Updated: 4 days ago
The following SMG Consulting Brief is the second of several designed to address the post-Coronavirus tourism industry.
As several states and regions begin to consider re-opening, there is much confusion about what a timeline to normalcy looks like from a tourism industry perspective. There is the issue of the COVID-19 virus, but there is also an issue related to the underlying strength of the national economy. It is not clear if the country or parts of the tourism industry see both the distinction and the interrelatedness of these two issues.
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 understand better 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
From our perspective, we saw the impact of the economy as a severe drag on the future of the industry. Our assumption was if there was a vaccine found tomorrow, the return to normalcy would still be a ways off. Our think tank members saw things a bit differently. Below we ask the question of what your best estimate is as to when the tourism economy/industry will return to levels that existing before the COVID-19 pandemic?
As can be seen, the bulk of respondents 76% indicated the economy would return to pre-COVID-19 levels beyond 19 months.
We then asked SMG Consulting Think Tank members to consider the timeline to normalcy in another way. What if a vaccine were found tomorrow? What is your best estimate as to when the tourism economy/industry will return to levels that existing before the COVID-19 pandemic?
As can be seen, things become a little different in this scenario, and these differences should be considered. Overall, SMG Consulting Think Tank members see a quicker return to the tourism economy/industry return to levels that existed before the COVID-19 pandemic. Destinations are looking for answers to three key questions: understanding the different scenarios provides some potential planning insight into answering these questions.
• How much demand for your destination will there be?
• At what pace will demand come back?
• How will your destination experience be different?
To take a closer look at these two scenarios, we combined the data on the following page.
These are two distinct scenarios for the tourism industry to consider, and both will dictate how much demand there will be for a destination, what the pace of recovery will be, and what the experience will be like.
Another observation, the SMG Consulting think tank takes an opposite view of our initial assumption. We assumed that even if a vaccine were found tomorrow, the recovery would be lengthy due to economic reasons, including high unemployment, etc. The response on the chart above illustrates the exact opposite that a vaccine would not only inoculate against the virus but also fix the poor economic conditions.
1. The strategy implications for tourism destinations are significant. The optimistic view would be if a vaccine were found tomorrow, a return to normalcy would be significantly shorter. The pessimistic view assumes that even with a vaccine tomorrow, the underlying economic challenges would be significant, and a return to normalcy would still be a long time off.
2. Are we under-appreciating the economic issues and impact on the tourism economy? The Fed chairman Jerome Powell's comments in his recent press conference are not soothing.
"And though he said there could be a burst of economic growth once stay-at-home restrictions are lifted, he added: "It's unlikely that it would bring us quickly all the way back to pre-crisis levels."
The potential impact on DMO's is significant. Pessimistic or optimistic, how does one plan? Our view takes a nuanced view and includes the SMG Consulting Think Tank. Take the long view and the underlying impact of the economy, and if a vaccine shows up all the better. In either scenario, it is going to be a while.
About SMG Consulting SMG Consulting, located in South Lake Tahoe, is a strategy consulting firm specializes in the tourism and recreation industry. For more information, www.smgonline.net.
For more information on the impact of COVID-19 on DMO's see our special section on the SMG website. How has COVID-19 changed consumer outlook, preferences, and priorities? SMG can help you with those answers, contact us for more information.
 Jerome Powel Press Conference 29 April 2020.