The Impact of COVID-19 on Global Travel and Tourism: What Does Future Recovery Look Like?
Danielle Ohrenberger-Hopkins (she/her): Man i'm gonna hide myself until the intro comes. Danielle Ohrenberger-Hopkins (she/her): hi everyone, my name is Danielle orenburg Hopkins i'm the assistant director of alumni relations here at nyu SPS I wanted to thank you all so much for joining us today at the special webinar. Danielle Ohrenberger-Hopkins (she/her): The impact of covert 19 on global travel and tourism, what does feature recovery look like presented by the nyu SPS Jonathan and to Center of hospitality.
Danielle Ohrenberger-Hopkins (she/her): We encourage you all to put any questions that you have in the Q amp a box and then Dr lumen art our academic cheering clinical associate professor at the SPS Jonathan and. Danielle Ohrenberger-Hopkins (she/her): To Center of hospitality she'll address them on toward the end of the presentation and with that i'm thrilled thrilled to welcome Dr you go light a maki clinical Professor. Danielle Ohrenberger-Hopkins (she/her): At the SPS dishes to Center of hospitality and really excited to hear him present his research and findings you bet. Jukka Laitamaki: Thank you Danielle it looks like it's yesterday when you are my students so. Jukka Laitamaki: Thank you for the introduction welcome everyone, good evening.
Jukka Laitamaki: Very good night if you're in Europe or good morning if you're Asia today was the first beautiful day in New York with 22 sales shoes or 70 fire and I. Jukka Laitamaki: Either way, and birds were singing in central Park, it was a positive day optimism and style there I got my first call it a shot. Jukka Laitamaki: So i'm going to tell you that this story is sad in the beginning, but it will get better at towards the end so let's roll. Jukka Laitamaki: So what i'm going to talk about today is, first of all, how was the industry before then they make, and then we are going to focus on the on the issue of. Jukka Laitamaki: The inbox you know what was the embed code 19 on the industry and from there, we look at them some of the tourism and travel recovery scenarios so so let's look at the industry before calling 19 so basically how did it look like in 2019 so huge industry. Jukka Laitamaki: You know in in in terms of revenues export revenues, tourism is in an export business 1.7 trillion in 2019, which is the second largest industry in the world after oil and gas and you've counted.
Jukka Laitamaki: 6.8% of the world exports and 28.3 como services. Jukka Laitamaki: And what is interesting 50% of the total exports from some small developing countries so some countries more countries are very dependent on tourism, David Carey and take Greece, Italy, Spain. Jukka Laitamaki: And there was a huge almost $1 trillion capital investment we was 4.3% of total investment globally. Jukka Laitamaki: And in contributing 10.3% of global GDP, which translates into 8.9 trillion, and it was growing faster than the world economy. Jukka Laitamaki: Overall, in 2019 that 1.5 billion international tourists arrivals and he wants to dance concert with you that era sustain growth to the great recession. Jukka Laitamaki: The industry, travel and tourism looking boy 330 million people, and what is interesting, there was a high Sierra women so 54% of the workforce and also disproportionate number of young people.
Jukka Laitamaki: So there has been trends taking place before the call me and they these trends accelerated so based on McKinsey study. Jukka Laitamaki: What has happened in terms of these trends in terms of acceleration one is broad proliferation of analytics and destructive back. Jukka Laitamaki: So technology, as we all know, based on zoom everything else gone back to us travel was speeding up and she's to do and mobile was accelerating there was also a lot.
Jukka Laitamaki: In terms of considerations for the environmental impact and, of course, well being services and she's seen food and beverage towards to healthy healthy way of eating so that was that, but what happens in ministry, by the end of 2020. Jukka Laitamaki: In terms of export revenues they draw 1.3 trillion, so what went down to 0.4, which is a drop of 76.5% was the end of 2019 I don't know any other industries within a year. Jukka Laitamaki: More swipe dollars so badly as travel and tourism, plus minus 76.5 and the international arrivals went down to half a billion. Jukka Laitamaki: And was just 1 billion, which means they drove 74% and it was a job loss about hundred and 20 million, and so the industry is trying to 210 million direct jobs, who assist 330 so major impact. Jukka Laitamaki: And it wasn't Even so, it wasn't around 70% across all categories as you saw the excellent ruinous went down minus 82%. Jukka Laitamaki: International arrivals minus 74 jobs minus 36 but the interesting point was short term Rentals like airbnb were down only minus 6%.
Jukka Laitamaki: And the reason being that a lot of people study to travel domestically they fail safe to stay in the quarters that you control, rather than to be called cell. Jukka Laitamaki: So the occupancy rates according to this car went down 28% seat capacity for domestic airline 38% then hold those searches went down 47 similar to hotel bookings down 47%. Jukka Laitamaki: and international seat capacity was down minus 62 so international travels hit harder and the domestic and the tourists arrivals 72 so. Jukka Laitamaki: There was a a prediction January October United Nations World Tourism organization was looking into into the invite estimating will be impact and so far January October, it was not even so, the hardest hit areas you remember the band me goes in waves. Jukka Laitamaki: Were Asia Pacific minus 82 followed by Middle East minus 73 and then Africa minus 69 Europe and America is minus 60 day but, again, you know, since those days Asia has come back. Jukka Laitamaki: Okay, just to compare the sun damage to the previous ones, so SARS 2003.
Jukka Laitamaki: The arrivals went down 2 million, which was 0.4% and then, when we probably could have a crisis 2009 the decline was 37 million which equals minus 4% but window qualities, so we came down harsh so 1 billion. Jukka Laitamaki: arrivals where we were done 1,000,000,007 minus 70 to 75% so would never be seen as never seen such a drastic kid like we did. Jukka Laitamaki: 2020.
Jukka Laitamaki: So what about them being but on on US economy based on today's statistics. Jukka Laitamaki: GDP is down 3.5% was the same day 2020 GDP growth is estimated for this year to be 3.7%. Jukka Laitamaki: And the employment at pre college level, probably by 2024 and it will continue growing since 2024, but we will reach that level. Jukka Laitamaki: pre-columbian. Jukka Laitamaki: Just some other stats you know unemployment in April 20 was 14.8% That was the Beak and so in a really was a disaster so eating Greece 10.3% from much translated into 23.1 million people in us losing jobs, so the annual unemployment 20 20th.
Jukka Laitamaki: Was 8.1% was just. Jukka Laitamaki: And, unemployment has improved currently in January we're standing in 6.3% personal consumption wasn't down minus two point 74 so, even if the. Jukka Laitamaki: Even if we lost a lot of jobs to CMOs helped the ball to spend money, even the the as expanding services chains, you know we all know, we went online for purchasing things. Jukka Laitamaki: We started doing this in our homes and then you know if we got food from a restaurant, it was delivered or beta so the total retail and food sales, where he harder than personal consumption so really it was targeted close to 20% decline.
Jukka Laitamaki: So US economy, if you look at the deal we had in April, so in 2020 in the non farm payroll you know employment went down minus 5.8% and it's pretty easy to grow plus 1.8% 2021 so there was a drastic. Jukka Laitamaki: drop and, as I said, 2024 we should reach the level that we had 2019. Jukka Laitamaki: Now, consumers, assessment and national economy, which is a, which is very important, part two, in terms of how do these consumers.
Jukka Laitamaki: theme, the economy will be and how will they be is an important one, and national restaurant association did a survey recently and, as you can see from January 2020 were 43% dog that. Jukka Laitamaki: You know the economy was a window good he went down in April 20% spring coming back slowly and January this year 15 through 17 it was 23% who thought it was excellent. Jukka Laitamaki: But the majority thought it was fair or poor and but it's not as bad as April, so we come down from 83% thinking it's fair or four to 77%.
Jukka Laitamaki: Now. Jukka Laitamaki: disposable personal income is also an interesting story because. Jukka Laitamaki: There was a growth of 2.2%.
Jukka Laitamaki: By 2020 we actually saw much bigger growth 6.4% which is explained, based on the stimulus stimulus and the support for consumers so so disposable personal income was not harder and United States is one of those economies, where 75 sometimes 80% of GDP is based on personal consumption. Jukka Laitamaki: And you can see, the first quarter of 21 the stimulus that was decided in December and he hit you know growth and he was. Jukka Laitamaki: Definitely, you can see that there was a be as well as there was the second quarter, but beep in terms of birth personally income. Jukka Laitamaki: So the consumption potential is there, consumers are also saved a lot, because they haven't been able to travel, so there is this opportunity for pent up demand in the future, and I will address that a little bit later. Jukka Laitamaki: So also economics did a study for American hotel and lodging association comparing 911 the recession, through 07209 and then, this was a brilliant scenario scenario.
Jukka Laitamaki: For. Jukka Laitamaki: Only 19 So this was done in my 2020 so what happened in 911 we lost 400,000 jobs in them, you know tell industry and the occupancy was around 60%. Jukka Laitamaki: And then, when we when we get into recession, the great recession, the jobless, a little bit bigger so 470,000 jobs and the entrepreneurs who was a little bit harder, so it came down to 54%.
Jukka Laitamaki: From close to six, but we were dealing with a totally different scene occupancy is hovering at 25%, and this was March. Jukka Laitamaki: And that was a prediction and jealousies between 2.82 3.4 million jobs not anymore half a million, but 2.8 3.4 million, so the devastation was totally in a different category. Jukka Laitamaki: So, if we look into the performance indicators and compare the markets between USA and Europe you and the full year between 2020 and 2019.
Jukka Laitamaki: So red bar was he in USA minus 68.5% Europe suffered more minus 72.7% don't know about, or a farm or, which is the total expanded some. Jukka Laitamaki: Revenue per available room, not just the room rate was he little bit less 68.3 and and you're upset at minus 17%. Jukka Laitamaki: Labor costs are available room reduced minus 52% in USA and about 49% in Europe So yes, you lost revenue, but you were able to come visit some of that by low Labor costs when hotels closed and laid off, and for a lot of people. Jukka Laitamaki: Cross operating profit per available room was really hard minus 31 7% and in Europe when negative 100 101.1% so there was a loss. Jukka Laitamaki: significant loss for for available road.
Jukka Laitamaki: So that was the story in terms of USA was this euro and now test today I received the results from str where are we today and the occupancy in USA is 49% ADR average 98 so red bar 48 and, if you look at these the hardest hit. Jukka Laitamaki: How do you see in terms of occupancy are the Luxor in Upper upscale hotels and economy hotels, have done fairly well throughout the. Jukka Laitamaki: pandemic guy I saw some weeks in January, whether we're actually above January 2019 2019 numbers so so you know that's.
Jukka Laitamaki: that's Overall, the economy and expanded stay have done better than the industry overall and just available, last week the week before this one total us occupancy was 47%. Jukka Laitamaki: So yes, the industry's coming back, but just to give you an idea where we are relative to pre pandemic, we are still down so if you compare the same week and we're at 28 two months six. Jukka Laitamaki: Between 2020 and 21. Jukka Laitamaki: You know this was this was not yet, at the time in 2020 we were not hitting the hearts. Jukka Laitamaki: And minds April in terms of the hotel industry, so we are now in total occupancy by about 10% 20% for us at our is down about 22% 22% and red bar down about 38%. Jukka Laitamaki: And here, you can see what I mentioned earlier life story is to minus 51% below the occupancy level but it's interesting the ADR, this is the first week that I saw the atr he's actually reaching in the library got a gory.
Jukka Laitamaki: The level that that was the case in 2020, so there is some rate recovered so upper upscale is down minus 48% and ADR is still 25% down upscale 24% down or convincing white an ADR wide scale down. Jukka Laitamaki: occupancy and 17 ADR me scale 11.6 below occupancy level year ago and ADR is. Jukka Laitamaki: About 10% below and here you can see the economy it's only behind 4.8% and terms of occupancy and a drs down 5.1% an independent hotels that be suffering.
Jukka Laitamaki: documents and losses are close to 17% and 14% in ADR and Just to give you an idea I went upstate the Gospels and on the you know New York state thruway a seven. Jukka Laitamaki: I saw a couple of hotels that have taken down the brands, you know their their concentration of those those hotels, which I mainly mean scale economy hotel so just serving that that there are a few who have closed, but we will look at it more closely the situation in New York City. Jukka Laitamaki: All right, so what happened in New York City. Jukka Laitamaki: proceeded last last job loss was a Korean 78,000 and, if you take third quarter unemployment average was a point five, but there are certain industries, they were hit really hard sciences actors dancers, as you can see 50 to 55% musician is 27% on employed way years 19 retail sales team. Jukka Laitamaki: So, Elisa and hospitality.
Jukka Laitamaki: Had. Jukka Laitamaki: You know 20 240 9000 jobs and it's down from 460 6000 in 2019 so almost half. Jukka Laitamaki: And occupancy in October was 40% in New York City, where it was 92% in October 2019.
Jukka Laitamaki: Typical high up a demand for the judah fashion fashion week and UN. Jukka Laitamaki: Out of the 700 hotels 200 closed and out of those 500 left CC three were were for most people sheltering homeless people. Jukka Laitamaki: Real Estate sales tax went down 59 billion from hundred million in 2019 and sales tax was down minus 5.6% to four and 80 million for in 38 minutes so industry was hit hard and here you see what the New York City. Jukka Laitamaki: look like prior to the pandemic and the hotel industry occupancy 2019 87.5. Jukka Laitamaki: giving us a red bar revenue per available room to 49.
Jukka Laitamaki: Now. Jukka Laitamaki: The occupancy was 40%. Jukka Laitamaki: done the ADR or sound hundred and $50 235 resulting in red bar or 54 and so, and you can see, see the total number of room nights sold so that has been growth until 2019. Jukka Laitamaki: So if we then look into. Jukka Laitamaki: into the area of these days so number of visitors coming to New York City, so it wasn't a year from New York City CC 6.6 million visitations. Jukka Laitamaki: And 47.4 billion economic impact 2020 or 22.9 million visitations so decline of 66% and in what I see it, accompanies predicting 38 million visitations for this year, which is the growth of 37% and the breakdown.
Jukka Laitamaki: Up to 2018 and you can see how how out of the 65 million visitation some. Jukka Laitamaki: International with 13.6 and 51.5 when a domestic and it was 21% was business and 79 laser so these numbers that we have here 2020 22.9 million visitations is mainly driven by domestic demand so with this restrictions that we have in place. Jukka Laitamaki: inhibited international visitors come to New York City. Jukka Laitamaki: So, what then us restaurants so national restaurant association provided some data so by December of 20 87% of full service restaurants reported an average of minus 36% decline in sales by December 20 December of 20 oh 110,000 restaurant closed permanently or long term. Jukka Laitamaki: And between. Jukka Laitamaki: March and October 20 over 130 million losses in sales.
Jukka Laitamaki: And by November 20 oh 2.1 million jobs were lost in the restaurant industry. Jukka Laitamaki: And currently 22 States allow hundred percent restaurant capacity to be used so 22 States out of 50 are no restrictions for restaurants and nearly all just recently moved to the 50% capacity from 35. Jukka Laitamaki: So some other information regarding. Jukka Laitamaki: The consumers on a comfortable eating so survey by city science just march 28 March of this year 53% of the US, consumers are comfortable eating at restaurants and the same company in February find out that 37% of US consumers were planning to eat the following week in a restaurant. Jukka Laitamaki: And the orders by nba D Group in terms of orders and sit down restaurants went down still at 37% on February 25 this year, so there is still room for recovery for the restaurant. Jukka Laitamaki: So what am I near the city restaurants pre and during cold so in 2019 we had 23,650 establishments with creating 317,000 eight 800 jobs and generate 10.7 billion in wages wages and nearly 27 billion in sales taxable sales.
Jukka Laitamaki: And there has been a great growth in the restaurant sector in New York City since great great recession so from. Jukka Laitamaki: jobs through 61% and establishment number of staff that burning through 44% which was double the overall rate of growth for jobs, a new businesses and New York see so it was the engine of growth mean the city. Jukka Laitamaki: And the host and the panelists are unsafe to create wanting 12 the private sector jobs and establishment. Jukka Laitamaki: And about 60% of New York City restaurant workers were immigrants in 2018 compared to 45% across all occupations So yes, this American dream has always been studying for immigrants, despite working working in restaurants. Jukka Laitamaki: But by September of last year, employment was only 55% of the level of February 20.
Jukka Laitamaki: So we lost lost about 140 2000 jobs and as a result, and when 33% of restaurants and 50% of bars closed. Jukka Laitamaki: So, how does it look like for for New York City in terms of the tourism industry. Jukka Laitamaki: So no see he has recovered, you know from 911 from great recession we saw some of the statistics earlier and the recovery is estimated to start need 2021. Jukka Laitamaki: But in order to reach the pre pandemic level, it will take on go 2025 and that's mainly because the.
Jukka Laitamaki: restrictions on travel, especially for the international international tours and also people are hesitant to visit big cities and. Jukka Laitamaki: In New York City in April March, April was the epicenter of the pandemic, I mean this the pictures of mass graves in in bronx and things like that don't really, really. Jukka Laitamaki: encourage people to come at the time to New York City and also you know, we have, I mean the reasons to come to New York City is often related to the dining scene to the entertainment the broadway shows the culture. Jukka Laitamaki: In and test the action in the city and and I have to say, though, I visited my daughter individually, as I was walking around 830 on Sunday. Jukka Laitamaki: To the subway and folsom street almost every restaurant had at their outdoor seating going on, even it was about freezing temperature, and so there was a lot of action plan of action, so, so I think the and I believe the industry New York City tourism industry will be back. Jukka Laitamaki: Okay, you know let's see next.
Jukka Laitamaki: Alright, so what are some of the scenarios, then, for the record. Jukka Laitamaki: So here's a here's a TV prediction so. Jukka Laitamaki: The world will see about 5.5% growth in GDP USA 4.3 you 4.2 China 8.1 emerging markets 6.3 this growth will continue, but not so strong and 2022, as you can see here, but still the world is expected to grow 4.2 USB 3.1 your 3.6 China for 10 seats and emerging markets 5%. Jukka Laitamaki: So here isn't.
Jukka Laitamaki: prediction that was done. Jukka Laitamaki: You know October 20 20th and it was pretty close to what actually happened but, as you can see, there are scenarios. Jukka Laitamaki: You know the worst scenario was minus 78% decline. Jukka Laitamaki: In terms of international arrivals and the most important event was minus 58 so we we hit that at 74% decline, so the question is, when will the recovery star for the international tourism industry and, as you can see here.
Jukka Laitamaki: We were dragging you know, there was no no way you know these scenarios could happen that we were predicting predicting in terms of. Jukka Laitamaki: October, so we were went down but estimation out there, they some United Nations World Tourism organization and it takes two two and a half to four years. Jukka Laitamaki: To get it to us record levels of international tourism arrivals and you can see a couple scenarios here. Jukka Laitamaki: And, and you know the vc recoveries it shocked me scenario one or scenario to sort of a more level or scenario three and I have to say i'll get back to them, but it will be uneven, so if this is the Kobe sure it will be on even. Jukka Laitamaki: Green collar based on region based based on companies and type of operations, they have so based on the UN who.
Jukka Laitamaki: Ban on. Jukka Laitamaki: The estimation, is that first quarter So these are things worse in tourism and travel so. Jukka Laitamaki: A rebounding international tourism in your country.
Jukka Laitamaki: And majority 50% said that it's going to be the first quarter of 2022 and so you can see here. Jukka Laitamaki: q3 q3 for will see some some role for international tourism so overall it's probably the bear at the end of the queue for and the beginning of of q1 when the international tourism will return and. Jukka Laitamaki: So what about when do we reach the pandemic levels, the majority of the people think it's either 23 or 24 or after nobody thinks we get there, this year only 15% think that will get there on 22.
Jukka Laitamaki: So just recently. Jukka Laitamaki: The consulting company or the analyst analysis group called Baird equity research much nine. Jukka Laitamaki: concluded in terms of global global hotel brands recovery, so these other filters Marios highest choice hotels so there's a destination that pent up demand will be in to be realized in second quarter of 21, especially on the Lisa front and 22 going to be a more normal year.
Jukka Laitamaki: and which compares to prior expectations and 23 being the first normal year so optimism, I mean if you look at this period prior predictions from the end of 2013 2020 there is more optimism faster recovery, and that is because of vaccinations and. Jukka Laitamaki: resistance. Jukka Laitamaki: Okay, another study. Jukka Laitamaki: looking into the US a hotel industry and based on these experts, they predict that this is done by str speak travel research.
Jukka Laitamaki: So they expect the hotel the men return to prevent me by 23 an ADR return on 25 I have to say, though, that. Jukka Laitamaki: by looking at these these weekly reports and so so already and the luxury hotels. Jukka Laitamaki: are basically they are already reached this past week, the same thing at our level that they had a year ago, so this might might be faster for the ADR. Jukka Laitamaki: To return it might be 2024 but again it's dependent on market some margins are demanding on business travel conferences and so that will make a difference. Jukka Laitamaki: So, in February. Jukka Laitamaki: The US laser and hospitality sector, adding 355,000 jobs, but we were still down 3.5 million from February of 2020.
Jukka Laitamaki: And as you saw earlier before recovery of these jobs will take on 24 and the same or more than 1.1 more than half a million jobs in December and January. Jukka Laitamaki: and unemployment in the sector was still 15.9% in January was a 6.3 your salary, so we are a very hard industry, what about then cross travel bookings so experts predict that done. Jukka Laitamaki: It will happen, you know when do you expect across travel bookings airlines hotels car rental return to read it, and any so it will be 24 or later.
Jukka Laitamaki: So there are barriers why why doesn't happen this year, first of all travel restrictions for international travel. Jukka Laitamaki: And there have been trials for travel corridors it's not really working I mean countries like UK feeling just closed on Monday for three weeks and we used to allow people to come from Estonia, many people came from Estonia tiling to help senior to work me service sector now walk down. Jukka Laitamaki: Slow wireless containment is an issue I mean we all know that, for instance, European Union they negotiate hard to get lower rates for the last three months, and now there's a shortage of vaccine. Jukka Laitamaki: And, of course, when we did the deal with them developing countries can afford the.
Jukka Laitamaki: vaccine they they are supported by callbacks and other nonprofits and that will give them, but it will take time there's whoa consumer confidence. Jukka Laitamaki: You know there's a psychological effect that the consumer doesn't feel confident that if I stay in a hotel I go to a restaurant that I don't get get the code 90. Jukka Laitamaki: The economic environment there's the uncertainty you store some of the stats before.
Jukka Laitamaki: that people are not even if they have money and savings they don't feel comfortable spamming splurging that goes on travel and tourism meeting out. Jukka Laitamaki: And in there is lack of coordinated response now we're dealing with countries like Israel Austria and trying to come up with a. Jukka Laitamaki: Green passport, so that if you get vaccinated, then you can travel between those two countries so but, but there is no ui initiative you know why so initiative on that, and then a slow flight resumption. Jukka Laitamaki: relies on careful adding routes, adding capacity, because business travel is not yet back and there has been changes in the behavior of business travelers they get used to using zoom and they think twice if they're going to travel and also many companies tend to have their travel budgets. Jukka Laitamaki: Then let's look at.
Jukka Laitamaki: How will this happen so according to my teens in. Jukka Laitamaki: The recovery. Jukka Laitamaki: is dependent on proximity travel reason and sector so early recovery happens for regional travel can be completed in personal rented vehicle then comes to domestic travel by air and then international travel.
Jukka Laitamaki: Travel and that's dependent on government regulations, the reason for travel in person sales or client meetings and essential business operations. Jukka Laitamaki: will come first and then internal meetings training programs other small group gatherings and low slowest recovery happens in industry conferences trade shows exhibitions and events sector wise manufacturing pharmaceutical construction. Jukka Laitamaki: has an earlier recovering follow like tech real estate finance and energy, healthcare, education and professional services, it will take longer to recover. Jukka Laitamaki: Then, if we look at it and watching time. Jukka Laitamaki: Based on skis and Price Waterhouse Coopers so the based on the lodging type of slow recovering happens for Convention centers lottery full service hotels. Jukka Laitamaki: Faster recovery happens for the economy and extended stay and the other other a Burmese Cleveland upscale on there in between location why'd.
Jukka Laitamaki: You know state suburban trying to resort small town, we will recover faster than urban island resort an airport demand wise, the faster recovery happens for new contract. Jukka Laitamaki: type of the men like healthcare workers drive to laser and then the traditional contract, which is groups like alien cruise flight delays or corporate meeting group laser and trends in business will have a slower recovered. Jukka Laitamaki: So what about travel behavior, what are the changes closer is solely already domestic stations. Jukka Laitamaki: People saying closer to the home getaway nature, rural tourism road trips so anything where you can you can be an open air.
Jukka Laitamaki: And then younger travelers are most resilient so because they are also exposed to call it, and and and also you know they maybe they don't have to take it so seriously. Jukka Laitamaki: By the manager travelers and retirees will be most impacted segments, because of the dangers. Jukka Laitamaki: Now, new concerns there's the health and safety measures and cancellation policies many airlines hotels, how to revise that cancellation policies and to be more flexible, they have to communicate that it said. Jukka Laitamaki: healthy and safe safe to stay at us and our place booking window has gone from 90 days to 14 days, people do ask me bookings because they don't sure if they are in good shape to travel. Jukka Laitamaki: And of course change these in pandemic related events and travel restrictions and more responsible. Jukka Laitamaki: They give more importance to creating a paucity social, environmental and economic impact, so that has gone beyond sustainability it's it's about.
Jukka Laitamaki: Concern for local and health issues, so there is also some interesting things happening in terms of technology, you know in crisis, the innovations can accelerate. Jukka Laitamaki: so fast accelerators according to makinson are are those exciting replacement for in person experiences so contactless online kiosk checking if it's done well, yes messaging workflow staff collaboration tools. Jukka Laitamaki: Those are all fast accelerators but, so to speak, of the pandemic or those new experiences with momentum and the potential to send it in the next normal, which is keyless entry online fnb food and beverage ordering. Jukka Laitamaki: It might be exciting no but not sure if they're going to last, which is the temporary to chase track and trace software delivery robots. Jukka Laitamaki: Even though some of those delivery Robert solutions are very economical, I mean my students results that area. Jukka Laitamaki: And you can lease for $3 an hour a robot to clean the room was over $30 an hour for a Unionized Labor in New York see well, we probably return to your normal with bad online kiosk or in Room technology.
Jukka Laitamaki: Even though Hilton is very successful with their connected room, which is, which is, which is probably going to stay. Jukka Laitamaki: So what And what about in 2021 which other faster and slower recoveries so fast ones domestic travel slower international. Jukka Laitamaki: leisure fast faster business slower economy faster conference luxury slower short term Rentals faster hotels slower than that brandy hotels come back faster than independent hotels, mainly because they have all the resources. Jukka Laitamaki: To to make it safe and hygiene all those day of the brand power and third party and distribution in in sharks like this, we saw also in 911.
Jukka Laitamaki: hotels need to need to reach out and an airline to the to try to get the customers and especially lesson on brands and local stereos rather than a network airlines, because little scary is life fly from A to B, rather than a hub. Jukka Laitamaki: So going to skip. Jukka Laitamaki: What are the themes for 2021 so it's uneven economic recovery across regions, and that is dependent on issues like what industries where he hard. Jukka Laitamaki: Oil and gas, you know the whole last fidelio the lease or tourism so that's one reason the other reason are we dealing with developing world or developed countries. Jukka Laitamaki: How much like United States is largely because most of the demand so in the case of New York City came from domestic travel. Jukka Laitamaki: So, then, the travel good look normal, but more conduct less Yes, some of these fundamentalist things will stay Lisa from business as you saw.
Jukka Laitamaki: And it's business travelers demise is greatly exaggerated, as you saw there are certain categories like manufacturing pharmaceuticals, where the business travel will come. Jukka Laitamaki: There are businesses where you need to be in person to go go and make the deals short term Rentals today they have grown in popularity because of this notion that you know we can. Jukka Laitamaki: We can isolate ourselves with friends and family not being exposed to same way as in hotels there's a lot of capital American Airlines sister knows today. Jukka Laitamaki: Two days ago that they're going to raise $7.5 billion, based on the American advantage Program. Jukka Laitamaki: which generates revenue for them when they sell the points to the banks and the retailers delta JESSICA 10 billion, based on the same concept united as well. Jukka Laitamaki: So brands will consolidate so and so has been very aggressive hotel brand but the regions will fraction and that's what I was referring to get.
Jukka Laitamaki: These uneven recovered distribution swings back to the body of your song you just want the brand out there through any channel and things will different but tourism and travel will return and why, because it is a mega trend, I mean when countries. Jukka Laitamaki: enter the middle class disposable income increases like China, India, there's there's a limit how much stuff you can buy. Jukka Laitamaki: But experience is especially the younger generation, they want experiences and that will be something that that is is definitely keeping this as a mega trend, and we have very nice so tourism traveling to see has whether the crisis before just to name a few terrorism 911. Jukka Laitamaki: We had local terrorism in would have had in Egypt, where you know terrorists bomb the hotels, natural disasters tsunamis hurricanes cyclones wildfires graves disease SARS bird flu swine formers Z got a boy and you're going to economic declines, like the crater system. Jukka Laitamaki: But the innocence always come out stronger for it.
Jukka Laitamaki: But we have to be honest, the current call in 19 pandemic has delivered a major blow bigger than any crisis over the past decades, but tourism and travel will return to growth. Jukka Laitamaki: I have a few things for that, rather than showing them to you, you can look at these these are. Jukka Laitamaki: World travelers travel and tourism console and your donations will tourism organization website and it's about restarting tourism restarting travel and the social impact of travel and tourism, the message is this. Jukka Laitamaki: Travel tourism, and these are emotional experiences and as owning these people are missing this emotional connection connecting with other cultures, other people and exploring so that's the that's the approach that these organizations are taking and trying to restart the travel. Jukka Laitamaki: So that's all I have to say, and thank you keep us that's my own country, Finland, thank you and. Jukka Laitamaki: I will be open to any questions, I know, Linda menard has been has been tracking some of the questions so if if there are any Lynn please.
Lynn Minnaert: are indeed we have quite a. Lynn Minnaert: Few questions come in and thank you so much for the presentation, first of all. Lynn Minnaert: So let's start with the first one is one is come from corey and you have addressed it in part, but maybe we can press you a bit further on it. Lynn Minnaert: So the question came in early and was about corporate events and you've mentioned that it's one of the slower once you think will return, so let me if Curry allows me to put a brief twist on this, do you think. Lynn Minnaert: With this with events with all the other things that you've mentioned that some of the early predictions were perhaps a bit pessimistic.
Lynn Minnaert: Now that we are seeing increased vaccination and it has changed so much just in the last couple weeks, do you think we might see the recovery happening quicker and even with the timeline then, for example, 2024 or do you think that's still a realistic estimate. Jukka Laitamaki: yeah I think it's dependent on on couple things one is you know CDC gave gave instructions that you know if you get the vaccine, you can gather with your own family. Jukka Laitamaki: Even if somebody in your family didn't have that, but any kind of bigger events another loud think places like Las Vegas Las Vegas these mega ballrooms they have. Jukka Laitamaki: obeyed the rules were is divided into hundred person areas, so there are ways, there are solutions and. Jukka Laitamaki: But I have to say, the consumer electronics consumer electronics show in Las Vegas went online and there are. Jukka Laitamaki: Trade shows like, then, that can be done online it's hard it into a car, even though we have.
Jukka Laitamaki: You know virtual reality Volkswagen has introduced a virtual reality show room that you can actually have the Volkswagen in your space, and you can explore it and and all those type of technologies, but then, when you really have to meet people. Jukka Laitamaki: You know the small, medium sized businesses, a lot of the marketing is done through trade shows. Jukka Laitamaki: So I think they will come back because there is no substitute then meeting the people touching the were so they selling the products and. Jukka Laitamaki: Goods and and you know, making those deals, so I think those come back, but they don't come back unless we are herd immunity and people will comfortable going going to the shops. Lynn Minnaert: Yes, absolutely some of them are already coming back right picture so options coming exciting.
Lynn Minnaert: We also have a question from marisol who is talking about vaccinations so she's saying, perhaps we will need to get this as a yearly shot that will there be a requirement you think that there will be proof of vaccination necessary when someone is traveling. Jukka Laitamaki: Well i'll show you this, this is the level of technology that I got today when I got my shot, it says school relax national record card. Jukka Laitamaki: I mean, there is a discussion nowadays like I mentioned Israel Australia talking about the Korean pass. Jukka Laitamaki: My green passport so, and you know you need evidence we went to Africa, but you have a polio shot, so this is nothing new and now they're absolutely available and, of course, I think that that would make things safer and and then, but then there's the issue of discrimination, so if, for your. Jukka Laitamaki: reasons, religious or other reasons you don't want to date the shop, then it will discriminate and. Jukka Laitamaki: But I don't see that as a big problem because, like I said the Apps are available, we already have some tracking and it's easy to put in, you know you have these Apps for security or the airports and that's just an additional feature to add.
Lynn Minnaert: But it's definitely something I know the family traveled sector is very concerned about seeing the kids are not necessarily going to be vaccinated very soon, does that mean no family travel if we require vaccination so it's a big question industry. Jukka Laitamaki: yeah I think it's see seniors are younger you don't need that, for there is no vaccine yet, but, but you know I don't listen can carry it, but the little babies don't necessarily. Jukka Laitamaki: And then you're talking about family travel, I mean they're trying to errands would like to see their credential or and they are the risk group so after the vaccinated I think that family travel will come back.
Lynn Minnaert: that's exactly right, I mean we're hearing already in the travel agent Community lots of grandparents and healthcare workers okay family twits because their backs. Lynn Minnaert: Yes, great news now Joe also had a question, he asks about how the pandemic you think will affect m&a activity mergers and acquisitions in the hotel industry. Jukka Laitamaki: Well, you know so interesting I mean, who is who's really hot is the owners, you know, like Asian American hotel owners associates and 70% of the dates in our own bodies, people, mainly from Bush era India. Jukka Laitamaki: So they are hit hard because they own their properties, the big brands not so, and then, yes, they could be deals like in New York City, you know i've been looking at some some of the some of the deals here but, but the.
Jukka Laitamaki: The issue is what we saw was that the economy low end hotels decided to go and become a home homeless, shelter and then close forever, I mean you looking at investing. Jukka Laitamaki: Quite a lot to get them back on standard and honestly some New York City hotel some of the 200 that close needed to be closed because they went on competitive, will you get deals usually the you know, is to you know to be true. Jukka Laitamaki: They are well funded and and Hilton Marriott as soon as the pandemic became serious they secured lifeline you know they they make sure that they had liquidity. Jukka Laitamaki: And they have been cutting maybe 10 20% of the headquarters staff so really what's been suffering is the hotel owners, so you might find some some individual deals here and there. Jukka Laitamaki: But, but I don't think I don't see we didn't really see that in the after 911 or Great recession that you know, suddenly, you have all these deals and. Jukka Laitamaki: A lot of I mentioned earlier, so NASA has been one which been aggressive in terms of acquisitions.
Lynn Minnaert: Right right that's a great example, indeed, and we also have a question from Ken who's asking about, particularly for New York City, the large Union population and whether you think that will. Lynn Minnaert: lead to a faster entrance back into the workforce and also I don't know if you want to comment on this one, what do you think the future will be for the Union since Peter board has retired. Jukka Laitamaki: Well, I have to say this, this is like personal experience.
Jukka Laitamaki: I used to go to events in blast and I always like to talk to this Gray haired old man who had been there was so happy that they put their children. Jukka Laitamaki: their grandchildren through grade Collins is because the union's protecting their wages, so that they could afford you know, rather than a minimum wage, the Union providing them the American dream, as I mentioned earlier. Jukka Laitamaki: You know, they were born, but I think they'd be marketing many areas themselves out and what happens in a crisis like this whenever that of course is prohibited. Jukka Laitamaki: Companies look for technology for solution so. Jukka Laitamaki: I think that that's that's one thing or just tried to go non Unionized so these robots I mentioned there's so many technologies out there that can reduce the number. Jukka Laitamaki: of employees needed for housekeeping for checking in and we already saw that in CDs and m self checking and these type of things, taking taking place, so there is another thing.
Jukka Laitamaki: We I seen already that some hotel next to this talking about the hiring friends see so you laid off people and many people not coming back to hospitality, you know they they chose other carriers they went to went to read online retail and many companies like Hilton had. Jukka Laitamaki: Had programs helping their latest employees to get jobs with Amazon, and so on, so I think there's a group of people who will not be returning. Jukka Laitamaki: And I think that will be an opportunity for younger people to enter the industry and. Jukka Laitamaki: And so it's it's not like Okay, we still are missing 3.5 million jobs, yes i'm sure they will come back, but to what level.
Jukka Laitamaki: But then they will be an opportunity if people left the industry for younger people, and also the cost is you, you know if if you keep a you know person has been 20 years in a Union you pay premium where's just somebody who started. Lynn Minnaert: But actually that ties into a question someone else was asking it shows as anonymous what are your recommendations for the young people just graduating from hospitality schools looking to enter the sector, would you say it's a fairly optimistic outlook from your perspective. Jukka Laitamaki: yeah I mean the first thing to keep in mind, you are young and and also you know think positive in terms of. Jukka Laitamaki: Maybe it's a good idea to consider other industries, which are growing now and then return the hospitality industry, so if you go let's say. Jukka Laitamaki: industries which use technology well, so you can learn new skills and the beauty of hospitality and tourism industry is an experienced industry, there are many other experience industries.
Jukka Laitamaki: Healthcare retail and so some of those are growing, and I think it's it's okay to leave the industry for a while. Jukka Laitamaki: And then come back later if you want to stick with the industry, I think what you really need to upgrade your skills is to know much more about the applications of technology, what is potential. Jukka Laitamaki: You know now's a good opportunity to introduce new ideas to organizations, how you can use the technology and, of course, unfortunately. Jukka Laitamaki: Our students are graduating I know they able to enjoy their hospitality innovation hub, but we will have that as a major player in the industry in terms of innovations and applications of technology, so that knowledge is crucial. Lynn Minnaert: And it might tie in and this might be one of our last questions, we can take as we're coming up to time but.
Lynn Minnaert: Again it's an anonymous person who saying, do you think there will be a lot of shopping around going on in terms of loyalty before and after the pandemic, so do you think travel loyalty programs will play a part, or change in the recovery. Jukka Laitamaki: Yes, I briefly mentioned that they have to relax the rules and and they don't you know I don't think. Jukka Laitamaki: They will go back and, for instance, united airlines relax the rule that you know the miles expire within a year and a half now now they don't expire.
Jukka Laitamaki: And so, so your interest margin situation where you need to get a demand, and one way to do that is to be flexible, as you saw you know the booking window is 14 days rather than 90 days, so I think the loyalty, will be a lot. Jukka Laitamaki: play a big role in the future, but you have to be transparent, you have to make sure the consumer believes that you are a. Jukka Laitamaki: A brand that takes care of the consumer and takes care of the employees, I mean that's one other thing. Jukka Laitamaki: You know, many of these people in hospitality tourism our frontline people.
Jukka Laitamaki: And, and they are exposed to this, so if the brand like we had at the meatpacking industry, which was in really bad shape and many people can call it, because they didn't have the. Jukka Laitamaki: safety systems in place so hospitality needs to have that, and so you saw the well being those type of trends will accelerate so, so I think that loyalty will definitely still be there. Jukka Laitamaki: But, but at the end of the day, the consumer is really talking about the trust it's not about going to stay at the hotel to collect a few points and get it it's more about can I trust this hotel and are they doing good. Jukka Laitamaki: I mean, are they responsible.
Jukka Laitamaki: I think this pandemic has taught. Jukka Laitamaki: us that you know we all suffering through this. Jukka Laitamaki: So you need to be responsible towards your employees and customers and I think that that's that's really driving that. Lynn Minnaert: Yes, yes, absolutely true, I think a lot of people's priorities when they pick their travel products and services will change, as you rightly pointed out, and. Lynn Minnaert: I think that is, unfortunately, all we have time for we're right on time right at six so Dr you can thank you i'm gonna let you beat everyone good night and give a closing closing word.
Jukka Laitamaki: Yes, so thank you for everyone, joining us today and stay positive I mean this this is this is really a serious. Jukka Laitamaki: pandemic for our industry, but we always like I said we come back stronger and better and and there will be opportunities this mega trend of people traveling spending money on experiences will never disappear, so thank you everyone and have a good night Good morning, good evening.