Tourism in Nepal after COVID-19
The last blog I wrote was in April 2015, after the Gorkha Earthquake had devastated our industry, and we were trying to figure out whether there would be an industry to go back to.
Well, there was, and it was all going well, with Visit Nepal 2020 expected to deliver somewhere between 1.3 million and 2 million tourists to Nepal by December 31. Not anymore. COVID-19 and its impact have decimated the world tourism industry. Whereas the earthquake of 2015 was a local event, this is global. In 2105 our economy was the only one impacted. In 2020, it feels like the whole world's economy is going to hell in a bucket!
Airlines are grounded. Some will fly again. Some won't. Airports are closed. Land borders are sealed and governments are working overtime to build "walls", where none existed, not even in the minds of the most xenophobic persons. Isolation and Quarantine are the two most often used words right now. Both are anathema to the conduct of tourism. At least, to tourism as we knew it.
So, what is Nepal's tourism industry going to look like after the dust settles on the storm kicked up by COVID19?
Any attempt to peer into the future has to first be tempered with a backward glance.
The world economy has not been clobbered like this since the Great Depression which lasted from August of 1929 to March of 1933. That event shaved close to a third of the Global GDP and saw Global Unemployment at almost a quarter of the workforce. Tourism was a fringe industry, at best, catering to the very well-heeled, before those tumultuous years, slowly coming into its own only after WWII and the air capacity enabled by surplus military aircraft. However, it wouldn't be until the jet age, ushered in by Boeing's 707 and the McDonnell Douglas' DC 8, followed quickly by the DC 10 and the 747, that mass tourism would take off. Governments around the world would recognize tourism's potentials. Countries with ready infrastructure - places of well known historical and archaeological importance, ports, airports, hotels, and roads would benefit first. First-time travelers flocked to see the seven modern wonders, seasoned travelers looked increasingly further afield in search of the increasingly exotic.
Economies held back by whatever past forces were quick to realize the game-changing potential of this new phenomenon and would fall over themselves in a rush to tear down barriers to travel, build infrastructure, spruce up their archeological sites and get in line to welcome the international traveler. Poor countries would benefit from the earnings shoring up their shaky finances and richer countries would realize the projection of their soft power via the wallet of the traveler. Even tin-pot dictatorships would queue up. Post-WWII, for 70 plus years, beginning slowly at first and then accelerating rapidly, barriers to travel would be torn down. Travelers were welcomed everywhere with open arms.
Who would have guessed that homestays would become a serious experiential product and that Airbnb would rise to challenge the mighty hotel chains? The idea of the brotherhood of man, or mankind, if you prefer, was on a serious roll. Nothing could stop this 8.8 trillion dollar juggernaut growing at close to 3 and a half percent a year and employing 319 million people. That was 2018 and seems almost as distant as the years of the Great Depression.
Destination Nepal was built initially, on the word-of-mouth form of marketing, extolling that magical Kingdom in the Himalaya, where a new king, Mahendra had just been crowned, where there were more temples than houses and colorful people like Boris Lissaneyevich hosted you at the Hotel Royal. Tourism to Nepal was born off the back of the seasoned traveler seeking the exotic. In the sixties and even early seventies, you may have traveled the beaten path to India and the Orient but, so had your friends and neighbors. Add Nepal to your travel history and you were truly world-weary. On returning home you could have been invited to lecture on your experiences and people might have lined up to see your photos.
It would take the ascent of Mt. Everest along with a host of other mountains and the arrival on the scene of Col. Jimmy Roberts and people like him for a serious mountain tourism product to be created. Soon, others, both ex-pats as well as Nepalis would get in on the game. Still, they were specialists. A handful of travel companies would control the bulk of the travel industry in Nepal, well into the eighties. And a few of those early visitors would take that giant leap of faith and begin selling Nepal as an adventure destination like no other, internationally. The mightiest mountains, rushing rivers, and teeming jungles mixed in with the ancient Kathmandu valley and beautiful, tranquil Pokhara and you were selling a slice of heaven.
Nepal, although slow to recognize tourism's potential till the mid-fifties, was quick to get on the band-wagon, and beginning in the early seventies with the arrival of the first Boeing 727's, began earnestly to look to tourism as a major contributor to its economy's bottom line. So much so, that 2020 was the year we were going to aim to welcome over 2 million visitors and count god alone knows how many dollars. That was going to be 1 visitor for every 15 Nepalis. No small task for a country with limited resources and a history of political instability over the past twenty years.
Now, let us look forward. At both the supply and demand sides.
Supply Side: Unlike after the earthquake, our infrastructure is still intact and nothing that was working needs to be re-built. Airports, hotels, tour operators with their vehicle fleets, restaurants, highways, and tourist sites are still standing and ready to welcome back and serve tourists. Delays have been effected on new airports, hotels, and highway projects but, they will get built, eventually. The toll on the Human Capital required to operate those infrastructures will depend on the length of time it takes for COVID19 and its effects to subside. A short turnaround will mean the Human Capital will still be available. A prolonged turnaround may lead to some businesses going belly-up and see some of the workforce migrating to other forms of employment or sustenance along with chances of a section falling victim to the Pandemic. On a slightly more positive note, well trained Human Capital who had migrated to overseas labor markets may now find themselves, even better trained overseas, having to seek opportunities in the domestic market itself thus, enhancing our capacity and capabilities. Our competitive and comparative advantages remain relatively intact.
Demand Side: Here is where things get tricky. Demand for travel to Nepal has never been a mainstream affair. VNY 2020 aimed to bring in 2 million tourists but, barring in India, the reality was that Nepal was still sold mainly by specialist tour operators. Of course, in early 2020 there were many more tour operators than just the original handful in tourist generating markets but, Major tour operators mostly found the cost of sales for trips to Nepal too high. The absence of direct flights, risks associated with adventure tourism, compliance with home laws, etc. created too big a burden to justify the serious investment. Then along comes the Pandemic causing COVID-19.
While there have been localized major shocks - short, sudden and prolonged- to the system in the past like the dramatic hi-jacking of IC 814 in 1999, the long drawn out affair of the Maoist insurgency from the mid-nineties to 2006, the Royal Massacre of 2001 and the earth-shattering earthquake of 2015, nothing compares to the brakes applied by the current crisis. The overseas tour operators specializing in Nepal recovered quickly from those events. Expanding their portfolios to include other destinations during the insurgency is just one example. But how will they cope with this global crisis on an unprecedented scale? How many will survive the financial strain of a prolonged closure? The closest examples we can refer back to are the events of 9/11 when travel partially came to a halt. Those events produced a host of unprecedented bankruptcies in the travel fraternity. This is a halt to travel in a much, much larger scale, and given the intense price competition of the past decade, it is probably safe to assume that not many overseas tour operators who were selling Nepal are sitting on piles of cash and bankruptcies and business closures can be expected.
Tourism After COVID19.
How long will COVID19 continue to ravage the world and its economy? Once an end to the pandemic is in sight, how soon will hastily erected barriers to travel be brought down, if ever? Will barriers come down all at once or will first world countries take down the barriers only for themselves and continue a travel ban on countries with poor health care systems and infrastructure? How will the Pandemic influence customer's buying patterns? Will customers revert to pre-pandemic buying habits or will they be looking for additional value in destinations? What will be the face of travel distribution when the dust has settled?
How long COVID19 lasts is anybody's guess. Theories have been put forward of an end in summer. Of a slowdown in summer with a spike in winter. Of it never actually going away and becoming the new normal. An Indian astrologer has even pin-pointed to May 29, 2020 as the date on which the virus will be defeated! The answer to this question is up in the air.
Will countries rush to pull down the barriers to travel that they have erected? Some will. Some won't. Tourism in 2018 was worth 8.8 trillion dollars to the world economy. Some countries will want to get back into the game as quickly as possible and begin healing their economies. Others will be more cautious. Especially, if they are unable to answer the "What if the virus makes a comeback?", question. Others still, will see this as a way of further restricting access to outsiders and tightening despotic controls over their own populations. Nepal will be eager to begin welcoming back tourists but, will the tourists oblige? Initially, in my opinion, the adventure travelers will come back, the charge led by mountaineers and trekkers, closely followed by the budget traveler who may place a premium on low prices over any security concern. Think back to the time of the Maoist insurgency when a quarter-million tourists still visited in the deepest, darkest of days.
Governments across the world, no matter how advanced, were caught with their pants down with their populations scattered all over the world, suddenly needing evacuation and repatriation back home. They will want to avoid a repeat performance and the associated costs and logistical nightmares of late March and early April 2020. On the flip-side, having seen the strains a pandemic on the scale of COVID19 can cause to even the best gold standard health care systems, countries will be reluctant to allow in all and sundry. Will we be back to the days when everybody traveled with a little yellow card stuck inside our passports attesting to our inoculations and general well-being? Well, maybe.
Although government actions will influence, to a large extent, return to the status quo ante COVID19, it will be the consumer who will have the final say. will they seek added value in potential destinations? Will destinations with relatively more robust health care systems enjoy a premium demand? Will travel insurance costs be skewed in their favor? Will any price difference in insurance be enough to force individuals' buying decisions in favor of a certain destination? What sort of destination choices will potential tourists, currently stranded abroad while on vacation, make in the future? Customers will certainly be more choosy in the future, at least in the short and medium terms both as a result of the fear of the unknown and due to increased insurance costs. The cruise industry, for example, will be in deep introspection on these accounts.
Nepal has primarily been sold by specialists. Will they still be around at the end of COVID19? Will big travel wholesalers continue to shun Nepal due to the high cost of sales or will they look to earn incremental revenues from any and all sources to survive? Or will COVID19, which has forced the entire world online, so much so, that the demand for internet bandwidth has significantly increased all over the world, accelerate the migration of distribution of travel products to on-line platforms which already exist or maybe just over the horizon. In my opinion, travel distribution will move more rapidly and more aggressively to online platforms calling curtains on the specialist, overseas tour operators. Nepali travel companies will be well advised to re-think their marketing strategies during this forced work-from-home period, including the sprucing up of their online presence and sales tools, for the day when travel demand to Nepal among consumers will rebound.
Well, there was, and it was all going well, with Visit Nepal 2020 expected to deliver somewhere between 1.3 million and 2 million tourists to Nepal by December 31. Not anymore. COVID-19 and its impact have decimated the world tourism industry. Whereas the earthquake of 2015 was a local event, this is global. In 2105 our economy was the only one impacted. In 2020, it feels like the whole world's economy is going to hell in a bucket!
Airlines are grounded. Some will fly again. Some won't. Airports are closed. Land borders are sealed and governments are working overtime to build "walls", where none existed, not even in the minds of the most xenophobic persons. Isolation and Quarantine are the two most often used words right now. Both are anathema to the conduct of tourism. At least, to tourism as we knew it.
So, what is Nepal's tourism industry going to look like after the dust settles on the storm kicked up by COVID19?
Any attempt to peer into the future has to first be tempered with a backward glance.
The world economy has not been clobbered like this since the Great Depression which lasted from August of 1929 to March of 1933. That event shaved close to a third of the Global GDP and saw Global Unemployment at almost a quarter of the workforce. Tourism was a fringe industry, at best, catering to the very well-heeled, before those tumultuous years, slowly coming into its own only after WWII and the air capacity enabled by surplus military aircraft. However, it wouldn't be until the jet age, ushered in by Boeing's 707 and the McDonnell Douglas' DC 8, followed quickly by the DC 10 and the 747, that mass tourism would take off. Governments around the world would recognize tourism's potentials. Countries with ready infrastructure - places of well known historical and archaeological importance, ports, airports, hotels, and roads would benefit first. First-time travelers flocked to see the seven modern wonders, seasoned travelers looked increasingly further afield in search of the increasingly exotic.
Economies held back by whatever past forces were quick to realize the game-changing potential of this new phenomenon and would fall over themselves in a rush to tear down barriers to travel, build infrastructure, spruce up their archeological sites and get in line to welcome the international traveler. Poor countries would benefit from the earnings shoring up their shaky finances and richer countries would realize the projection of their soft power via the wallet of the traveler. Even tin-pot dictatorships would queue up. Post-WWII, for 70 plus years, beginning slowly at first and then accelerating rapidly, barriers to travel would be torn down. Travelers were welcomed everywhere with open arms.
Who would have guessed that homestays would become a serious experiential product and that Airbnb would rise to challenge the mighty hotel chains? The idea of the brotherhood of man, or mankind, if you prefer, was on a serious roll. Nothing could stop this 8.8 trillion dollar juggernaut growing at close to 3 and a half percent a year and employing 319 million people. That was 2018 and seems almost as distant as the years of the Great Depression.
Destination Nepal was built initially, on the word-of-mouth form of marketing, extolling that magical Kingdom in the Himalaya, where a new king, Mahendra had just been crowned, where there were more temples than houses and colorful people like Boris Lissaneyevich hosted you at the Hotel Royal. Tourism to Nepal was born off the back of the seasoned traveler seeking the exotic. In the sixties and even early seventies, you may have traveled the beaten path to India and the Orient but, so had your friends and neighbors. Add Nepal to your travel history and you were truly world-weary. On returning home you could have been invited to lecture on your experiences and people might have lined up to see your photos.
It would take the ascent of Mt. Everest along with a host of other mountains and the arrival on the scene of Col. Jimmy Roberts and people like him for a serious mountain tourism product to be created. Soon, others, both ex-pats as well as Nepalis would get in on the game. Still, they were specialists. A handful of travel companies would control the bulk of the travel industry in Nepal, well into the eighties. And a few of those early visitors would take that giant leap of faith and begin selling Nepal as an adventure destination like no other, internationally. The mightiest mountains, rushing rivers, and teeming jungles mixed in with the ancient Kathmandu valley and beautiful, tranquil Pokhara and you were selling a slice of heaven.
Nepal, although slow to recognize tourism's potential till the mid-fifties, was quick to get on the band-wagon, and beginning in the early seventies with the arrival of the first Boeing 727's, began earnestly to look to tourism as a major contributor to its economy's bottom line. So much so, that 2020 was the year we were going to aim to welcome over 2 million visitors and count god alone knows how many dollars. That was going to be 1 visitor for every 15 Nepalis. No small task for a country with limited resources and a history of political instability over the past twenty years.
Now, let us look forward. At both the supply and demand sides.
Supply Side: Unlike after the earthquake, our infrastructure is still intact and nothing that was working needs to be re-built. Airports, hotels, tour operators with their vehicle fleets, restaurants, highways, and tourist sites are still standing and ready to welcome back and serve tourists. Delays have been effected on new airports, hotels, and highway projects but, they will get built, eventually. The toll on the Human Capital required to operate those infrastructures will depend on the length of time it takes for COVID19 and its effects to subside. A short turnaround will mean the Human Capital will still be available. A prolonged turnaround may lead to some businesses going belly-up and see some of the workforce migrating to other forms of employment or sustenance along with chances of a section falling victim to the Pandemic. On a slightly more positive note, well trained Human Capital who had migrated to overseas labor markets may now find themselves, even better trained overseas, having to seek opportunities in the domestic market itself thus, enhancing our capacity and capabilities. Our competitive and comparative advantages remain relatively intact.
Demand Side: Here is where things get tricky. Demand for travel to Nepal has never been a mainstream affair. VNY 2020 aimed to bring in 2 million tourists but, barring in India, the reality was that Nepal was still sold mainly by specialist tour operators. Of course, in early 2020 there were many more tour operators than just the original handful in tourist generating markets but, Major tour operators mostly found the cost of sales for trips to Nepal too high. The absence of direct flights, risks associated with adventure tourism, compliance with home laws, etc. created too big a burden to justify the serious investment. Then along comes the Pandemic causing COVID-19.
While there have been localized major shocks - short, sudden and prolonged- to the system in the past like the dramatic hi-jacking of IC 814 in 1999, the long drawn out affair of the Maoist insurgency from the mid-nineties to 2006, the Royal Massacre of 2001 and the earth-shattering earthquake of 2015, nothing compares to the brakes applied by the current crisis. The overseas tour operators specializing in Nepal recovered quickly from those events. Expanding their portfolios to include other destinations during the insurgency is just one example. But how will they cope with this global crisis on an unprecedented scale? How many will survive the financial strain of a prolonged closure? The closest examples we can refer back to are the events of 9/11 when travel partially came to a halt. Those events produced a host of unprecedented bankruptcies in the travel fraternity. This is a halt to travel in a much, much larger scale, and given the intense price competition of the past decade, it is probably safe to assume that not many overseas tour operators who were selling Nepal are sitting on piles of cash and bankruptcies and business closures can be expected.
Tourism After COVID19.
How long will COVID19 continue to ravage the world and its economy? Once an end to the pandemic is in sight, how soon will hastily erected barriers to travel be brought down, if ever? Will barriers come down all at once or will first world countries take down the barriers only for themselves and continue a travel ban on countries with poor health care systems and infrastructure? How will the Pandemic influence customer's buying patterns? Will customers revert to pre-pandemic buying habits or will they be looking for additional value in destinations? What will be the face of travel distribution when the dust has settled?
How long COVID19 lasts is anybody's guess. Theories have been put forward of an end in summer. Of a slowdown in summer with a spike in winter. Of it never actually going away and becoming the new normal. An Indian astrologer has even pin-pointed to May 29, 2020 as the date on which the virus will be defeated! The answer to this question is up in the air.
Will countries rush to pull down the barriers to travel that they have erected? Some will. Some won't. Tourism in 2018 was worth 8.8 trillion dollars to the world economy. Some countries will want to get back into the game as quickly as possible and begin healing their economies. Others will be more cautious. Especially, if they are unable to answer the "What if the virus makes a comeback?", question. Others still, will see this as a way of further restricting access to outsiders and tightening despotic controls over their own populations. Nepal will be eager to begin welcoming back tourists but, will the tourists oblige? Initially, in my opinion, the adventure travelers will come back, the charge led by mountaineers and trekkers, closely followed by the budget traveler who may place a premium on low prices over any security concern. Think back to the time of the Maoist insurgency when a quarter-million tourists still visited in the deepest, darkest of days.
Governments across the world, no matter how advanced, were caught with their pants down with their populations scattered all over the world, suddenly needing evacuation and repatriation back home. They will want to avoid a repeat performance and the associated costs and logistical nightmares of late March and early April 2020. On the flip-side, having seen the strains a pandemic on the scale of COVID19 can cause to even the best gold standard health care systems, countries will be reluctant to allow in all and sundry. Will we be back to the days when everybody traveled with a little yellow card stuck inside our passports attesting to our inoculations and general well-being? Well, maybe.
Although government actions will influence, to a large extent, return to the status quo ante COVID19, it will be the consumer who will have the final say. will they seek added value in potential destinations? Will destinations with relatively more robust health care systems enjoy a premium demand? Will travel insurance costs be skewed in their favor? Will any price difference in insurance be enough to force individuals' buying decisions in favor of a certain destination? What sort of destination choices will potential tourists, currently stranded abroad while on vacation, make in the future? Customers will certainly be more choosy in the future, at least in the short and medium terms both as a result of the fear of the unknown and due to increased insurance costs. The cruise industry, for example, will be in deep introspection on these accounts.
Nepal has primarily been sold by specialists. Will they still be around at the end of COVID19? Will big travel wholesalers continue to shun Nepal due to the high cost of sales or will they look to earn incremental revenues from any and all sources to survive? Or will COVID19, which has forced the entire world online, so much so, that the demand for internet bandwidth has significantly increased all over the world, accelerate the migration of distribution of travel products to on-line platforms which already exist or maybe just over the horizon. In my opinion, travel distribution will move more rapidly and more aggressively to online platforms calling curtains on the specialist, overseas tour operators. Nepali travel companies will be well advised to re-think their marketing strategies during this forced work-from-home period, including the sprucing up of their online presence and sales tools, for the day when travel demand to Nepal among consumers will rebound.
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