Navigating the New Norm
Views on the Travel Tech Space Post COVID-19
CONSEQUENCES OF COVID-19
Our observations on how COVID-19 has affected markets and firms in the industry.
Visitor Arrivals By Countries (2020)
Since the outbreak of the virus in late January, Asian countries have closed their borders, reducing tourism and business activities between said countries; moreover, residents returning to their own countries are required to self-isolate for 14 days.
The majority of South-east Asia countries experienced a fall in visitor arrivals since February. The drop is significant in March and April (over 80% compared with 2019). Some even had 0 visitors in April.
TRAVEL TECH COMPANIES PIVOTING TO CATER FOR COVID-19
CASE STUDY 1
CASE STUDY 2
CASE STUDY 3
Increase of single-number to 10-digit number of cases every day since September (both local and imported cases)
Hong Kong’s government has contacted 11 countries and proposed a travel bubble between them including Japan, Thailand, South Korea, Germany and France.
Hong Kong-Singapore travel bubble allows quarantine-free visits, but also requires a negative result on Polymerase Chain Reaction test (PCR) 72 hours before departure in both locations
Major ASEAN Countries & Cities
Increase of single-number to 10-digit number of cases every day since September (only a few local cases)
Singapore has struck a travel deal with China which allows essential travel between Singapore and six cities in China: Shanghai, Guangdong, Tianjin, Chongqing, Jiangsu and Zhejiang.
Hong Kong-Singapore travel bubble allows quarantine-free visits, but also requires a negative result on a Polymerase Chain Reaction test (PCR) 72 hours before departure in both locations
In addition, Singapore has agreed to a travel bubble with both Japan and New Zealand.
Passengers have to be sponsored by a government agency or a company and were able to apply for the ‘fast lane’ for essential travel.
Bali has been decided to be one of the regions which is soon to open up under the Indonesian government's “new normal”, which will gradually reboot local economies while ensuring public health protocols - since July they have had on average 3,000 tourists per day.
Local attractions like Mount Brono have began to re-open at limited capacity and arrivals in Indonesia have been steadily growing since June.
Taiwan has achieved 200 days with no local COVID-19 cases.
Taiwan is subsidizing citizens to stay at designated hotels, with free entry to amusement parks for children born after June 2001
Thailand's COVID-19 cases per day have increased from signle-digit to double-digit numbers since May.
The Thai government will subsidize 5 million nights of hotel accommodation at 40% of normal room rates for up to five nights.
Vietnam's COVID-19 cases per day have increased from single-digit to double-digit numbers since September.
Vietnam resumed domestic travel in September after National Day, offering discounted tours and staycations to stimulate travel.
Malaysia allocated USD $113 million towards travel discount vouchers and up to USD $227 tax relief per person for expenses related to domestic tourism
International air travel will continue to be volatile:
It is highly unlikely to return to pre-pandemic levels in 2020 as fears of flying remain an ongoing concern.
Brian Pearce, chief economist for IATA expects a slight recovery in the second half of 2020.
Bookable seat capacity has reduced to 62% of normal capacity despite an average breakeven capacity of 77%
Amid low demand, it is difficult for airlines to raise prices despite their lower seat capacity - double the reason for concern.
We predict that it will not be until 2023-2024 that air travel make a full recovery to pre-pandemic levels.
CONSUMER BEHAVIOR AND OPPORTUNITIES
Forecasting the behavioral changes of consumers due to the pandemic, paired with opportunities which will arise as a result of said changes.
CHANGES IN PREFERENCES
We believe that travelers will evolve to value both privacy and hygiene.
In a post-COVID environment, there will be a natural fear of crowds and being within close proximity of others. Furthermore, with the likely continuation of social distancing into the future; traditional, large group traveling becomes less feasible.
Privacy and the option to travel in small groups therefore becomes more important.
Furthermore, travelers will instinctively be concerned with hygiene, both in maintaining their own sanitation and the condition of the places which they travel to.
We believe our portfolio company, TripGuru has the opportunity to capitalize on the changing preferences of customers.
Specializing in tours of small groups between 5-8 people, TripGuru provides a local perspective with guides from the area. Local guides, with a full understanding of the area are able to bring tourists to perhaps unknown spots which are naturally less congested than the big attractions, allowing consumers to experience the local life without needing to merge with other big crowds, keeping their privacy.
Furthermore, smaller groups are able to rent private vehicles and keep track of hygiene easily compared to others who may use public transport.
Fulfilling the needs of customers in the future, there is reason for TripGuru to be optimistic.
We further view another portfolio company, Telkie as another firm which could grasp the opportunities created by the diverging inclinations of consumers.
Providing a means of communication between traveler and hotel/residence, Telkie allows customers to find deals with all its partnered hotels without needing to scroll through each website while allowing both parties to converse.
Telkie would allow customers to more easily communicate to hotels their specialized needs post COVID, may that be rooms who are distanced from other occupied rooms or certain assurances regarding hygiene and safety of the hotel.
Like TripGuru, we see Telkie as a firm being able to overcome the difficulties of COVID and come out stronger on the other end.
Aspects of the industry which we believe, while untapped in the past will emerge as a result of COVID-19.
Given travel restrictions, social distancing laws and the dangers of going on vacation in the current climate, consumers are less willing or unable to go on vacation.
That being said, there remains a demand for entertainment that now cannot be satisfied through traveling - thus virtual tours from locals in a certain location may be able to attract consumers.
They would not need to physically be at a location, yet have an experience of it, fulfilling some of the demand for travel which is stifled by the ongoing pandemic while being at a lower price.
Some firms have even begun to explore this market - most notably AirBnB, and we believe it is a trend to stay for the future.
Similar to the issues suffered by airports, consumers are now increasingly wary of touching products which many others have, as well as the large crowds that amass in shopping centers.
We thus believe that technology which aids online souvenir shopping allows customers to firstly get products without needing to get into the crowds, furthermore reducing crowd size in malls as some consumers order digitally.
The reduced crowd size further increases confidence in customers who are trying to avoid huge groups of people.
Touchless Travel / Shopping
Airports, at the moment, are seen as a hotbed for infection given the density and volume of people that bypass them.
For consumers to regain confidence in airports, we believe it is paramount that they fix congestion issues and instill confidence in the travelers who pass daily.
Thus, a potential avenue to fixing this problem is in the form of airport crowding solutions, a segment relatively unexplored to alleviate the problems faced by airports post-COVID.