Great article by Steve Braude at Alix Partners. Travel has certainly been hit harder than most industry verticals, but it has always shown itself to be a resilient sector. It’s often the case in business that being big is an advantage, but perhaps this is a scenario where having less physical assets and more agility is more of a benefit. Travel businesses with the ability to flex and adapt will surely prosper. The other angle here is the emergence of new start-ups and entrepreneurs. These businesses will have the advantage of no debt and avoiding costly redundancy programmes. Travel will prosper again, but it will certainly look different and some of the structural changes that would have happened will transform more rapidly, with the emphasis on more digitally enabled businesses.
With the chaotic approach to travel corridors and second wave of infections takes hold, it promises to be a long winter for companies across the travel value chain. Most companies took action early in the pandemic to raise liquidity and reduce costs temporarily, through government furlough schemes and negotiations with suppliers. With optimism that the pandemic would be over in a few months, and that travel would start to resume in the summer, many of these actions were short-term in nature, or premised on a reasonably rapid travel recovery. As we head into a second wave in Europe, it's clear that travel demand is not going to recover to 2019 levels for many years. What far fewer companies in travel are addressing at this point, is the scale to which they need to structurally adapt their businesses for the long-term.
