How I think Covid-19 will affect travel businesses this year
Like most people, I've been watching developments closely.
Health-wise, Covid-19 is unlikely to affect me, I'm still relatively young (51) and fit and healthy.
Unfortunately, the economic effect of the virus is going to absolutely hammer the travel industry badly this year. It's come at the worst possible time for the Northern Hemisphere's travel trade.
Its collapse came a day after Ryanair chief executive Michael O'Leary predicted that the coronavirus crisis would lead to bankruptcies.
"It's inevitable in the next couple of weeks we'll see more failures," O'Leary told Reuters.
"Where you have a massive short-term decline in bookings you have a massive short-term decline in cash flow," he said on the sidelines of an industry event in Brussels on Tuesday.
The Guardian, Coronavirus live feed
The global spread of the coronavirus outbreak has continued to roil financial markets, with European stock markets plunging on Friday amid continued growth fears.The FTSE 100 fell by 3.5% in morning trading, with hotel and travel stocks amongst the worst affected. Shares on benchmark indices in Germany and France fell by 3.7% and 3.8% respectively.
Anecdotally, within my own family some people have already cancelled bookings planned for later this year. Stock markets are down across the board, particularly among travel companies. Airlines like BA and Ryanair have already cancelled a lot of flights due to a drop in demand. For Flybe airline, the virus is the straw that broke the camel's back and I wouldn't be surprised to see other travel related firms failing as booking cancellations increase.
How does this affect Jomres users?
Ironically, this should put Jomres users into a very strong position to pick up properties from some of the inevitable failed businesses. Running one or more Jomres installations as an Online Travel Agency is an extremely cheap business plan, the cost effective monthly license and hosting costs are not a huge burden. In fact, the biggest expense is likely to be manpower, and if you're running the business alone or with just a small group of people then you are likely to be able to capitalise significantly where other travel related businesses will fail due to their higher overheads.
My gut says that the biggest damage will become more apparent when the lost bookings of May, June and July start to be felt. I think that this is when the pain will be at it's worst, and I wouldn't be surprised to see a big surge of bookings later on in the year as the situation settles down again.
In my mind, the smart business people will invest in self-hosted OTA software like Jomres to sweep up the local trade so that they're ready when business picks up later this year. Many of my users cover geographically small areas, mostly towns or regions. If these areas remain free of the virus then they're likely to see an increase of bookings compared to other locations where the virus is spreading.
If you're considering setting up a Jomres based OTA for your locale, I think that you're going to be in for a pleasant surprise. Yes, Covid-19 is going to hurt the industry, but I don't think that it's all doom and gloom. Clever investment of time and funds, building up an OTA from your spare bedroom could well be the wisest thing you ever did.
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