This series is focusing on how the industry might emerge from the disastrous set of circumstances that the travel, tourism and hospitality sector finds itself in.
The first of four scenarios - Travel swings back to normal in 2021 - was followed by a second idea: The end of mass tourism as we know it. The third was: Big is beautiful in the new travel order.
We continue with the next and final theory...
Scenario 4: Travel moves from atoms to bits
Lenin’s famous quote, "there are decades when nothing happens; and there are weeks when decades happen," perfectly illustrates what humanity experienced literally from one day to another in the first quarter of 2020: our way of life came to an abrupt halt, forcing us to shift most of our daily activities into cyberspace.
White-collar professions' new normal became telecommuting, while farm and blue-collar work remained largely unchanged but saw its jobs increasingly being automated. Governments in the developed world are forced to deploy large-scale social programs for low-income populations to avoid a total collapse of society.
The long wait for a vaccine forced nations across the world to walk a fine line between suppressing the virus and crashing the economy with ongoing shutdowns.
Virtually everywhere
The lockdown periods that leapfrogged the adoption of all types of virtual services brings us closer to the dystopian future of science fiction narratives like Ready Player One, where entertainment happens in virtual worlds hosted and orchestrated by digital giants.
Beyond a massive surge in already existing sectors like online gaming, e-sports and media streaming platforms, a host of new entertainment forms and technologies emerged during this period.
Zoom parties mimic the magic of moving through a club’s different dance floors by jumping from stream to another one. Nintendo’s new video game hit Animal Crossing: New Horizons becomes the new trendy virtual space for Asian users where they meet to chill out together or stage pro-democracy demonstrations.
And 12 million players log into a Travis Scott virtual concert on gaming platform Fortnite in April 2020, opening the floodgates for countlessmore virtual mega-concerts broadcasted in online gaming platforms.
The tech behemoths had been pouring millions the decade before in technologies to reinvent the human-machine interface. From Google Glasses, passing through Microsoft’s Hololens to Facebook Oculus headsets, none of these innovations had hit the sweet spot for mass adoption.
Tech guru Benedict Evans perfectly illustrated the paradigm change leading to a new universal device: “In the late-1990s, we argued about whether 'mobile internet' devices would have a separate radio unit and screen, plus an earpiece, or perhaps a keyboard, or a clamshell with a keyboard and screen - we were in form-factor-discovery, and it took until 2007 (or later) to resolve on a single piece of glass”. Meet the iPhone.
This "form-factor-discovery" for AR/VR was still in the cooking process when the virus broke out early 2020. The new digital behaviours during the lockdown triggered a “call to arms” among tech giants to marry VR/AR technologies with a mass-market commercial device.
The virtual arms race
Apple triggered the mobile internet era with the Iphone and redefined the sector of wearable devices, thanks to the Apple Watch. The launch in 2021 of the first version of Apple AR glasses marked a milestone in expanding virtual reality devices from hardcore gamers to mass market.
Google, sitting on a trove of physical and digital data, started creating killer applications from 2021 onwards. Google Maps, already well on its way in 2020 to become the first Super App of the Western World, started blending the physical word of Google maps with the digital data of Google Lens, transforming any Android smartphone into a powerful AR device.
Facebook, enjoying a head start last decade with the acquisition of VR headset maker Oculus, became another driving force of the new virtual era. New “Zoom-type” video streaming features launched on its massive digital platforms (Facebook Whatsapp and Instagram) and augmented reality filters add-ons, boost engagement and AR adoption.
On the device side, once Apple seeded mass adoption with its glasses, Oculus surfs the AR wave with a new generation of headset that integrate video chatting in physical or virtual backgrounds across all Facebook platforms.
Shopping and streaming - a match made in heaven
If in scenario 2 the new business mantra evolved to “every company is a health company”, in this scenario the new leitmotif ruling the corporate world will be “every company is a virtual reality company”.
In a society where virtual happy hours have become an inherent part of our social life’s, brands will build new virtual connections with their audiences from the early days of the first lockdown period.
Louis Vuitton started hosting live stream events including local celebrities on Chinese social commerce platform Xiaohongshu, Anheuser Busch beer brands streamed trivia happy hours on Facebook and Chipotle organized virtual hangout sessions on Zoom.
Livestream shopping, a consumer habit born in Asia, allows consumers to interact in real time with brand ambassadors who are showcasing products and features. After its massive success in 2020 Chinese Singles Day, it became a cornerstone of marketing playbooks for brands across the world.
Apocalypse Now for travel
Philosopher John Gray stated in an influential piece in April 2020: "The crisis through which we are living is a turning point in history."
It certainly turned out to be a turning point for travel. The long-lasting health crisis wreaked economic havoc and forged long lasting changes in travel
The mass tourism model that had emerged after World War II and peaked in 2019 reaching 1.3 billion worldwide tourists, according to the WTO, came to an end with the first outbreak of the COVID-19 virus. Economic literature would refer to this period as the "Golden Age of Travel," similar to other boom eras like the Second Industrial Revolution.
Post-crisis tourism will have certain similarities to society 200 years before: a two-tier world where only the upper classes were able to travel internationally to experience new places firsthand.
Home became the epicenter of life and leisure for most of the world population, with staycations and visiting friends and family the new priorities for most travelers.
As a result, the travel industry goes through a massive downsizing process between 2020 and 2023, facing a dramatically smaller levels of global demand.
Even when the world finally has a vaccine, hygiene standards never go back to pre-virus levels and many countries keep travel restrictions to different degrees.
Travel becomes less affordable and the middle class suffers a global drop of income. These factors combined translate into a collapse in international leisure travel of over 50% vs. 2019's peak. Business travel slides even stronger with virtual meetings being the new normal.
These deep structural changes have an earth-shattering impact across the entire travel industry chain.
When the Centre for Asia Pacific Aviation (CAPA) estimated in March 2020 that half of the world’s approximately 800 airlines would be wiped out by the end of May without financial help from governments , it was received with dismissal. The prediction turned out to be nightmarishly accurate in its size, unfolding in a period between 2020 and 2023.
Most long-haul network carriers collapsed or transformed themselves into point-to-point regional airlines. Long-body aircrafts become a rare bird to spot at any airport in the world. A few major low-cost carriers survived after going through a painful shrinking process serving domestic and regional travel needs.
Airports were not immune to the air transport apocalypse. During the first outbreak some airports announced temporary closures, like Berlin Tegel or Paris Orly, while others turned themselves into drive-in cinemas.
Most of them never saw airplanes taking off or landing again. These massive public infrastructures became landmarks of the glory days in travel and transformed themselves into public spaces for local inhabitants.
The hotel industry suffered a similar fate, with properties across the world being shut down or transformed into residential or public spaces.
The alternative accommodation sector moved most of its inventory to the long-term rental market and category champion Airbnb became a multi-month accommodation provider, catering for an increasing trend of remote workers living in different places for longer periods.
Only small properties in rural areas remain a popular lodging alternative for domestic travel in this travel Armageddon.
Travel goes virtual
Out of the travel industry debris emerged a handful existing players that manage to reinvent themselves and disruptors with radical new business models, mainly focused around blending the physical with the digital travel experience and digitizing face-to-face interactions in the travel journey (hotel check-in, airport bag check-in etc.)
The virtualization trend started taking shape during the first virus breakout. TripAdvisor's Viator brand and Airbnb Experiences created hundreds of virtual activities ranging from virtual walks around city centers to yoga courses with an Olympic rower.
Hotels all over the world began exploring creative options for would-be guests to stay engaged and entertained from their living rooms. Six Senses launched an online wellness platform, Tuscany’s getaway “Il Salviatino” streamed traditional Tuscan cooking classes by its Chef star Stefano Santo and Miami’s adult-only Hotel Gaythering kept the party going with virtual karaoke nights with people from all over the world joining in to showcase their singing skills.
Travel destinations shifted their promotional efforts to the virtual world, allowing travelers to experience world wonders from the comfort of their couch like a 360-degree view of the lush greenery of the Amazon rainforest, watching whales surface the sea or admiring northern lights in the Arctic.
Landmark buildings across the world open their digital doors too: The Musée du Louvre offered digital walks guided by their art curators, the Vatican Sistine allowed visitors to enjoy a 360-degree view of the Sistine Chapel and the London Globe Theatre streamed recorded Shakespeare plays.
To stream or not to stream
With the world jumping on the virtual act, the few surviving OTAs from the crisis embraced the technology to stay relevant in this brave new world.
Virtual worlds are the new shopping malls for users and travel companies. People can chill out in virtual islands hosted by travel brands, allowing users to digitally experience its travel products beforehand and online gamers are offered discount codes and awards sponsored by OTAs.
But the biggest winners in the redefined travel space are the big tech giants keeping millions of users locked in their virtual platforms.
China’s streaming service Taobao Live, owned by Alibaba, started featuring online experiences back in early-2020 for zoos, museums and all types of tourist spots, expanding revenue streams by cross selling physical souvenirs delivered to the users home.
Google platforms such as Maps, YouTube and Google Arts&Culture, become major platforms for travel brands, streamlining interactive content and channeling users to the shopping funnel.
The golden goose left in travel
The surviving industry players will throw their commercial, digital and operational resources at the only travel segment that keeps thriving 2023 onwards: the upper crust of society with the purchasing power to jet around the world and enjoy its wonders in-person.
Travel for these elite does not change dramatically to what it was before the crisis, with the benefit of enjoying the experience without hordes of other tourists. Strict hygiene standards and health buffer zones are a given in any airline business classes and luxury resorts across the world.
Top tourist attractions across the world transform their visitor facilities originally designed for mass tourism into exclusive lounges offering health and wellness services and trendy cocktail bars.
Virtual services also become a key visitor feature, including AR headsets allowing to virtually experience the Volcano's eruption in Pompeii or the thunderously collapse of ice mountains in the Perito Moreno glacier.
A final word
Management Guru Peter Drucker famously quoted: “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”
This logic shaped by the past and sustained by our business-as-usual way of working and planning will be of little use in the huge crisis that the world is facing today.
Everybody in travel is starting from ground zero and will need to reinvent themselves to some degree.
The four scenarios over these recent article aim to be a guiding light, illustrating directions our industry might be heading to.
Those who craft suitable strategies for each possible outcome and identify new opportunities for consumer products, will increase their chances to survive and carve out competitive niches in this brave new world.
* Read the four scenarios again: