How the GCC’s travel and tourism industry can get ready for the post-COVID recovery

There is significant disruption in the GCC region’s travel and tourism sector lately, as the COVID-19 crisis has halted most travel worldwide. We at Strategy& estimate that the GCC’s tourism revenue could decline by $14 billion to $17 billion (excluding airlines), assuming the pandemic lasts for two quarters, a drop of over 30%. In addition, up to 400,000 tourism-related jobs in the GCC region could be lost. But the long-term fate of the industry is still largely within governments’ control. Our analysis, drawing on our deep expertise in the transportation and tourism industries, suggests there are five measures government authorities and regulators should focus on to create a stronger travel industry when the crisis ends and the recovery starts.

1. Set clear policies to rebuild confidence in the industry and boost demand. Adjusting national policies to facilitate travel — for example, by digitizing and enhancing the processes to issue travel visas — and introducing new health and quality standards for tourism providers are good first steps.
2. Prepare marketing and promotional campaigns. Governments and stakeholders should build a library-in-waiting of marketing and promotional campaigns that can be launched at the first sign of the crisis ending. Reassess upcoming business and leisure events, and consider how different scenarios for the end of the crisis and the recovery could affect demand.
3. Make strategic investments while valuations of travel assets are low. The global travel industry remains structurally sound, so prices will rise again after the crisis ends. We suggest travel distribution assets such as travel agencies, both in-person and online; and technology investments in destination management companies (providing tours and excursions, accommodations, air travel, and dining) to enable greater tourism revenues and more efficiency in managing incoming tourist flows.
4. Offer financial support to tourism companies. Immediate fiscal support, such as suspending taxes and levies on tourism operators, and debt relief and expanded access to credit, will keep organizations afloat until demand returns.
5. Consider structured support for airlines, which are the most critical economic enablers for a country. Airlines have typically limited liquidity, and according to IATA, most airlines worldwide went into the crisis with about two months of cash on hand. One caveat for governments providing financial support: Be sure that airline leaders develop and deploy a sustainable restructuring plan.

The current crisis, though daunting, represents an opportunity for the GCC travel and tourism industry. Governments must intervene to mitigate the damage, adapt to changing consumer preferences, and prepare the industry for the rebound. We’d love to hear your thoughts. In these uncertain times, we are here to help.

This article is authored by Alessandro Borgogna, Senior Executive Advisor at Strategy& Middle East, Marwan Bejjani and Camil Tahan, Partners at Strategy& Middle East, and Vivek Madan, Manager at Strategy& Middle East.