Rosanna Caira: What are the early impacts of COVID-19 on each of your
areas of the tourism industry?
Greg Klassen: This is an unprecedented occurrence. More than 100 countries in the world have actually stopped travel to their borders. So, you’ve got this complete cessation of any kind of global or international travel and, in many instances, even travel within each of those countries — no reliance on the international market and no reliance on the domestic market to help fill our hotels or destinations. In many countries, we’re at stay-at-home or even in some cases, total lockdown of people. And no movement at all, obviously, means no tourism industry at all. We’ve never seen anything quite like that and the impacts are devastating on industries that support tourism, hotels, the small and medium-sized businesses and even those DMOs that are virtually down to threadbare staff, if any at all.
Scott Beck: With everything, you’ve got to find the silver linings or the learnings and move forward. Clearly, the impact is, first and foremost, recognizable from an economics perspective. Our industry — and so many industries we rely on — is just not functioning and it’s not functioning for health-and-safety reasons. And so that second impact is sort of emotional and both are of enormous importance right now. One is very immediate and very real, which is the economic impact and we’re now beginning to shift and understand what this means from an emotional perspective and what it’s going to mean to travel once some of these health concerns are addressed and understood — that’s equally impactful right now.
Beth Potter: The impact is being felt in every corner of [Ontario] and it’s affecting not only those you would normally think of when you think tourism, such as hotels and restaurants, but also recreational products, those unique experiences such as flying-fishing camps in Northern Ontario. And what we’ve learned over the last few days or weeks through our evidence-generation strategy is that more than 50 per cent of those businesses have already closed their doors, temporarily anyway, and 38 per cent have laid off their staff. And obviously, if they’re closed, revenue generation is not there and they’re really concerned about that. The other part of it is those that support the industry, the DMOs and the sector associations and others that are working hard to try and support those businesses. But right now, everybody’s in the same boat and so much is unknown.
RC: When you talk about the numbers of businesses that have closed, albeit temporarily at this stage, what percentage of those may not come back if this continues at the pace we’re seeing now?
BP: It’s all going to depend on how they access some of the help that’s being announced from all levels of government. Right now, according to our survey, more than 30 per cent of businesses fear they won’t be able to open again. It’s a huge number and it’s not specific to any one type of business or any one location — it’s far and wide across the province.
RC: Frederic, as someone who observes tourism and teaches about it in the university environment, what are some of the long-term impacts going to be that will transform the industry moving forward?
Frederic Dimanche: For those of us in higher education, we’ve pivoted very quickly to go into distance learning and using Zoom meetings and all those technologies [available] right now. And companies are doing this as well, which will have an impact on business travel, obviously on meetings, although probably not on conventions and tradeshows, which may be a whole different ballgame.But business meetings are learning from this and will possibly change their travel policies to protect their staff and limit travel.
[Schools] will also be confronted by a diminishing number of international students and that will affect Canada as well. There are a number of colleges, specifically around the Greater Toronto Area, that rely, if not exclusively, in very large part on international students — [some as high as] 80 per cent of their students. [There’s an associated] impact from a decrease in visiting friends and relatives [of those students]. But, on the good side, that may be one of the markets that will be among the first to rebound. Travel safety will obviously be important, but meeting your friends and family will be very important and, for all those new Canadians and immigrants, some of the first visitors we’re going to be seeing, or that we’re going to be seeing from an international perspective, are likely to be the visiting friends and family market.
RC: How different is this crisis from others, such as SARS or 9/11? Were there any lessons learned from those crises we could apply today?
GK: I was working with Destination Canada in 2003, when SARS hit, and I was there during 9/11 and during the 2008 crisis. So, I’ve been through a number of different crises, working in and with Canada’s tourism industry. I would add all three of those crises up and then double or triple it for what we’re experiencing right now. Early on, we could see some commonalities and lessons from SARS. But SARS was isolated to certain areas and, certainly, Toronto, Ontario and Canada had [felt] a fairly significant impact — we lost about a million and a half travellers in the year of SARS and really only recovered about 900,000 of those travellers. It took us a long time to make up the recovery from SARS and there were lots of other factors at play, because it coincided with the period where Americans were requiring passports for visitation into Canada, which had a major impact as well. But this is very different and I’ve never seen international airspace closed like this. I mean, 9/11 we saw airspace closed in the U.S., but for a much shorter period of time. There wasn’t this cessation of travel. I think we’re beyond those comparisons. Right now, we’re into brand
RC: Looking at this crisis, what can we expect in terms of rebound time, given the sheer magnitude of what we’re dealing with?
FD: One thing we learned from previous crises, whether 9/11 or the financial crisis, and if we look at the hotel data specifically from STR, is that it took about twice as long for Average Daily Rates and Revenue Per Available Room metrics to recover as it took for them to go down to the lowest level. So, as Greg said, we’re beyond that [and into] double recovery time. In terms of numbers [returning] to the level we had before, we have to realize the industry isn’t going to come back to the same normal; it’s a new normal we’re going to be facing. And if we’re talking about numbers of visitors flying and travelling internationally, it will take years for us to get back to the level we’ve seen in 2019.
BP: I agree it’s going to take a long time. We’ve been in conversations with colleagues across the country, but also in other countries — [we’re] trying to learn from China right now as to where they are in their recovery time, as they’re slightly ahead of us. We know we’re going to see a little bit of a peak coming out, once we all can start socially integrating again, and we’re going to see that domestic visitor start to help businesses rebound. But we’re really not going to see that upward trajectory in recovery until people feel safe again and part of that is going to be when we see a vaccine. So, if that vaccine is 18- to 24-months down the road, that may be what we’re looking at before we see that trajectory of recovery really start to take off.
RC: When the industry finally does get to some kind of rebound, which group will be the most impactful?
SB: The consensus [seems to be that] it will be locals [supporting a] regional market. It will be clearly defined, not only as leisure local, but also local corporate travel between Ottawa and Toronto. People aren’t going to be risking their health by getting on a plane for a long period of time. One of the areas where we’re fairly optimistic, because we’re not seeing mass cancellations of large events in September, October or November, is there seems to be a desire [within] the industry to reconvene. Zoom and Google Hangouts are a necessary tool and people are adapting to them very well. They’re enormously helpful right now, but people still want to be with people and that’s an important part of the recovery. Long-haul overseas travel is probably one of the last [that will] come back globally. The big unknown — the one we’re the least optimistic about — is international corporate travel, just because of the economic impact to the balance sheet of business, not just Canadian business, but global business. It’s going to be a long time before they’re back to travelling the way they were.
GK: I’ve been accused of being overly optimistic, but I would say I’m pessimistically optimistic. I want to do a shout out to the resilience of travellers in general. Post-2009 crisis, travel returned to its best year ever and it’s grown ever since. There’s a great deal of resilience in [the] travel [industry]; we tend to have relatively short memories. Every situation is going to be different but, I do believe wholeheartedly in the resilience of that traveller. Now, they’ll travel in different ways, domestically, regionally, for sure, and I do believe, as Scott said, we’re going to be tired of these web-based calls. We’re going to want to get together so we can work through some of those corporate shifts and we’re going to find we need to be together in a room in order to do combine with — those corporate meetings will support it. But I have a couple of data points that have come out along with it, suggesting a number of people have changed from an international to a domestic trip. Their viewpoint is that, when this is over, they’ll start travelling and they’ll start travelling domestically. We also know, through the same study, that 65 per cent of people, as of April 1 of this year, were still planning a trip this year. It might be a domestic, but we’re planning trips. Right now, people have time on their hands and they’re thinking about what they’re going to do when this is all over.
FD: I agree entirely with Greg about the domestic and regional travel — that’s going to be where the growth is going to start again. But, I have some concerns when I read about statistics coming from the U.S. The Americans don’t really understand the gravity of the situation yet, they don’t realize they’re going to have to go into confinement for an extended period of time. So, [recovery] is going to take a lot more time than the Americans are expecting. But, no matter what I think, whether we focus on the regional domestic travel or on starting international travel again, slowly, we’re going to have
to — from our perspective as service providers and operators — make sure we establish trust and confidence. It’s important to realize people are not going to start travelling unless we put in place the conditions to make them to feel safe.
RC: What would some of those conditions look like as we move into a whole different mindset and landscape?
FD: We’d have to have a number of procedures in place, like we did after 9/11, at the airport. Perhaps the airlines will have to restart with only one consumer every two seats, for example, or not sitting next to one another. Hotel restaurants will have to practice physical distancing because, if we want to have customers back into our properties, we’re going to have to make sure there’s no opportunity for customers to feel crowded, whether it’s at the front desk or the bar or in the restaurant. We’re going to have to reinvent a whole series of practices throughout the various operations we’re running in hospitality and tourism that will make people feel safe.
BP: We’re already starting to have conversations with the accommodation community around what changes to standards of housekeeping are going to need to be made and how we’re going to manage crowds. [It’s going to have to be] a phased approach and we’re going to have to look at time tickets and how to manage the flow of that kind of a system. We’re already starting to have those conversations and see what we can develop to get ready now, before we start welcoming everybody back to our businesses.
RC: How do you feel the government has played into this recovery?
BP: If you don’t normally work with government on a regular basis, you may not understand that they’re moving at lightning speed. So, hats off to them for doing that. The feds are taking the lead on pieces and then that is often followed by the provincial or territorial level and then it rolls down to the municipal level. It’s a great civics lesson in how these three levels of government have to co-exist and support each other in the different programs and solutions they’re trying to come up with to help businesses of all shapes, sizes and kinds across the country.
SB: I have a unique perspective in that I’m still so close to what’s going on in the U.S. And, I’ll tell you, I’m feeling really damn lucky to be in Canada. The ability this government, at the provincial level, has shown to listen to — and engage with and speak to — the industry has been above anything I’ve ever experienced. When I tell people in the U.S. what’s going on, they find it hard to even get their heads around it. There’s an incredible connection to the industry and that’s very important. The social network, that’s the safety net for the frontline employees who are carrying the brunt of this of this crisis — the housekeepers, the bellman. At the city, municipal, provincial and federal level, the ability to recognize the impact of their actions and hold themselves accountable has been an incredibly
GK: I’m really impressed with [the government’s] support for our economy. I don’t know how we’re going to pay for all of these programs, but I’m delighted they’re in place because. let’s face it, most of those suffering are in the hospitality industry. The hourly employees and seasonal employees are suffering the most and they’re the ones we need to survive in order to bring back our tourism industry. We’re all collectively working so hard to communicate with government the importance of tourism, how much it contributes to our economy, how much it contributes to employment, how much it contributes to our exports. We felt as if it frequently fell on deaf ears [but] they’re listening now, because they see the downside and the impact [COVID-19] has had. Hopefully we can sustain that awareness with government and work with government to help build rebuild our industry going forward.
FD: I’m amazed by the quality of the [government] response here. I’d also like to recognize the fantastic work the professional associations are doing here. I’ve been comparing [it against] the professional associations in Europe and I don’t see as much commitment to represent the industry and discuss with government that we’ve seen here.
RC: From the association perspective, what are you telling your members about the recovery process? Are you speaking to them about strategies, opportunities and funding possibilities once this crisis is over?
BP: We’re only just starting to make that shift now. For the last four weeks, we’ve been in listening mode, trying to make sure we’re an outlet for all those businesses to reach out and share with us the impacts of what’s going on so we can really understand the needs of individual businesses. But the shift and conversation are starting to happen. Now we’re starting to talk about, as we get through this, what does coming out of it look like? We’re having those conversations around training. Our friends at Tourism HR Canada have made all training courses available free of charge right now. Isn’t that a great way to engage your staff if they are on furlough or if they’ve been laid off? Is there an opportunity to get them to augment their skills? Can we build capacity during this timeframe? What are the capital projects that might be waiting in the wings and ready to go and how can we get those shovels in the ground as soon as the state of emergency is lifted? So, we’re starting to have those proactive conversations now, about taking advantage of this time we have and having something positive come out of it, so that when we’re ready to flip the welcome sign back on, we’re in a better position to welcome our guests back.
SB: As you know, our member communication used to be much more program related and aspirational. And that really pivoted to us sharing information from organizations with them. [We’re] acting as a conduit for information we have access to and pushing it out in a weekly email that’s been very well received. That created a dialogue that was transformational for us as we’re a destination-marketing organization that sometimes gets confused with a membership-marketing organization. Our communication or interaction has really shifted that community orientation and that will be the North Star for us moving forward. [It’s about] how we can be of help today preparing for the future.
RC: What are you hearing from your membership in terms of what they would like to see moving forward?
SB: First and foremost, they want to know how they can bridge to recovery. We sort of filled a unique gap because we have a very engaged hotel association with Terry Mondal in the Greater Toronto Hotel Association and where we seem to be delivering the most value is in the smaller business — the single-unit owner [who wants help working their way] through this network of government services. For example, we had 178 people sign up for a webinar we did with a local government-
relations expert to help them navigate all these services. Some of the larger [operators] are saying, ‘let’s talk July/August, what are our plans.’
RC: Greg, from your perspective as a consultant and an industry observer, how can operators start that recovery process?
GK: The most important thing we can offer our operators right now is help and hope. Again, this is where my optimism comes in handy, I suppose. But we need those businesses to be in operation when recovery happens. We need them to work through some of this gnarly stuff that’s happening right now in order to come out the other end and I know that’s not going be easy. They’re going to need some support and some help with how to take advantage of some of the government programs so they can get through this challenge. So, hope is really important and each of those operators needs to know there’s a glimmer of light at that end of the tunnel so they can strive towards that goal. I’m also really impressed by those operators who have figured out how to pivot and shift their businesses; how those restaurants have turned into takeout centres, maybe not hiring the 18 people they used to hire, but maybe hiring six and keeping 12 off of the unemployment line for a short period of time while retaining some of their own money in order to keep their businesses alive. Those kinds of operators are really inspirational. Everyone’s got their reasons for shutting down or figuring out how to pivot. But if we can collectively help each other, sustain ourselves through this challenge, we’ll have a much better destination to market when when restrictions start to [lift] and, when we look at what the next normal is going to be, we’ll be ready for them with some solid product and can start to thrive again.