Opinion Release: Wednesday, December 16, 12:00 CAT | Source: TradeRoot
Travel and tourism have been among the fastest growing industries in recent years, contributing $8.9 trillion to global GDP in 2019, and employing approximately 330 million people. Those 330 million jobs equates to 10% of the global workforce! It is astounding just how large these industries have become.
Consequently then, it is curious that risk management didn’t seem to be well applied to these overexposed sectors. Experts around the globe had warned of a health pandemic that could wreak havoc on the world population, and thus it should have made sense that the most vulnerable of industries prepared themselves in advance.
We saw Bill Gates often speaking of his foundation’s research into a potential health pandemic, and then of course Netflix famously created a documentary that followed epidemiologists around the world in their quest to monitor potential outbreaks. Incredibly the series was released only months before the first documented case of Covid-19 in Wuhan, China.
Despite these increasingly public warnings, it would seem human nature’s response to ethereal threats was simple ignorance, and a hope that “it doesn’t affect us”. Alas, the travel and tourism industries were not only affected in devastating ways, they were almost obliterated.
Figures are now showing that global travel plummeted 97% between January and April 2020, and by July was still down 93%. The hotel sector has seen occupancy rates drop as far as 96% in Italy, 59% in the USA, 68% in China and 67% in the UK, with an average decline in revenue per available room down 75%. The United Nations World Tourism Organisation estimates that the economic losses on tourism alone will come to around $1 trillion in 2020.
The figures are mind boggling, and quite frankly, heartbreaking. But where there is a loser, there is usually a winner. And in this case, it has been e-commerce.
That $1 trillion of tourism spend needed to go somewhere, and it would seem much of it has been diverted to online spending.
“We have seen our clients increase capacity across the board,” Traderoot Director Brett Dungan tells us. Traderoot are a fintech software provider with over twenty years experience in providing payment processing, issuing Central Processor IATA BSP authorisations across the travel and hospitality industries. Traderoot’s data is showing a significant increase in digital commerce.
“When the Covid pandemic hit, we all knew tourism was going to be negatively impacted,” Dungan continues. “But we certainly didn’t anticipate such a sizeable stay away from traditional retail activity and such a momentous shift to e-commerce. I think it comes down to the trust that e-commerce has developed in the last half decade, and finally people believe in it enough to actually use it.”
Data collated by Common Thread Collective shows that e-commerce in some sectors is up over 500% year on year, and on average up over 70% across the board. When one takes into consideration the fact that many industries are down on e-commerce sales such as travel bags and accessories, online payments for vacations and flights etc., that average is closer to 150%.
Household goods and children’s products purchased online are up over 200%, while medical products are up over 500%. The growth is remarkable.
“At Traderoot we’ve been helping our clients prepare for this shift for over a decade,” says Dungan. “We knew a seismic shift was coming, but no one predicted a health pandemic would be the catalyst to change consumer behaviour.”
Dungan tells us that Traderoot have spent a considerable amount of time improving capacity for their clients’ payment rails, allowing for increased numbers of transactions to be settled and cleared without compromising on speed at the checkout process of the e-commerce journey.
“With many grocery outlets experiencing 200% growth in e-commerce sales, we’re seeing outlets that were processing 1000 transactions per second now processing 3000 per second,” says Dungan. “That is triple the capacity required for very nuanced fintech software to process transactions securely, efficiently, and most importantly affordably for our client.”
Such nuanced fintech software is becoming increasingly necessary in global commerce, and with evidence that the seismic shift to e-commerce has happened; digital security and transaction capacity are going to be top of mind for all retailers. Due to the Covid-19 pandemic, e-commerce is now well and truly an ubiquitous part of our daily lives, and retailers without sufficient financial technology to empower their online operation are going to find it difficult to remain relevant.
While retailers confront these new technological challenges, those in the travel and hospitality industries will need to rely on different forms of technology: Their most likely hope is that of an effective Covid-19 vaccine. Medical technology that can’t come soon enough.
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This article is an Opinion Release received from TradeRoot. Global Crypto did not receive any form of compensation for its publication, and as this material is deemed newsworthy for the Southern African blockchain industry, it was thus published accordingly.
Feature Image by djedj from Pixabay
