Roadmap to an open Europe – or a different travel industry?
20 May 2020: The European Commission has published guidelines on the restoration of transport services throughout the EU following COVID-19. Individual countries are now also stepping up.
A group of 11 EU countries have now issued a coordinated roadmap for reopening their travel and tourism markets. Consultations between Germany, Italy, Spain, Austria, Malta, Portugal, Slovenia, Greece, Bulgaria, Croatia and Cyprus have taken place.
The approach is likely to be phased and coordinated but will travel and tourism throughout the EU ever be the same again? We put this question to ICAEW member Angelos Loizou, from Cyprus, an expert in travel and tourism.
Loizou is a Chartered Accountant, retired from PwC in Cyprus after a 30-year tenure, culminating in holding the post of Chief Operating Officer. During this time, he developed the firm’s Hospitality and Leisure Services division, and became a member and past Chairman of the Board of the International Society of Hospitality Consultants. He also served as the Chairman of the Board of the Cyprus Tourism Organisation (2014-2018) during which time tourism in Cyprus increased 63%. He knows virtually everything there is to know about travel, tourism and hospitality, both in Cyprus and beyond.
Now that the European Commission’s guidelines are out, what is his evaluation? “These guidelines just give us an idea of how we can go back to normal,” he responds, there is no detail. “What else could the Commission do given that freedom of movement is one of the pillars of the EU?”
Loizou also points out that the whole concept of tourism does not lend itself to writing complex rules. “No one can stipulate how holidays and air travel can take place,” he says. “However, because there is danger, life will never be the same again in the hospitality and leisure sector – we will turn to a new page.”
We might already know some of what will be written on that new page, after all, we have experienced new processes to manage risk associated with terrorism without inhibiting travel. And something similar may well happen in the light of COVID-19. “These protocols make us feel safe,” says Loizou. “They might take half an hour more in the airport but we will accept them.”
Next, Loizou turns to sustainable business models – and this will be the main plank of sector recovery. To some extent, this requires us to revisit the low-cost airline versus the legacy national airline debate of the 1990s. “We need both a viable travel industry and a more enjoyable but healthy experience as travellers,” he says. “We need to move away from the idea of travel and tourism products being about earning fast money. This might mean that tourism will no longer be for everyone as it will inevitably push up prices.”
The level of service will have to go up if we are all to be safe; and that will have a knock-on effect for pricing. And, as prices augment, this may mean that we have fewer holidays but an enhanced experience. “The all-inclusive concept has to be redesigned,” says Loizou, commenting on the herd experience of package travel. COVID-19 may have put paid to the bubble in which all-inclusive holidays existed until they were put under scrutiny in the coronavirus environment.
And, he says, Chartered Accountants will be at the table when change is being designed. “Chartered Accountants have a duty to change the regulatory environment for travel and leisure,” he says. “We have done it with banking and for many other sectors. Now we have to do it for this sector.”
Why are accountants intrinsic to change? Loizou says: “Accountants scrutinise the liquidity of a company; but going forward, a travel company’s viability and ability to deliver a safe travel experience will be key.”
He continues: “Yes, it’s a matter of disclosure; but it is also about giving a true and fair view of the operator so that the consumer has the full facts about the viability of that operator.”
Turning to his home market, Loizou comments that the island of Cyprus receives between 1m and 1.5m tourists a year. Cyprus’s total indigenous population is only 1.17m; that puts the numbers into perspective. “In the 1980s, we experienced a good number of repeaters,” he says. “Perhaps 35-40% of visitors had been before. They knew where to go. That gave them a great experience.”
“In recent years, travel packages have kept tourists in their own bubble so they don’t see the island and that is neither healthy (as they are cooped up together) or a good experience. This has to change.”
He is vocal about the island’s desire to see more national carriers visit the island. He also calls for islands like the UK and Cyprus to have strong national airlines and, yes, they may need central government support to sustain them. They will also charge more and may need to fly at 60% aircraft capacity but still make a profit – that number is sacrilege in today’s terms where airlines push for above 80% aircraft capacity.
And there will be fall-out around the itinerant workforce the sector attracts. “This sector is the biggest employer of itinerant workers of them all,” he says. “We will see change here too.”
So, although the conversation started with EU countries’ desire to kick-start the industry and the European Commission’s plans for opening up the bloc to travel, we may conclude that the sector is ripe for change. That is change to its operating model, its cost structure, its risk management profile around health and, most importantly, it needs to be sustainable while delivering a great experience.