One of the industries on the European continent that have been worst affected by the ongoing corona crisis is tourism. With borders closed, most airline fleets grounded, tourism is inevitably going to suffer huge losses. Countries where tourism accounts for a lion's share of their GDP are now trying to find ways to keep their heads above the water over the next several months.

As part of N1 Television’s series of columns “World in Times of Corona” we talked about the crisis and the outlook of the tourism industry to Otmar Michaeler, CEO of the Falkensteiner Michaeler Tourism Group (FMTG), a large hotel group operating about 30 hotels and resorts in several countries including Italy, Austria, Slovakia, the Czech Republic, Croatia, Serbia, and Montenegro.

The following conversation has been lightly edited for clarity.

This crisis hit the travel and tourism industry very hard. We’ve heard some apocalyptic forecasts for those industries, not only for this summer season but also for the long-term. From your past experience, can Europe get out of this, and how?

This is generally a very deep crisis, nobody was expecting a crisis like this. I think Europe can get out of it in the future, provided that the right decisions are made. When a crisis starts, everyone is thinking about protecting themselves, and nation states are thinking about protecting themselves. This is understandable as an initial reaction, but in terms of future, this is the main issue that needs to change.

If countries don’t start working together on the same goals, such as re-opening borders, and really prove that the European Union exists, then it will get difficult. If politicians take common decisions and agree on conditions and rules for a staged return to normalcy, then it’s possible that we can come out together from this crisis.

Borders are closed, planes are grounded, all travel has practically ceased – and travel is obviously what your business is based on. But people’s urge to travel will probably survive. What do you think of the measures that have been proposed going forward, like introducting “corona passports,” or special bilateral travel corridors, for this year’s summer season?

I am convinced that it won’t be as complicated as people are saying now. We’ve seen what happened it Austria. Austria made a clear decision that on May 15 they will re-open restaurants, and over the last weekend shopping malls opened… We’ve seen that people are clever enough to know what they can and cannot do, we don’t need strict rules for everything.

I was watching Austrian TV on Sunday and they said Austrian government is surprised by the well behaviour of Austrians. People are smart enough to understand what they have to do.

I think we should just open the borders and let people go travel, with some rules such as mandatory masks and distancing rules, and then people will make their own decisions which kind of accommodation are they going to choose, whether it will be a big structure, a small structure, whether they will go camping or rent an apartment.

This is a decision the customer has to make, we cannot influence their decisions. And if people see that protection measures are not implemented the right way at hotels, they will not book hotels. Because nowadays the Internet helps spread information about any problems. If I have a problem at a hotel, in two seconds the whole world knows about it.

To sum up, we just need a logical mindset, nothing else and nothing more.

How important is the individual responsibility on the part of travellers and customers, as we have seen a variety of policies and recommendations put forward by various national authorities across Europe, as there is still much that we don’t know about this disease.

Every day we find out more and get new experience, every day we understand a little bit more about this virus. And this is not the first virus we had to deal with, the world has experienced things like Ebola, malaria, a lot of other influenza strains in the past. We are still learning about all that, and we see a lot of different ways to survive through this.

There has been a lot of talk about Sweden (and the way it avoided lockdowns). I am very happy that Sweden took this route as opposed to other ways of dealing with the pandemic. We are also seeing that some countries have managed to organise their response better than others.

I can congratulate countries in Southeast Europe, and Croatia, because Croatia can be optimistic about this year’s summer tourist season. Why? Because I’m certain that at the end of the day the borders will re-open. Because we cannot talk about the European Union and then let every country close down and make its own rules. I don’t think Europeans in their mindset can accept that. Yes, the crisis is here, we know how to react to it in this phase, but we would also like to regain our freedom.

Croatia did a great job, nobody is worried about visiting Croatia because there was no surge in numbers of cases and coronavirus-related deaths. So people feel safe coming to Croatia, compared to Italy, where the situation is much more difficult.

Croatia’s tourism ministry has looked into holiday markets and expectations this year in case people are allowed to travel abroad, comparing East Europe, Germany, Austria… And Croatia was on top of the list.

There has been a lot of talk by Croatian government recently about some kind of special corridor with the Czech Republic to bring in Czech tourists, we heard Austria and Germany making a similar agreement as their tourist industries rely on each other. What do you think about these ideas?

At that moment, when all of Europe has this crisis under control – and there is a chance that this will happen in the next 4-6 weeks – I think we might have total freedom of travel all over Europe by early July and the summer tourist season.

Alternatively, we might see two categories of countries, like now for instance, Germany, Austria, eastern Europe – places which have better control of the virus. But not just because Germany won’t allow people to travel to Italy, for example, but also because Italy must think about protecting itself.

That means they have to do their homework and put everything in order. Because nowadays people are increasingly talking about the second phase, in the winter, as there will be a new wave of influenza, and there will likely be a rise in coronavirus cases as well.

So we have to be very well prepared for this second wave.

In any case, the tourism industry will experience huge losses because of this crisis. Are there any predictions on the European level on how this will impact not only the hospitality sector but also the supply chain relying on it, like the food and beverage industry, to put things into perspective?

Nobody can predict how this year will end, especially in places like Croatia. Croatia is not a year-round destination, it’s mostly a summer destination. But what we can say is that a city like Zagreb will suffer a lot. But what will happen in a region like Istria or in the city of Zadar will be different from what will happen in Dubrovnik.

Dubrovnik is more international. In Zadar or in Istria more people come by car, so they have a better chance this season, compared to Dubrovnik which relies more on visitors from England or the US – for them this season might be much more difficult.

So there will be a certain split in how different destinations get through this. But at the end of the year, it’s very difficult to offer any predictions. But in my opinion, I think we might see 70-80 percent of last year’s overnight stays this year in Croatia.

Your hotel group operates resorts in countries like Croatia, Serbia, Italy, Austria. How do you plan to adjust to these circumstances that are different from country to country. Austria announced it would allow hotels to open in May, Italy is expected to feel the consequences of their lockdown for a longer period, and so on. How do you tackle this?

Just to clarify, what I meant earlier by 70-80 percent was the number for high season, for the period from July to August. Overall, I think in 2020 we might be at 50 percent of last year’s overnight stays. This is the projection for our entire group.

Of course we cannot yet say what the outcome will be, but personally I’m optimistic. The bookings that we have are still stable, most people still haven’t cancelled their holidays in July. People in Germany, Austria, eastern Europe – they still believe that they will be able to go to Croatia this year in July and in August.

Serbia, and Belgrade as a city, are in a more difficult situation. And we have no idea what will happen in Montenegro, because it is a totally different market. It’s more of a flying-in market rather than a car arrival market. It’s very difficult to say if this market will be just a last-minute market by end of June and early July, this remains to be seen.

Europe accounts for half of all tourist arrivals globally. How do you see the entire industry adapting to the new restrictions that are likely to come into place, like reducing the number of seats on planes, which may not affect other markets where European travellers mostly arrive by car. How do you see this adjustment working, and how long do you expect these measures to be in place?

First of all, this is a global crisis, which means we can learn from each other. We have seen what happened in South Korea, what’s happening in China, we will see how thing will go in Austria, in England, in the rest of Europe. So that’s one advantage that we have, that we can learn from that.

Second, I’m really optimistic, because today they are saying that a kind of medicine for the coronavirus might be arriving soon. If that helps us feel safer, then returning to normalcy will happen faster as well.

Even if things don’t happen as fast as people believe, even if we don’t get a vaccine within a year like some predict, I am still more positive about the situation than I had been weeks ago. Because we will have to adopt a new style of living anyway, and once we do we will not be so concerned about the disease. That gives me some cause for optimism.

The question is what will happen after this crisis. And that’s the thing I’m always more concerned about – that we keep some restrictions in place that we no longer need.

For example, after 9/11 attacks controls in airports became really strong. If you think about how much money we’ve invested in these robust air traffic controls, and its results, we must think about the effect these had on our communities. If there wasn’t for 9/11 we would not be needing these restrictions. So we have to ask, do we still need these restrictions and why do we need them? I think we don’t need them any more.

Coronavirus crisis brought new restrictions, which cost money, and which are not so consumer-friendly, and now is the question if these will stay with us for a long time even after we need them. And that’s something we should also discuss. If we impose new restrictions, we must clearly say that they will be around for a few months and then remove them.

Among the new protective measures which will have to be adopted by restaurants and hotels – and you already mentioned masks and distancing – and we will probably see much higher hygiene and disinfection standards as well. What specific measures are you considering implementing as a company?

We made clear from the beginning that we stick to the standards prescribed by the World Health Organization. They are not complicated, and they are logical. Every day we have task force discussions about the situation, the other day we talked about the re-opening of our first hotel on May 29 in Austria.

Yesterday our CEO for Croatia, Agron Berisha, responded by saying “Look Otmar, the customer will tell us immediately – if they are going to our hotel – what they like and don’t like.” If we say we make pizza in a certain kind of style and a certain type of protection, we will see what they are using and what they are not using. So a lot of it is about learning by doing.

And then I said we should use this chance and look at breakfasts. In the international world of tourism, or in Croatia, every year the breakfast buffet gets bigger and bigger, with more and more things on offer. But does the customer need this? Are we doing this because the customer asked for it, or merely because competition forced us to?

I think we must look at what the customer wants and give them that, rather than offering a huge buffet per default, where at the end of the day only 50 percent of the food is used by most customers, and the remaining 50 percent is only used by two or three people.

So we have to ask what are the key things we have to offer. Because the customer is always on a limited budget, and if we must spend more money due to all these restrictions, the customer wil also have to spend more money. So we have to find ways to reduce our costs, so we can reduce costs for the customer.

So that’s an opportunity to change the hotel industry, and make it different from what we have done in the past.

Do you think that the prices charged by the hotel industry will overall go up because of the crisis?

I think the prices will fall. Before the crisis we often talked about the split between high-priced and budget products. And this split will happen even faster now because of the crisis.

So I’m sure that the high-priced segment will increase prices as they will tell their customers that the same level of service will cost more. And on the other hand, the budget industry will cut prices to retain revenue.

So in essence both of these opposing trends will accelerate.

In several European countries tourism revenues account for a large chunk of their GDP, and one of them of course is Croatia. Croatian government released some projections predicting a sharp drop in this year’s GDP and the rise in public debt. How do you see countries which are so dependent on tourism – and especially seasonal tourism like in Croatia – how do you see them coping with this in the long term and the effect this will have on the sustainability of their tourism model?

I must say that I’ve spent more than 20 years now as a guest and an investor and manager in former Yugoslav countries, in Serbia, Croatia, in Montenegro. I would not take these warning lightly, but also I would not be so concerned about this effect.

First of all, the indebtedness of these countries is not so high, and these countries have some experience with crises.

We employ around 2,500 people at our company, including more than 1,000 Croatians. A huge part of our main office is in Zadar, and we have about 100 people there, sitting out the crisis.

And I’m very optimistic and positive because I’m very impressed by how strong our staff is, these people are really willing to work. They are suffering now because they don’t have work. Kind of like horses waiting for the race to begin, they are eager and they are waiting to start running.

In general, I think that there is a special energy, which also comes from the past, knowing what does it mean to go through a crisis, that leads people to believe that they have to do something, that they have to survive the crisis. So this makes me feel optimistic.

Yes, the GDP of these countries will go down, public debt will increase – but on the other hand we have young, tough, people, and I’m convinced we will get out of this crisis stronger.

As long as politicians understand the corrections that we have to do to our systems, like for example cutting red tape, or maybe a new labour law. If common people and politicians both understand the changes that need to be done, then I feel very positive about the future.

In terms of how this crisis has affected your company, have you already seen some losses, and did you have to do any lay-offs or did you manage to preserve jobs?

We tried to keep people as much as possible. We couldn’t keep all of them, but we preserved 80 percent of people employed at our company. We have more than 1,500 people working year-round at our company, and then we have seasonal workers – and they are now waiting to start working.

But in general, we are looking very hard for ways to keep our people, and that also makes me optimistic that if people start going back to work we will get out of this crisis in good shape.

So in essence you are sending a message of optimism, that this is just one of those crises, but that in the end people will continue to travel when all this is over?

Yes, we are really in a deep crisis, but look to the past – crises are always here also for us to survive them. If you’re not optimistic that you can survive, then you cannot lead a company. This situation is very complicated, it’s a very deep crisis, we have to suffer a lot – but we have to stay optimistic.

One more reason for optimism is that we see that people want to go on holiday – and our product is holiday.

Globally speaking, do you think people will maybe refrain from long distance travelling in the future, or that we might see a drop in conference tourism as everyone is holding meetings online via video calls, just like the two of us are using it for this interview today?

I’ll give you an example. Last year, there was always something happening in Turkey or in Egypt, bombings and things like that. And we noticed that now, when the mass media are reporting less on these crises, that the customers are fast to forget about them.

So if the world is dealing with new topics, then the recovery of long distance travel will happen even faster than what we are seeing now.

Before this crisis, everyone was discussing about the environment, there was a lot of talk about that, about Greta Thunberg, and so on – but not much happened about it. But now that a big crisis arrived, it showed us how humans are affecting the environment.

We are still not discussing the environment, but we should start doing that today. Because we now have very real and obvious examples of what the human population is doing to the environment. But at the moment nobody is interested in the environment because mass media is all about the coronavirus.

And if tomorrow a new problem for the world occurs, we will forget the coronavirus and we will run the world the way we did before.