Expert’s Voice: Post Covid19 future of hotels and hospitality hinges on Chinese tourists

by | 06 May 2020 | People

(Photo from Unsplash by Victor He)

Being carried away and responding with emotions rather than pragmatism and wisdom can have its own secondary economic blowbacks and more daunting geopolitical costs, writes Ali Borhani, Managing Director of 3Sixty Strategic Advisors.

COVID-19 has undercurrents with ramifications that go beyond what we can imagine. This global quarantine has been the largest “staycation” ever in mankind’s history.

The WTTC (World Travel & Tourism Council) says 1 in 10 jobs (330 million) worldwide are in travel & tourism. The organisation also highlights that 11% of the global GDP is derived from the sector.

2018’s largest source market for the global travel & tourism sector was China with 150m outbound travels, spending close to $277bn which is more than the GDPs of Finland, Vietnam or Egypt. It’s also worth mentioning that only close to 140m Chinese have passports – a tip of an iceberg when it comes to future potential.

Beware of finger-pointing

Indeed, COVID-19 has been the biggest challenge in the history of the travel & tourism sector, but with growing finger-pointing and political dodgeball between major capitals, there is a chance that many countries unknowingly will develop the wrong socio-cultural antibody in form xenophobia towards foreigners at large, and in particular, develop a bias towards Asian nationals and Chinese in particular.

According to the China Tourism Academy, 84% of the Chinese outbound tourists are young and all under the age of 45. This means that their experiences and the way they will be received in a post-COVID-19 would influence their travel, education and investment decisions for decades to come.

Why does this matter? Because China is the largest source market in the world and only 10% of the population have passports. In other words, the future of hotel and hospitality hinges on the expenditure of Chinese tourists for years to come.

The “Welcome Chinese” certification initiation led by the China Tourism Academy and one that many EU countries have already adopted and applied the process to their markets should be revisited. Hosting destinations, countries have to be very clear about their travel and tourism strategy in a post-pandemic era.

This would entail not only being fixated on medical tests at source or arrival, but also more importantly how to robustly develop the re-engagement travel and tourism strategy. The bounce matters to all primary, secondary and tertiary jobs in the sector and beyond.

The future of travel and tourism is essential not only for sectors like retail, fashion, F&B, arts and museums but ever more so for diplomacy, cross-cultural pollination and a better understanding between nations.

UK’s reliance on China and the world

Being carried away and responding with emotions rather than pragmatism and wisdom can have its own secondary economic blowbacks and more daunting geopolitical costs. Name-calling a virus is a slippery path; as much as the zika virus was not called Rio or São Paulo virus, the latest coronavirus should not be called Wuhan virus either.

Travel and tourism sector also has a direct and interrelated impact on the education sector. Universities have been around for centuries, and the academic sector is heavily reliant on the industry for its sustenance as it is the first exposure and touchpoint. Parents visit countries, like what they see in safety and security and then send their children and invest which also has a direct impact on real estate /construction and student accommodation affecting all other economic sectors.

Close to £7.5bn was spent by Chinese students alone in the U.K in form of tuition in 2018-19. Add other nationalities and you will soon realise that an estimated £10-11bn of international student fees is the backbone of the much-needed R&D budget that many U.K universities need in a post-Brexit world.

Many of the shortcomings, underinvestment in research and manufacturing capabilities were highlighted in these health crises in the U.K and across E.U. One of the most important ways of positively influencing a country is not always at home and on its turf but abroad.

In light of these latest crises, we should not forget that only after Deng Xiaoping’s opening-up policy, China saw the world, and developed its own socio-economic model from which both China and the world have greatly benefited. With all the fair and unfair criticism of China at times, a far more engaging and responsible China is a far better choice than an isolated China.

I once read: “Little things matter and those who say they don’t have spent a night in a bed with a mosquito.” We should pay pragmatic attention to how we intend to deal and engage with China moving forward.

Ali Borhani
Ali Borhani

Managing Director, 3Sixty Strategic Advisors

Ali is an emerging markets geo-economic and strategy expert. His many years of experience have been developed and strengthened by helping blue-chip companies, multi-nationals and family businesses in some of the most challenging markets.