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Episode 18: How the hospitality and tourism sector is navigating through the pandemic

City names going in different directions

The COVID-19 pandemic continues to create challenges for the hospitality and tourism sector. The majority of travel has been halted, lockdowns have restricted the operations of restaurants and bars, and businesses are waiting to see if they'll even make it out of the pandemic.

On this episode of Like Nobody's Business, Professor Frederic Dimanche, opens in new window, director of the School of Hospitality and Tourism Management, talks about how the industry is managing through the tribulations of the COVID-19 pandemic. We speak about how drastically the sector has been hit, the innovative ways companies have tried to bounce back and how education is changing to meet the needs of a new chapter in the hospitality and tourism industry.

Podcast Transcript – Episode 18
Nadine Habib: From the corner of Bay and Dundas in downtown Toronto, this is, Like Nobody's Business, a podcast of thought leadership and business innovation.
Nadine Habib: I'm your host, Nadine Habib. The COVID-19 pandemic continues to create challenges for the hospitality and tourism sector. The majority of travel has been halted, lockdowns have restricted the operations of restaurants and bars, and businesses are waiting to see if they'll even make it out of the pandemic. On today's episode of Like Nobody's Business I speak virtually with Professor Frederic Dimanche. He is the director of the School of Hospitality and Tourism Management at the Ted Rogers School of Management. He has been a key voice and expert on how the travel and tourism sector has been impacted by the coronavirus. We speak about how drastically the sector has been hit, the innovative ways companies have tried to bounce back, and how education is changing to meet the needs of a new chapter in the hospitality and tourism industry.
Nadine Habib: Thank you for joining me virtually, Frederic. It's nice to see you again.
Frederic Dimanche: You're welcome. Good morning.
Nadine Habib: The last time I saw you was in March, and I remember it clearly because you were doing a CBC interview, and I remember after the interview you had said, I'd be very surprised if schools don't close within a week, and within a week we were all working from home. And I remember even at that time you were giving a lecture and saying how dramatically the COVID impact on the hospitality and tourism sector that's already taken shape, and that if this continues for another six months a lot of companies are going to go out of business. And so now we are eight months in, and how has that changed? How dramatically has COVID impacted the sector?
Frederic Dimanche: So unfortunately, I was kind of right. We did close the school. Actually, we have to say, we don't close the school because the courses continue and we continue to work. But physically the school was closed indeed and we all work online. And unfortunately as well, this COVID crisis has continued for a long time and I think it will continue for a long time as well. And as we discussed already, six months ago or eight months ago, it has had a very detrimental effect on the hospitality and tourism sector, probably more on this sector than on any other sector because of government restrictions, not just in Canada, but all over the world. As we know, some borders were closed and people were advised not to travel and so it made it really difficult for people to travel, first of all.
Frederic Dimanche: And then there was of course the risk, the health risk that people perceived, and people were not willing to take that risk in many situations. So very few people traveled and as a result, well, the travel and tourism sector literally sunk. We are down to maybe 10% of what it was a year ago, so you can imagine what kind of impact that has on all businesses that are related to hospitality and travel and tourism. From transportation to attractions, to accommodations, to food services, to the travel intermediaries, the travel agents, the tour operators, everybody has been hurt very badly.
Nadine Habib: So you're the director of the School of Hospitality and Tourism, and I know it falls under the same program, but those are two very different sectors. And so, hospitality deals with restaurants, bars, hotels, tourism, anything related to travel. So how have those two things been effected separately from COVID? And has one industry been able to bounce back better or quicker, and does the government still need to provide a lot of incentives for both sectors to really get it back? Because 10% is super low.
Frederic Dimanche: Yeah. Those two sectors are very-much connected. So I don't want to say they are one and the other, because they are one and the other, really together. Hospitality is part of the tourism sector. However, the difference is that there are some hospitality services that cater also to locals. So when we're talking about travel, long haul transportation, airplanes, and et cetera, of course, that's the travel sector, and when people don't travel this is definitely not doing very, very well. The hospitality sector, for some part of it, and I'm thinking about restaurants for example and bars, they cater also to locals. And therefore under some circumstances they have been able to continue to operate. And I don't want to say they did well. They did not do well. Actually it was very hurtful, but nonetheless, they did operate.
Frederic Dimanche: There was a time when indoor dining was authorized, and outdoor dining in the summer was authorized, and people could go to bars for example. But at some point as you know, there were more restrictions so we closed indoor dining and the bars were closed, and that really impacted very dramatically the sector, probably more than any other sector, as far as local business is concerned. There was no way restaurants could survive, managing the fixed cost with only providing food on delivery basis or online ordering without sit-down service, and that has been very, very difficult. Even more difficult maybe for the hotels, because when people don't travel, usually they are no customers in the hotels except for very, very few rooms that may be occupied by people who had to travel. I'm talking possibly about the very few airline crews that were still flying, or some of the people in business whose business depended on staying in a hotel in a different city. But that's very, very limited. And as you know, several hotels had to close because the occupancy rate was so low that there was no opportunity for them to operate.
Frederic Dimanche: So it's been very difficult. So again, the hospitality sector, the restaurants, the bars, depending on the local regulations, it's not the same in Toronto, for example that it has been in some other parts of the country. They manage more or less to work with the local businesses. But those who are part of the hospitality business and the tourism business, in other words, those that cater exclusively to traveling tourists, it's been very difficult for them except in the summer.
Frederic Dimanche: And I will make another distinction. We have been told by the health officials to stay away from the crowds, to go outside, of course, to go to the countryside possibly. So during the summertime, those tourism businesses and destinations that did pretty-well were probably those in rural areas, comparative to urban areas that were not visited at all by the tourists.
Nadine Habib: So it's a shift of balance, shift of power almost because everybody's going out of the city.
Frederic Dimanche: Yes, yes.
Nadine Habib: ... usually everybody goes to the city.
Frederic Dimanche: But also because it was vacation time, and those businesses were relying on people coming on vacation and who spent a long weekend or maybe a week at a cottage or something like this. But now that we're going into the winter season, it's going to be very difficult for them to operate.
Nadine Habib: And what about the airlines? Because I know people have been talking, should the government bail them out? They’re at record lows in terms of profits.
Frederic Dimanche: In terms of airlines it's been very difficult. International airline traffic is down to 10% or less than what it was before. Some countries have managed to maintain or to recover. I'm thinking about China, for example, that seems to be in improving conditions. But for North America, it's a lot more difficult. So some people have been traveling, like I said, for business or others so they have some flights, but the traveling public in general is not traveling. Even businesses are working from home like we're doing right now. Instead of going to Ottawa, for example, for a one day meeting, or in Montreal, that is not existing anymore. People are teleconferencing or doing video conference calls. And so again, the impact has been tremendous on the airlines.
Frederic Dimanche: And the question is, can the airline survive without operating, without any kind of revenue? It's unlikely. So we have seen in many countries, governments stepping in to help and to provide financial support in one way or the other to those airlines to make sure that they survive. Because airlines are essential to any kind of business, not just to the traveling leisure public, but also to actual business and trade, so it's important to keep them in the loop.
Nadine Habib: And do you feel that maybe the Canadian regulations have been some of the more stricter regulations when it comes to airlines, comparatively to other countries?
Frederic Dimanche: I don't know. I could not really compare. I know for a fact that some other countries have stepped in and have helped some airlines, more significantly than the Canadian government has done for example, at the moment. But on the other hand we haven't heard yet about Canadian airlines going into bankruptcy. Air Canada, for example, is the major player in Canada. They're still able to operate. They transport freight, they transport a few people, there are a few international flights. So they managed to have a baseline activity that keeps them in business, basically.
Nadine Habib: And I know that you traveled a little bit this summer. What was that experience like? Because there's a lot of people at home that have barely budged.
Frederic Dimanche: I did. Over the summer I went back to Europe to visit family, to visit my parents and my children. And travel was kind of an unreal experience. The going through the airport, going through the airline security. First of all, there were very few people in the airports, obviously, because there was very little traffic. And then it was very high level security, signing papers, certificates about health and all this kind of thing. Plus the procedure in the plane about not sitting next to someone else unless it's of your own party. So a number of things like this. And when I was in Europe, I took the train and obviously everybody was wearing masks over the summer in public transportation. Same as in planes. The train passengers were masking up and that was being controlled.
Frederic Dimanche: So, once you realized that this is becoming the new normal, it's not that threatening anymore. It's not that scary. People still need to travel like we said earlier. And I don't think that traveling in itself is dangerous. We know for a fact that traveling on a plane, that's not where you're going to catch the coronavirus. What governments are concerned is that when somebody who is infected might travel to another place and disseminate the virus, that's another issue. But traveling in itself, it's quite safe.
Nadine Habib: I know that now there's just so much more regulation about traveling. Like for instance, my sister was traveling from Dubai and she had to get tested before she got on the flight, after she got on the flight. And so she was tested multiple times so they're regulating it pretty strongly.
Frederic Dimanche: Absolutely. And that's one thing actually that the travel sector has been reproaching to the Canadian government. At the moment the regulation is, if you come back to Canada from abroad, you have to spend two weeks in quarantine. And if we work like we do right now, from home, online, it's not that difficult. But nonetheless, for people it's going to be a big barrier. They will not be thinking about traveling abroad if they know that they have to quarantine. It depends on their working conditions. It depends on their living conditions as well. Some people may afford it, and for some other people it's just not possible to stay at home for two full weeks. So we need to put in place a number of systems, as you suggested, where there is testing before flying, testing upon landing, and maybe a third testing four or five days later after a short quarantine of two, three or four days, and that should help encourage people to travel a bit more again.
Nadine Habib: And this brings me to my third question, is that, people, companies, entrepreneurs, are always thinking of innovative ways to get the customer back. Do you feel that there's certain things that, like in hotels or airlines or Airbnb, they're doing to bring the customer back?
Frederic Dimanche: Well, the hotel sector, the travel sector, the restaurants, have been among the first ones to implement very strict measures in terms of safety. Why? Because they were targeted very quickly. And everybody in the hospitality and tourism realized that if we don't put those safety measures and sanitation measures in place, we have no chance. So very early, all the hotel brands, all the airlines put together very strict procedures to reassure people, and to demonstrate to the potential clients, but also to government obviously, that we were very serious about safety and security. So that's something that they obviously continued to do. And I think they have been able to demonstrate that that service, whether it's in a plane or in a restaurant can be safe. And actually, I believe that restaurants are likely to reopen again to some extent with some physical distancing measures.
Frederic Dimanche: But obviously making people feel confident is an important aspect, but we have to attract them also in some other ways. When people are traveling, in hotels for example, what is there to do? Because there is no more live entertainment. You may not be able to go to the movies. You don't go to the theater. You don't go to a concert. You don't go shopping, or at least it's discouraged to go shopping. So one thing that some hotels have been doing to entertain, if I may say, their guests, is to provide health, wellness services, meditation services, yoga services in hotels. There's a number of hotel brands that have come up with those kinds of strategies. From apps to, in room with the TV training and courses or whatever it may be. So that's a new service that the hotels have been developing, I think, to keep people busy in the room. And also it's helping obviously people's wellness and mental health.
Nadine Habib: I think people just don't want to be at home. Even if they're in a hotel room doing those wellness things, it feels like a change.
Frederic Dimanche: Absolutely.
Nadine Habib: Well, the holiday season is coming up and I know that that's going to look very different considering what's going on. What do you expect for that season? I know that's a really big time for every industry. So what are your expectations?
Frederic Dimanche: Yeah. So for the past few weeks, as you know, the number of cases has gone up, so one of the reasons is, well, more testing, possibly. I think all over the country there's been more testing so obviously the number of cases has been going up. But also because it's a virus that is disseminating, okay. So several countries, including Canada, have restricted activities and opportunities to meet people, and crowding and all those kinds of things. France went into confinement, Italy went into confinement. The UK is going into confinement as well. And all those activities, of course, to control the spread of the virus. But also we are doing this at a time, a few weeks ahead of the holiday season, so that we are hoping that we can control the situation for the holiday seasons.
Frederic Dimanche: It would be very difficult I think for any government to tell people, you cannot meet your family for the holiday season. This is a heavy time in terms of travel, in terms of family togetherness, and we know that this has been a very difficult year. The holiday season may be an opportunity for people to get together and rejoice, and see family that they have not seen for weeks or for months, in some cases. So I'm really hoping that the strong measures that we're taking right now, the efforts that all of us are making not to go out, not to see people, not to go into crowds or events and all this kind of thing, will pay off in the next weeks so that the governments can release a little bit, some of the tension for the holiday season.
Nadine Habib: I know people are looking forward to that. It's been a hard year. People need to see their family.
Frederic Dimanche: It has. It has.
Nadine Habib: My last question I'd like to turn to is education. I couldn't think of a more interesting or exciting time to be a student, especially in hospitality and tourism. And you're learning, the sector is changing so much, and when there's a lot of change there's a lot of opportunities. So I can imagine that as a student, you're taking all this in. And as a teacher as well, you're changing a lot of your curriculum and your lesson plans. So what are you teaching now to your students? What is their response been like?
Frederic Dimanche: Well, first of all, we've gone 100% online, so that already was an adjustment for the student. And there was a great learning curve for us professors, but also for the students, because they had to learn as much as we did, the new tools, the new evaluation procedures and et cetera. But what we find is that both on the faculty side and the students' side, people are very creative. And if we give them the tools to work differently, they do it, they embrace it and something really good can come out of it.
Frederic Dimanche: Now, more specifically, with respect to hospitality and tourism, obviously in all of our courses we have to take this into consideration. Whether it's in accounting and finance, when you go through a crisis, how did we do? We taught this summer risk and crisis management. How do companies not only deal with the crisis currently, but how do they learn from this crisis to plan for risk management for upcoming events, upcoming crises that may be affecting this. People working in organizational behavior, leadership, human resource management, all of those have been affected very dramatically by COVID-19. So we are talking about all this in the classroom. And I'm talking here about business skills. But now more specifically, even to hospitality and tourism, I think we can talk about the way this crisis may be an opportunity for us to reinvent travel and tourism. Maybe not to reinvent it totally, but maybe to change the focus of travel and tourism.
Frederic Dimanche: We know that some destinations are changing the way they market themselves. We know that this crisis is combined with another crisis, which is climate change. We know that tourism has to be more sustainable. We start to talk about regenerative tourism in destinations. So there are lots of approaches that have been brought in or revealed, I should say, by the COVID-19 crisis and that we are now taking into consideration and addressing in class with the students.
Frederic Dimanche: Yeah. It's like you said, it's a great opportunity for them. Many of them may be wondering, am I going to get a job? Yes, of course it's not easy right now, especially for the graduating students. But in the mid-term to long-term there is no question that the travel sector or the hospitality sector will come back. We are people who need to travel. We need to meet each other. We need to entertain each other. The way we do it will change. And of course, depending on medicine and depending on a vaccine, possibly it may take some more months, long months, probably, maybe a year or two or three years for us to get back to where we were. But during that time, we're learning to do things differently in a more efficient way, in a more sustainable way.
Nadine Habib: Thank you so much, Frederic.
Frederic Dimanche: You're welcome, Nadine!
Voice-over: Like Nobody's Business is a presentation of Ryerson University's Ted Rogers School of Management. For more information about TRSM visit ryerson.ca/tedrogersschool. Thank you for listening.