By Nikolay Rusev
There is a truth as old as the world that bad things are quickly forgotten. And life proves it. After the end of the covid pandemic, with business gradually returning to the volumes of 2019, the memories of this difficult period associated with mass layoffs, bankruptcies and gloomy prospects are behind us. Now we are all completely absorbed in the agenda imposed by the new realities of the travel industry.
Lack of staff, complex predictability and above all reduced profit margins are among the main challenges for the industry. Given our average occupancy, sales prices and revenue per available room (RevPAR) for the first half of 2023, the optimism of many investors who continue to plan the construction of new sites and increase the bed base in the city's business hotels is extremely strange. It is hardly a secret to anyone that the sector is among the most sensitive to any economic, political and social upheavals.
In this regard, I believe that a few very real threats should be highlighted and reported:
- The creeping recession in Europe paints pictures that we already observed in the crisis of 2008-2009. Then the income in tourism decreased by about 20%, and the return to the previous levels took several years. In more serious earthquakes, budgets for travel, business trips, seminars and training are usually among the first companies to optimize. In such situations, high-category business hotels are forced to look for different market segments, as a result, they take away the customers of the lower-category ones: mainly tourists, sports groups, more budget individual visitors.
- The energy crisis has not passed. The momentary stabilization of the market is a breath of fresh air for business, but most of the objective prerequisites for its continued deepening are present. Supply issues continue to be on the agenda, making planning and budgeting for many activities even more difficult.
- The conflict in Ukraine, instead of a peaceful settlement, is heading for an even greater escalation. As a result, the whole of Eastern Europe risks becoming a permanent zone of instability, which will have an extremely negative impact on tourism.
- The new geopolitical fragmentation of the world at this stage gives an answer to the question of how it will affect tourist travel.
If only ten years ago we were discussing the "millennial" and "Z" generations and how they will influence and change the industry, today the conversations among visionaries are far more serious and in-depth. Until recently, it was believed that we are on the threshold of great technological and socio-economic changes, while now it is obvious that they are already underway. According to many analysts, the so-called "fourth industrial revolution" is significantly different from the previous ones - mainly because of the assigned place of man in it. Artificial intelligence, transhumanism and the meta universe will change beyond recognition the foundations of our familiar model of life. The world we know is going away. At the same time, the so-called "history acceleration" phenomenon. If earlier it took decades and sometimes centuries to impose a significant change, for a process, now the changes occur at the speed of geometric progression. The current conversations are very likely to be completely irrelevant very soon.
With the rapid development of artificial intelligence, it is openly discussed that many professions will disappear and entire sectors will be transformed beyond recognition.
The discussion of what mass tourism will be is still being conducted only at the level of what new technologies will be in hotels and restaurants. Given the problems with finding staff, this issue is approached with high hopes by the majority of hoteliers. Technology companies offer a number of successful solutions, as a result of which more and more unsolvable cases are gradually finding their answers.
In this context, more important for the industry is the answer to the question: who and how will travel in this new world? The complete digitization of payments, the introduction of a universal basic income and the like are increasingly being mentioned. We are left with the feeling that a very different society is in the making. We know that the basis of the development of mass tourism is affordable transport, free time and above all the "middle class". The place of this interlayer in the future is questioned. Here the main question is: will the guaranteed income include the ability to travel or will it cover only the basic needs for physical survival?
Pessimistic predictions are about the coming of very dark times for humanity. Some authors compare the future to a bleak "total eco-bio-techno control" where technological development and genetic engineering will create a completely new kind of human being and society will be divided into castes. Stratification different from the known forms in history.
Speaking of the hospitality industry, many are of the opinion that two types of accommodation will remain – the fully digitized, overnight capsule type and a small number of ultra-luxury hotels that will be affordable to the few. That is, the mass hotels that abound today simply will not have a place in the "brave new world".
Optimists, of course, envision eco-friendly futuristic cities where people teleport through an accessible app to get a closer look at the rainbow.
As is often the case, the truth is probably somewhere in the middle, and only time will tell the answers to all these questions. The recommendation is that anyone planning to invest should think very seriously, not least because standard market analyzes can prove to be woefully inadequate.
THE BOTTOM LINE With the rapid development of artificial intelligence, it is openly discussed that many professions will disappear and entire sectors will be transformed beyond recognition.