Social Distancing and Its Impact on Tourism

Overview


The following SMG Consulting Brief is the first of several designed to address the post-Coronavirus

tourism industry.


As can be seen daily, the Coronavirus has had perhaps the most significant impact on the United States over the past fifty years. As the virus spreads across the country, closures in the economy are

significantly impacting the industry today and will have legacy impacts tomorrow. The habits shaped by legacy impacts will continue long after the pandemic has subsided. The question is, what might some of those legacy impacts be?


For example, manufacturers will no doubt be looking beyond China to source materials and products. In the workplace, government and private sector organizations have increased the options for telework

and staggered work shifts. In higher education, many colleges and universities have shifted to even

more online courses that will continue to expand.


To mitigate the spread of the virus, the Centers for Disease Control and Prevention has issued

guidelines which include recommendations for "social distancing"—a term that epidemiologists are

using to refer to a conscious effort to reduce close contact between people and hopefully thwart

community transmission of the virus.


This new policy is significantly impacting tourism today, especially the cruise, airline, hotel, restaurant, attractions, and resort industries. Additionally, the many industry segments that feed off tourism are being impacted as well.


SMG Consulting Think Tank


The SMG Consulting Think Tank members are experts in their field from across the county and represent a variety of different perspectives and backgrounds, including tourism, marketing professionals, writers, environmentalists, photographers, professors, and more. Everyone has in common a passion for the work they do. The goal of SMG Consulting Think Tank is to better understand current and future issues impacting tourism and destinations, as well as to generate useful information and insights that can be used by leaders.


The Issue Under Consideration


To begin to develop post-Coronavirus scenarios and the potential impact on the tourism industry, the

SMG Consulting Think Tank has considered what effects social distancing might have on the tourism

industry.


Our take is that this pandemic will create legacy behavior changes, but most of the impact will be in the next six months with potential effects as long as 15 months. The think tank specifically considered two different segments: group and leisure travel.


On the group side, it is anticipated that meetings will be significantly cut back and the use of technology will increase for meetings. In the short term, it's also expected that there will be increased fragmentation with smaller, more regional meetings being conducted at the expense of larger meetings and conferences. This will change the playing field for Tier 2 and Tier 3 destinations that can provide quality meeting facilities.


In general, look for all meeting and conference organizers to go to the extremes to decontaminate the experience. You might see some kind of certification process to assure function attendees that the meeting facility is hygienically secure. We have most recently viewed this kind of behavior with Chipotle when they suffered from a similar issue and needed to reassure the public they could eat there again. The behavioral change back to a big conference and meetings will take some time. In the short run, those destinations that can take advantage of group fragmentation will and should.


On the leisure side, consumers will continue to travel as the pandemic subsides. However, they will exercise greater control over travel decisions in order to reduce risk. They, too, will look for places, hotels, attractions, restaurants, etc. that are hygienically secure. History shows that consumers ultimately return to travel. Still, they are smart and will learn from this experience. Expect other behavioral changes to emerge that will be a legacy of the pandemic.


Below is a sampling of thoughts from our think tank members:


• I don't think it will continue. People have already selected social distancing through the immersion of social media. People might be skeptical for a while, but after 3-4 months, we'll be back to "normal."


• Social distancing may linger for some time but believe it will diminish as the threat diminishes. Humans are social creatures by nature and require a threat to force them away from natural behaviors.


• This is similar in many ways to the behavior that followed Sept 11. Lots of talk about getting back to the basics, getting to know your customer, lots of handholding. That lasted for a while before we fell back into old habits. If the current virus abates in six months, but fears of a seasonal rebound hold firm, then social distancing may persist for the next 10-12 months.


• Social distancing will continue for a while after it is under control. It is assumed it will be at least a year, and we'll still be using the term. This impact will deter many from traveling. Restaurants are currently seating every other table or widening the space between tables. But fewer meals mean reduced sales and fewer profits. For meetings, promoters and planners will have to discuss how far each seat is from each other; there will be hand sanitizers in each room, etc. Look at airlines who, for years, have been tightening up the space between seats. It will be interesting to see how they handle the issue. However, sports, concerts, large crowd events will still take place as usual. Maybe this will help with overtourism, and it'll be interesting to see how those cities are affected.


In terms of how long the concept of social distancing will be in place, we assume it will be prominent in society, the media and consumer thinking for the next six months. Our survey of executive opinion among think tank members clearly shows a transition of time regarding social distancing.




Strategy Implications


1. The strategy implications for tourism destinations are significant. To put these potential implications in perspective, the first question to consider is how long this will impact the industry. Any forecast at this point is pure conjecture, but to get some kind of handle on it, we can look to other disasters and, most recently, California fires. If you consider the impact and travel behavior that has been seen during a fire, there are several vital distinctions we can learn from.

First, the downturn we see as a result of the Coronavirus is much steeper than we have seen with fire. It has been almost immediate and across the board. Also, we envision recovery at a slower pace than a fire. If you look at both the Santa Barbra and Ventura fire, it took approximately a year to get back on track. As such, a timeline to consider is about 12-15 months to get back to normalcy. This estimate is based on the assumption that the virus will keep spreading and at some point, the curve will flatten. When the press reports turn positive—from this point—we estimate approximately 12 months. Again, this is conjecture on our part, but we are also providing a timeline for consideration.


2. Given that timeline, what can you do? In the short term- not much in terms of advertising and communicating with your target segments, etc. DMO's would be wise to hold on to their budget. Also, your local community may not be interested in attracting more visitors, given the limited medical facilities and capabilities available.


That doesn't mean your efforts should also shut down; it's a perfect time to refine your destinations emerging strategy. As the impact of the virus diminishes your DMO, Hotel, the restaurant will need to have a plan in place and ready to go. Keep in mind all your competitors will be doing the same thing. The playing field will change, for example. If you pull back marketing and communications to your closest feeder market, be aware your competitors will be doing that same thing. How will you compete in an ever more competitive marketplace?


3. There is always opportunity in disaster. Spend some time looking for an opportunity as a result of this situation. Where can you get an advantage as we come out of this situation? Don't sit, still waiting.


There is so much we don't know right now, but we do know this, it will end. When it does, those that have spent their time considering the changes to the marketplace and how they will react will have some kind of advantage over those that haven't.


Stay safe, be smart, think strategically.



SMG Consulting. Take another path.


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