Travel and tourism have been hugely disrupted by the lockdown measures introduced to try and stem the spread of Covid-19 around the world. As countries begin to open themselves up, however, there are still strong signs that things won’t return to normal for the sector.
New research from Queen Mary University of London highlights how tourists might be more price sensitive in the wake of the pandemic. The study found that tourists were more easily bothered by higher prices on offer alongside the lingering threat of infectious diseases.
The study shows that in response to the economic conditions imposed by the pandemic, many businesses have changed their pricing strategies considerable, whether due to changing demand, to bolster their business, or even to offset the losses imposed by the lockdown measures.
Challenging conditions
The pandemic has had an obvious impact on all aspects of the economy, and tourism has been no exception. The research is interesting, however, because it explores how the current circumstances are affecting tourists willingness both to travel and engage with the sector.
It shows that tourists have an inherently emotional response to both service encounters and pricing, and these emotions are likely to be heightened by the unique conditions surrounding the pandemic. This not only changes our response to various things, but is also likely to make us more risk averse.
“When a destination faces the threat of an infectious disease such as COVID-19, tourism businesses operating at the destination need to be cautious in offering discounts or promotions, implementing dynamic pricing or price discrimination strategies,” the researchers say.
If prices are to change in the wake of the pandemic, the researchers suggest that providers communicate these price changes both clearly and effectively to ensure consumers don’t reject them outright.
“Tourism businesses should consider the balance between short-term profitability and long-term business sustainability,” the researchers urge. “Decisions on increasing prices during an infectious disease outbreak should be taken cautiously, even though operating costs may increase.”
