ragunan Zoo in East Jakarta are popular tourist destinations in the country that are now offering VR tours.
T&T companies acknowledge that virtual tours cannot replace the real thing—far from it. Instead, virtual reality will play two roles: one as a destination marketing tool and another as a temporary escape for those not ready to travel yet. The ultimate goal will always be to lure tourists back out into the real world.
Thermal scanners
Health screenings are also an issue. In places like the Philippines, manual declarations of your health condition are required before you enter a building. These declarations involve filling out a form and getting your temperature checked at the door.
This can be a long and tedious process and not the best measure for social distancing.
Temperature-check kiosks have since been developed to make these protocols safer and genuinely contactless. Technology company IntraEdge developed their own version called Janus.
Guests simply have to go through the kiosk and it will provide an accurate temperature reading within three to five seconds. Users will then be prompted with either a “yes” or “no” as to whether they can proceed. If the answer is “no,” hotels should determine the next steps for guests.
Confidence and trust are key to recovery
One key aspect of reviving the travel sector is building trust and confidence. Without the assurance of safety, there won’t be anyone willing to buy the tickets.
There needs to be clear, coherent policies that ensure a standard of caution for both domestic and regional travellers. In some cases, this will involve the disclosure of personal information, making now the perfect opportunity to develop more consistent frameworks for data protection and cybersecurity.
Local governments and private T&T companies also need to collaborate on their own initiatives for public health and safety standards. For example, RedDoorz collaborated with the Ikatan Ahli Kesehatan Masyarakat Indonesia (IAKMI)—Indonesia’s public health expert association—to provide a hygiene certification program to verify the cleanliness of hotels.
India-based hospitality chain Oyo also rolled out a certification program called sanitized stay. Travellers can filter out the hotels on Oyo’s platform that follow the “sanitized stay” guidelines. Trip.com did something similar and launched their international traveller’s guide, which outlines “safe” countries to travel to.
Another important factor in building confidence and trust is by giving customers the ability to back out of their travel plans if they wish. Having stringent cancellations, refunds, or rebooking policies may deter customers from going on trips. Expedia Group and Booking.com have both made it easier for customers to cancel trips on their platforms if circumstances change.
Needless to say Covid-19 has changed and devastated one of the biggest sectors of the Southeast Asian economy. It will be a period of rebuilding—rebuilding policies, behaviors, and technologies to make travel a safe and enjoyable activity once again.
While the situation seems bleak, we’re confident that the Southeast Asian T&T sector has all the elements to recover in the future.
