Travel, Tourism Industries Reel from COVID-19

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Jack Benoff said deals are there to be had for the bold right now, but don’t expect anything but future credit for cancellations.
Jack Benoff said deals are there to be had for the bold right now, but don’t expect anything but future credit for cancellations. (Photos courtesy of Jack Benoff)

The outbreak of COVID-19, the infectious disease caused by a previously unseen form of coronavirus, began in Wuhan, China toward the end of 2019.

But the first signs of the tsunami that now threatens to sink, or at least severely damage, the global travel, tourism and hospitality industry can be traced to early February, to a cruise ship called the Diamond Princess in the South China Sea.

The scenes of passengers sequestered in the cruise ship’s claustrophobic inside cabins, with no balconies, no access to fresh air might have served as a call for people to become vigilant against the coronavirus. But, for many, it wasn’t necessarily coronavirus that was the big public perception goat, it was the “Diamond Princess” (owned by Carnival Corp.) and, more broadly, the cruise industry.

“There are facts that are going to impact things, and then there’s the perception,” said John Scott a reservations specialist in the sales department at Gate 1 Travel, a group tour operator based in Fort Washington that was founded by Dani Pipano, a former Israeli tour guide. “The cruises are going to be hit the hardest. Of course, the Princess cruises in Japan are now infamous, rightly or wrongly. But the cruises are going to end up taking the brunt of this because of the perception that they’re not clean, that they’re not safe.”

Scott believes the cruises are more vulnerable than, say, the airlines, in terms of the industries best suited to survive what will surely be a dark time in travel for the immediate future.

“Airlines can get away with a lot of stuff because what else are you going to do. You’re not going to stop flying; no one’s going to start taking a different form of transportation,” Scott said. “But the cruise companies, people are just flat-out not going to take cruises — and it’s a shame because people are really passionate about cruising. But that’s the part of the industry that will be hit the hardest because they’re going to be looked at as unsafe, unclean death boats.”

Scott, who’s worked at Gate 1 for eight years, said he’s been lucky to keep his job this past week amidst mass furloughs. Several whole departments, including operations, product development and marketing, he said, no longer exist for the time being, as Gate 1 has effectively slashed its workforce of nearly 300 in half.

Bill Rubinsohn has been the president of Rubinsohn Travel in Jenkintown for the last 27 years, over which he’s built strong relationships with cruise lines, hotels and resorts. He worries that those relationships may be for naught if a wave of bankruptcies occurs, first with the “big boys” in air travel and resort hotels and then eventually with smaller luxury concierge services like his.

“I can’t even quantify how big of a disaster this is,” Rubinsohn said. “Put it this way, with the exception of a few industries, we’re of the few that have negative income at the moment. Instead of making sales, we’re in negative sales because all we’re doing is giving money back to clients. Sure, other businesses are closed for the moment but think about if you bought a baseball bat three weeks ago and last week the store closed. OK, they’re not selling any more bats today, but you’re not returning that bat either.”

What scares Rubinsohn most is the prospect of a wave of bankruptcies across the hospitality and tourism industry.

“The biggest industry concerns I have are the bankruptcies that will follow — the airlines, the hotels, resorts, etc. That will affect all of us,” he said. “I’ve got four or five salaried employees and five to eight independent contractors, none of whom are making any money from sales right now. So it becomes a question of, ‘How long will I be able to keep going like this?’”

For industry veterans like Rubinsohn, there is only a glimmer of hope, and it’s sort of what’s sustained his business for years — people’s innate desire to travel, their intrinsic sense of wanderlust. Except he anticipates it to be amplified given the extended period of time people will have been holed up.

“People are going to be jumping out of their skin with just a ton of nervous and excited energy, and they’ll be dying just to go somewhere, anywhere. As long as it’s not home,” he said.

Jack Benoff, who, with his wife, co-owns Vacationeeze, a luxury concierge travel business in Newtown. Benoff’s worked on and off in the travel business since 1978, and, like Rubinsohn, his prognosis for the immediate future of the industry is not good.

“My perception is that the industry is hurting very, very badly,” Benoff said. “The airlines are barely flying, the cruise lines aren’t cruising, many hotels globally are closed and many tour operators are not touring. We’re functioning at 100% but basically what we’re spending most of our time doing is answering questions, canceling trips, rescheduling trips and, on a very limited basis, dealing with opportunistic clients that are thinking ‘Oh, my God. Now’s the time when I should book Christmas or Thanksgiving because maybe I can get the deal of a lifetime.”

In contrast to Rubinsohn who was firm in his belief that no one was thinking about travel in this discrete moment of chaos, Benoff said he’s
experiencing otherwise.

“We’re advising in favor of clients being opportunistic,” he said.

Lots of people love sailing and cruising, but cruises have taken a big hit reputationally after theDiamond Princess fiasco.
Lots of people love sailing and cruising, but cruises have taken a big hit reputationally after the Diamond Princess fiasco. (Photos courtesy of Jack Benoff)

So while things are bleak, there are a few glimmers of hope out there, some for consumers, some for those in the industry.

For one, it could be a very beneficial time to be an opportunistic booker, though, as both Rubinsohn and Benoff said, be careful. Refund policies are changing day to day and they’re not reliable. Also, if you take a shot and book at a low rate for several months out right now and the coronavirus crisis has not receded, travel insurance generally will not cover you if you cancel your trip out of fear of the virus.

Secondly, there are a ton of people who had travel booked who’ve had their vacation plans thwarted by coronavirus. If you’ve contracted with several different vendors, what Benoff has found is that “99% of vendors are not refunding money; they’re basically leaving it on account. So, for example, the cruise lines are giving future cruise credits and many of the resorts are giving future vacation credits through 2022.”

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