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The tourism sector has been hard hit by the pandemic and the next few months will inevitably bring challenges and transformation.
As with any major crisis in any sector, the key to a successful, rapid and sustainable recovery is the industry’s or business’s ability to seize new opportunities.
Asses repercussions
Before delving into the heart of the matter, let’s look at a few statistics to measure the repercussions of the pandemic on Quebec tourism and to show the importance of taking action:
- 400,000 people laid off, including the restaurant sector;
- $2.6B in lost revenue due to the absence of foreign travellers in 2020;
- $1B in lost hotel rental income in Montréal and Québec City;
- 9.8% occupancy in downtown Montréal hotels in July 2020 compared to 83.5% in July 2019.
Transportation, events, conventions and restaurants were the most affected, with the impact being greater in urban areas.
Nevertheless, some sectors fared a little better: for example, campgrounds, where the average occupancy rate increased by 10.1% during the 2020 summer season, and sectors with a focus on outdoor activities, like agri-tourism, golf, hunting, fishing, and large parks.
Analyze positioning
To better understand the positioning of tourism businesses in the crisis and their internal capacity to recover, we have developed a two-axis analysis matrix:
- Entity’s key abilities;
- Entity’s key environment-related factors.
1- The five key business abilities to emerge from the crisis are:
- Financial and organizational health;
- Management team and board of directors;
- Relationship with business partners;
- Digital capability;
- Development vision.
2- The three key environment-related factors that define the crisis and the recovery are:
- Urban or rural location;
- Group or individual consumption;
- Clientele from outside or inside Quebec; younger or older clientele.
Analyzing these conditions determines the organization’s position in terms of its ability to recover and the type of strategy to be implemented.
Identify main challenges
Two areas will be put to the test:
Human and operational resources
1- Offsetting the workforce shortage
The industry is facing a severe workforce shortage. The sector’s vulnerability is causing many employees to change careers and consequently, businesses are losing expertise. As a result, they will have to turn to a range of new solutions for recruiting and retaining workers.
Internally, pooling functions should not be overlooked. The versatility of roles within the organization is a must to get through this crisis period, as is mobilizing the team.
2- Accelerating digital transformation to improve productivity
The tourism sector was lagging behind in terms of digital transformation. The pandemic has exposed the need for organizations to accelerate this transformation in order to adapt to users’ new needs and improve their productivity.
Financial component
As for the financial aspect, the financial assistance measures introduced since the beginning of the crisis have made it possible for many businesses to survive. There have been fewer closures than initially estimated.
However, it has been a long pandemic that has significantly impacted organization’s finances. Discussions with bankers, investors and business partners make it possible for entities to find new options to keep their business afloat.
Choose a tailored solution
Having stabilized and kept the business afloat over the past year, management must now chart a new course for recovery. There are several options:
- Diversify and foster the growth of new or traditional activities;
- Refocus activities on the essentials and restore profitability;
- Transform or reinvent the business;
- Or even sell, to get the maximum value for the business.
No matter what direction organizations take, they will need a healthy dose of courage and conviction. Efficient management will be critical. You will need to be agile, creative and equip themselves with the necessary tools and skills to help the organization adapt to the new reality.
This unprecedented crisis will trigger significant changes in the tourism sector, and while some businesses may not recover, others will emerge stronger. There are real opportunities to be discovered or even triggered between now and the full re-launch of operations. One thing is certain, the industry will evolve more sustainably and will recover its vitality in the years to come.
Our tourism, recreation and culture team is committed to the success of organizations and keeps abreast of evolving issues in this sector. Our experts are there to guide and support you in analyzing your needs, accessing available financial measures and providing relevant solutions for your business. https://www.youtube.com/embed/KMO5qdlDMNg