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Business Lessons from COVID-19’s Effect on Tourism

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By Steven Cooke
Faculty Member, Dr. Wallace E. Boston School of Business

Prior to the onset of the COVID-19 pandemic, tourism’s annual contribution to the global Gross Domestic Product (GDP) had an upward trajectory leading into 2019. The World Travel & Tourism Council (WTTC) showed that the direct, indirect, and induced impact of travel and tourism was $8.9 trillion for 2019.

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The economic report published in 2020 showed GDP growth from travel and tourism outpaced overall economy GDP growth for the last six years, ranging between approximately .5% and 2%. Starting at $1,629 billion and $5,160 billion for direct and total contribution in 2006, the total for 2019 was $2,892 billion and $9,258 billion in 2019.

Without COVID-19, that growth was expected to continue until travel destinations could no longer withstand the capacity. Although gains in revenue and wealth redistribution created many benefits, the correlated rise of overtourism had a negative impact.

Overtourism refers to the negative effects that increased consumption and unsustainable utilization of resources have on social structures and the environment. After the turn of the millennium, overtourism became not only a more significant concern for popular cultural and ecological environments, but also a more common issue worldwide. Overtourism becomes a burden to indigenous populations when the volume of incoming tourism traffic exceeds the capability of their infrastructure such as utilities, public transportation, food service outlets, lodgings and communication networks.

Unabated Overtourism Minimizes a Host Country’s Culture

One effect and critique of unabated overtourism is that the host country’s culture is minimized, pushed aside for trinkets and photo ops. Nowhere has this effect been more evident than in the open-air markets — traditionally structures for social engagement and commerce — that have been transformed into generic booths selling trinkets and fostering swarms of tourists taking selfies.

Local residents not only have to contend with increased traffic and hindered services in their day-to-day activities, but they also have to push through throngs of tourists to purchase basic food items that may not even be sold any longer because these markets have shifted to catering to tourists. The vendors choose to sell what the tourists want; otherwise, the tourists would form a blockade to take pictures and no one would buy anything.  

Locals in Some Countries Are Actively Discouraging Future Tourists

Local residents have adopted an anti-tourist stance and actively worked to discourage future tourists from visiting. Karl McLaughlin, a senior lecturer in Spanish at Manchester Metropolitan University, outlined anti-tourist events in Spain:

  • Barcelona: Masked assailants attacked a tourist bus, slashing tires and spraying graffiti on the bus.
  • Valencia: Protestors dressed up as tourists to satirize their behavior.
  • Palma: Protestors entered restaurants and showered mainly foreign patrons with confetti before using smoke to cause discomfort among visitors on yachts in a marina.
  • San Sebastian: A population of 180,000 greeted two million tourists in 2016 with “tourists go home” slogans.

Similarly, city and government leaders in Venice faced a crushing amount of tourism that had to be addressed, but every solution created an imbalance, harming either the residents unnecessarily or potentially being disastrous for the tourism industry in Venice. Being a symbol and significant contributor of overtourism, banning cruise ships from their current port in the city and then moving them to a different port was proposed.

As CNN’s Julia Buckley reported, the news of the proposal led to a loss in popularity of the political party making the proposal. In other efforts to minimize the damage of overtourism, Venetian leaders have micromanaged behaviors, seeking to limit what tourists could do and where they could go, which also affected the local residents. Quick fixes or restrictions aimed at herding tourists into specific areas only added obstacles to the daily lives of residents.

Resolving the Overtourism Dilemma

COVID-19 has disrupted global life, and we have had to learn and adapt. In this context, there is not much positive about the COVID-19 pandemic; however, industry leaders in destination management and tourism have identified some opportunities to resolve the dilemma of overtourism.

Many of the “fixes” were quickly decided upon or implemented, with many sacrifices imposed on local residents or businesses working within tourism. These fixes sometimes created new problems or were used as a means to discourage tourists from visiting, potentially causing financial harm for those dependent upon that revenue.  

Destination Managers and CVBs Can Evaluate Past Strategies, Tactics, and Outcomes

The restrictions and closures implemented to curtail the spread of COVID-19 have enabled destination managers and Convention and Visitor Bureaus (CVBs) to take a step back and evaluate their past strategies, tactics, and outcomes. The organizations and stakeholders vested in incoming travel and tourism, which has stalled or slowed nearly without precedent during 2020 and now into 2021, have been given a window of remediation to evaluate what has worked, what has failed, and what can be changed to more effectively accommodate balanced and beneficial levels of tourism.

Once COVID-19 restrictions are relaxed and destinations begin to open again, tourism will explode, exceeding 2019 levels due to the sheer numbers of people wanting to travel again. Destination managers and governing agencies can either manage incoming tourism better or they can expect to quickly return to the problems they had before.

This same window of remediation has been created for many industries and across hospitality services. Travel operations managers and leaders are often “knee-deep in the weeds.” They work through their daily routines and resolve problems using solutions that, like the quick fixes in managing tourism, may not be the best option because they focus too much on the symptom of a problem rather than on its root cause.

One example of a “quick fix” that could end up in court would be to prohibit workers from complaining about their work on social media. Aside from being protected by the National Labor Relations Board, a simple response to negative comments fails to address why the workers might be complaining.

Any policy that seems to micromanage behavior can be evaluated to determine precisely what behavior is being addressed and what causes that behavior. The goal is to find a more sustainable and effective solution for the root cause of that behavior.

Now Is the Time to Re-Evaluate and Strengthen Business Models and Practices

While in the moment or in a rush to move on to the next task or quickly fix the problem, decision making may be less than optimum, as is opting for the first solution to resolve the most apparent problem. Following the example of destination managers and tourism boards, now is the time to take a step back and re-evaluate business models and practices.

Operations managers, from departmental to general managers, should allocate time to dissecting tactics and determining if any specific tactic is really the best solution. Even successful tactics should be reexamined to find opportunities for improvement. Though COVID-19 is clearly unfortunate, the pandemic offers an opportunity to strengthen business practices.

Managers can discuss these issues and then bring in team representatives to get their input about past business practices. Valued furloughed employees can be asked their opinion to show an effort to involve them and provide a better workplace.

In addition, hospitality organizations can ask what worked and what didn’t. Start by reviewing the most recent “fixes” or older processes to determine how effective they have been. Isolate strengths and weaknesses and how each tactic directly or indirectly affected operational performance. Survey loyal guests to see what they liked and what they merely tolerated. Their perception is key to tailoring the guest experience to what would be most beneficial for all.

After the eradication of COVID-19, there will be no reason to return to business as usual. But there is a moment of opportunity right now to start to be better than before.

Steven Cooke is a certified hospitality educator and assistant professor in the hospitality management program of the Dr. Wallace E. Boston School of Business. He develops and teaches classes related to operations management, hospitality law and management theory. Prior to teaching, Steven served in the United States Army and then worked in operations management within several well-known restaurant brands in North Carolina and Las Vegas.

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