Author: Chiara Quaia, VP Market Development – Travel, Mastercard
The COVID-19 pandemic has grounded much of the tourism industry with huge economic and social consequences. The United Nations World Tourism Organization estimates international tourism could drop as much as 80% this year, putting up to 120 million direct tourism jobs at risk. An industry that made up 10% of global GDP has been massively impacted – with tourism spending unlikely to return to pre-crisis levels until 2024.
In the near-term, there are some glimmers of hope. Based on an analysis of anonymized and aggregated data from across Mastercard’s network – from before the latest round of lockdowns in a number of European countries – a gradual improvement in tourist airfare spending has been recorded over the last few months. Europe boasts 5 of the top 10 destinations for international travelers — with China, Russia and France in the 3 top spots, according to daily transactions. Consumer air spending is reviving faster than commercial spending. On the ground, global consumer spending on rental cars is coming back fast, and again, outpacing commercial rentals.
As the travel and tourism industry navigates the ongoing challenges and begins to map out a road to recovery, efforts are required across the ecosystem to improve efficiencies and make long-term investments in technology and infrastructure.
For example, boosting consumer confidence that the industry is taking health and safety seriously is one area where governments can help by ensuring standardization and understanding. Efforts by European public agencies to provide prompt, transparent and consistent communications has been shown to improve travel demand, according to a McKinsey & Company report.
Data, used responsibly, has a vital role to play. Attracting returning and new tourists isn’t as important as figuring out how COVID-19 has changed travel behaviors and what to do about it. Old assumptions won’t work in this new landscape. Rather, businesses and governments that rely on tourism will have to join forces to design more effective tourism strategies to navigate this new landscape. Figuring out who is both willing to travel and able to pay, as well as what incentives might entice domestic and international tourists who are still cautious of traveling. A deeper understanding of those potential visitors are required,exploring their safety concerns, spending decisions and how open they are to adapted attractions and experiences.
The core tourist infrastructure also needs to be digitized to offer contactless services and frictionless payments, accurate forecasting and coordination among various industry players and regulatory bodies.
And within the travel ecosystem that will get these tourists back on planes, and back into hotels, B2B travel payments have taken a new focus as a driver for increased efficiency and greater support for businesses that rely on the sector. Legacy payment methods now need to be a thing of the past in order for the travel industry to emerge stronger from the pandemic. With the industry dealing with continuous changes to regulations, stimulus programs, and protocols, digitization in the travel sector is key in supporting a robust recovery.
Mastercard continues to partner with different players across the travel industry to deliver new and innovative ways for them to best serve the consumer and their business.
The Mastercard Wholesale Program, a global virtual card solution specifically designed for the travel industry, is just one way we are demonstrating our commitment to supporting the industry. Utilising Virtual cards allows suppliers to streamline payment efficiencies and enables travel companies to save money and really focus on what matters: their core business and consumers. Virtual cards can help to increase consumer trust as they enable customers to pay travel intermediaries how they want, offer security on their transactions and data and reduce fraud.
As consumer anxiety remains high now more than ever they expect a frictionless and seamless payment experience. Ease of transactions, encompassed by security, speed and trust is vital as the travel industry is driven by consumers and in order to fully meet their expectations. Whilst we all need to play our part Mastercard is well placed to provide support by facilitating cross-border payments, increasing digital payment acceptance across the travel ecosystemand providing travel data and insights to guide the industry on a journey to having a robust and accelerated recovery.
Consumer sentiment is key to emerging stronger and more prepared for a Post-COVID situation. To shift our focusto how consumer behaviour has changed, innovation and digitization should be top of mind. Utilising up to date technology systems, data and identifying new financing strategies can all help to create an impactful and consumer centric strategy going forward. There is reason to be optimistic with travel consistently ranking one of the most missed activities during the pandemic, but planning needs to start now!
Also in the news:
Undisrupt: Bringing Power Back to Airlines
A New Digital Retail Reality – The Future Belongs to the Bold
AI Chatbot Lia Accelerates Enquiry Handling and enhances Customer Service for Montenegro Airlines During Unprecedented Times
Data driven solutions to enhance travel experiences from start to finish