Post Covid-19 Pandemic: Unemployment, Poverty and How Technology Creates New Opportunities in Tourism Industry
A simple formula: Pandemic consequences + Technology = Tourism revenue increase + Unemployment and Poverty rate reduction.
We are going through one of the most unprecedented difficult time in human history. Covid-19 pandemic has been in the spotlight of almost news or social media platform for months. No one can imagine that several countries have to lock down to prevent the spread of the Coronavirus. We all hope this “no-go” situation will end soon.
I love travelling, and I believe many of you are same. However, the current situation is killing our dreams of exploring the world. It is easy to see how people and the tourism industry are being affected by the pandemic. I, my wife and some friends of us have concerns about how travelling will look like post-crisis.
Impact on Tourism Industry
According to a statistic from Statista, the travel and tourism industry contributed directly US$ 2.9 trillion and in total US$ 9.25 trillion, accounting for 3.3% and 10.4% respectively, to the global GDP in 2019. Europe is the most competitive regions in terms of travel and tourism. This continent has six out ten top-scoring countries, including Spain, France, Germany, the UK, Italy and Switzerland (sadly, the Coronavirus have massively impacted these countries). Asia-Pacific and Americas have two representatives in each region in the top 10.
Then, Coronavirus come to the world. The pandemic causes consequences to the whole world economy, from financial, food and beverage, supply chain to import, export. Travel and tourism industry is not an exception. All we see in the last few months were empty streets. Countries closed their borders and restricted travelling; no flights; hotels closed; social distancing policies were internally issued to ban people from gathering in a limited number of persons of the group. Up to the end of March 2020, the World Tourism Organization produced a statistic that released a cut down of 67 million international arrivals worldwide and loss of US$ 80 million in receipts. It is the worst result of global tourism history.
Risk of Unemployment and Poverty Rate Increase
The COVID-19 pandemic also has impacted on the labor market. Companies have to cut down the redundancies to ensure a profitable business. In the travel and tourism industry, cancellation of booking results in a massive loss for facilities in the hospitality sector such as hotels or restaurants which causes the managers to have to decide to cut down the number of employees. From 100 to 120 million tourism jobs are put in danger.
High unemployment rate leads to the risk of increasing poverty post-pandemic. Under a statistic of World Bank, experts expected the poverty rate this year to continue the downward trend of the previous years, with the prediction of decreasing to below 8%. However, after the outbreak of the Coronavirus, the poverty rate of this year may surge again, to 8.6%.
New platform for travelers and tour guides
We are travel lovers, and this period is tough for us. We want to discover the world, to explore new cultures, new lands. Unfortunately, Coronavirus does not want us to do so. We end up inside our houses, with limited chances to go out and meet our friends. The most famous “travelling” destination during this time for us is the supermarket. We visit once a week, to “explore” some discount deals available each week, and “discover” new goods.
Then a new idea of a new business model came to our minds that we believe can benefit millions of people.
Imagine this: the COVID-19 ended so it will be travelling time. You start planning for your journey. However, you would not want to find a travel agency to follow their guide with a fixed agenda, which can either be exciting or dull, and your journey has to depend on that agency’s guide. You want to explore a new land in your way, you want to visit this place or that place, but you don’t know much about it and how to get there.
How to make your journey more fun and memorable? A new platform is created, to connect local guide who have knowledge of the area and the curious tourists. Specifically, the new platform will redefine how you travel. You go to the platform, input your destination, time for travelling, then the algorithm will match you with the local guides who are available during that time. The tour guides can be anyone, no matter gender, ages, races. As long as local persons can prove that they are eligible, satisfying specific requirements on education, language levels, knowledge of the area, or no record on crime commits, they can register to be the tour guide. The local guides will have their hourly rates, and they can choose to work part-time or full-time.
How the platform reduces unemployment and poverty rate and recover the Tourism industry
The new platform emerges to rebuild the tourism industry. It will motivate the recovery of this sector when people can start travelling again. Besides, with the risk of the high unemployment rate, this platform can help to create more working opportunities for local people, especially ones who have lost their job due to the crisis. They can have chance to lead the tourists to the unprecedented experience of travelling. They can find a new way to earn money.
Furthermore, more jobs mean the reduction of global poverty. In 2015, the United Nations Member States adopted the 2030 Agenda for Sustainable Development, which sets out a list of 17 Sustainable Development Goals. To achieve sustainable development, alleviating poverty is the number one goal in the Agenda.
For another issue, with the applicability of smart contract — a technological innovation, the solution will motivate the development of the travelling and tourism industry post-pandemic. The platform will contribute to the recovery of the economy.
From the businesses’ perspectives, they can proactively take measures to address constraints faced by the poor such as through inclusive business models, innovative products and services that better meet the needs of them. As a result, the platform not only creates jobs but also provide the poor with a stable source of income. It is the objectives of the platform. It will not reach the goal entirely but partly have a positive impact on this issue.
Role of technology
Technology plays a critical role in the creation and development of this platform.
The world is mentioning blockchain as a disruptive technology. We can apply blockchain in various industry, from finance (cryptocurrency — the most famous one) to corporate governance (the Decentralized Autonomous Organization — DAO) or to trace coffee beans source.
In the proposed platform, we can apply the blockchain to, firstly, verify the information of the tour guide, and secondly, store data of guides and tourists for tracking the travelling history.
For the former point, in the beginning, the registrant to be a guide needs to provide certain information, including, among others, identification document, educational level, language level proof, and their criminal records. The data will be transferred to the system, verified if the applicant is eligible or not. After verification process finishes, the platform will send email to the applicant, which include an encrypted link for them to confirm participation. A click on the link will form the contract between the guide and the platform operator. During the time the guide works, the platform will continue to verify the eligibility of the guide based on the guide history and the reviews or reports from the travelers.
For the latter point, next travelers can base on the previous information reviewed by the earlier tourists to evaluate how good or bad the tour guide is. It will be same from the guides’ side when they have a chance to verify the upcoming travelers. The assessment and evaluation of the credibility from both sides are necessary for the ‘conclusion’ of the contract.
Smart contracts will be used in two cases. The first smart contract is the one between the platform operator and the guides. By clicking on the link as discussed above, a smart contract is formed automatically. Accordingly, a percentage of the money the guides receive from the travelers will be direct to the operator. The contract contains the automatic termination clause in the case when the guide fails to meet any requirements, or if travelers report of scam or failure of the guide. The guide will no longer be able to make money from this activity.
The second smart contract is formed between the guide and the tourist after they agree with each other about the trip. The information of the journey will then be input to the system, encrypted, and linked to the smart contract. The contract contains a clause on how payment is made, including three scenarios: (1) the trip ends before it starts, (2) the trip ends before the end date as recorded in the system, and (3) the journey completes.
With the help of blockchain and smart contracts, the possibility of recovery of the economy after the crisis will increase. It can be slow, but it will be sustainable.
Final Thoughts
Travel and tourism industry is a lucrative sector contributing one-tenth to the global GDP. The platform cannot be the entire solution for problems we see today. But we are living in a globalized era in which disruptive technology like blockchain and smart contracts can solve global issues. We hope one day, the platform can help the tourism industry to recover, facilitate the development of the economy, create more jobs for many people, and reduce the rate of poverty.
One special thing, even there is no Covid-19 pandemic, the platform can create a great opportunities for travelers to enjoy their trips in unique ways with local guides. The journey will be more memorable.
And let’s hope one day, the barriers will be lifted for all of us to explore the world.
Special thanks to my wife Daisy Nguyen help me to build up this idea, and my friends Andrej Ilíc and Thao Nguyen Nguyen for their contributions to complete this post.