Airlines across Europe have been celebrating as the US announced that fully vaccinated visitors could return to transatlantic travel. Shares in several airlines including IAG, Air France-KLM, and Lufthansa have all been recovering, but is this short-term boost enough to get the tourism industry back on track?

It looks like there could actually be several different recovery tracks for travel. Business travel will start to recover where companies see travel as essential – for sales or important networking events – but it is likely that a large amount of routine business travel will never return, as video conferencing has been proven to be an effective replacement.

Deloitte has projected that business travel in the US might be at around 80% of pre-pandemic levels by the end of 2022. The Global Business Travel Association has predicted a full recovery by 2025. Even if these predictions are accurate it does mean that business travel will be depressed for a considerable period of time – a lost period of about half a decade.

Will tourism return faster? Scanning the news about travelers and their pent-up demand to see the sun during summer, it certainly appears so. There could even be investment opportunities in the sector as the long period of disruption will have ensured that only the best operators have survived – and they now have a long runway of growth ahead.

Talking to the Business Times in Singapore, Alan Custis, head of UK equities at Lazard Asset Management said: “Investors should look very seriously at so-called reopening sectors like travel.” He added: “The opportunities now, one would argue are much, much better, perversely, than they would have been probably if the pandemic hadn’t happened. That’s because excess capacity in aircraft, hotel rooms and restaurants has been eliminated – there’s been a sea change.”

European travel companies, such as TUI, have been given a boost recently as several countries have been relaxing their travel restrictions and focusing more on the vaccination status of passengers rather than where they have traveled from – the UK traffic light system is a good example. The confusing ‘amber destinations’ have now been removed, so the long list of green destinations require tests and vaccination, but no quarantine.

I think that the investment opportunities identified by Lazard show that the travel tourism sector is changing and responding to the pandemic. As suggested, weak operators and excess capacity will have already been forced out of the market. Where I believe we will see some dramatic change now will be where CX is used as a differentiator and tourism innovation.

TUI is a good example of a company that is seeking out new ideas. They recently launched a range of “workstation” hotels in various locations including Greece, Portugal, Morocco, and Jamaica. With excellent wifi and workspace available in every room, the concept is to allow people to book a few weeks away in the sun, but for them to continue working remotely – just enjoying a change of scene without needing to use up any annual leave allowance.

There are still many stories of customer service nightmares as hotel and airline passengers deal with delays, cancellations, and refunds. The companies that will come out of this stronger are the ones that have stood by their customers, explored new ideas, and made the customer experience as easy as possible in very difficult times – bundling all required tests into an airline booking is a good example.

We are going to see travel and tourism recovering at different speeds – different travel sectors, regions, and types of travel may all be on different tracks, but this combination of CX and innovation will be critical for all sectors in the tourism industry.

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