Travel hotspots must put on a show for returning tourists after the pandemic

This year has been painful for global stock market investors, but the last few weeks have been especially difficult after several giant US retailers such as Wal-Mart, Target, Gap and Dick’s Sporting Goods all warned of a significant slowdown in consumer spending.

The explanation for the slowdown is simple — the last stimulus checks have run out. Taken together with high oil and food prices, and inflation eating into disposable incomes, mean that consumers are being forced to make tough choices on spending.

The consumer slowdown in goods was inevitable. The COVID-19 pandemic meant that everyone was stuck at home, and many bought high-ticket goods, such as the latest kitchen gadgets, garden equipment and furniture.

However, as we sift through the wreckage of the last two years, a silver lining is emerging from all of this. As restrictions ease and the world opens up, there is a clear shift in consumption from goods to services as people spend more on travel, eating out and socializing. This is good news for the tourism industry worldwide which has been the principal COVID-19 loser over the last two years.

During the health crisis, a perception was built up that people were willing to jettison past habits to spend more time indoors and permanently change their lifestyles. A couple of years later and this has been proven to be hogwash — there is a significant pent-up demand for returning to habits that were suspended during lockdowns.

People want to travel, meet each other again and lead more normal lives — while the sales growth of Peloton exercise bikes, media streaming services and Zoom have slowed tremendously. The COVID-19 winners are falling back to earth and there is significant life left in COVID-19 losers.

The shift from spending on goods to services is not a new phenomenon, it had been happening for a while before the pandemic. Numerous studies have shown that an increasing number of consumers, especially millennials, prefer experiences to material goods. Experiences include things that make them laugh, learn something new, or allow them to relax.

Tourism ticks all of these boxes — traveling to a holiday destination, immersing yourself in a new culture, eating fantastic food and bonding with family are all well-established ways to take time out and learn something new.

What may be a difficult period for big-box retailers, may become a great opportunity for the travel sector, especially for countries such as Saudi Arabia which is opening its doors to the rest of the world with its Red Sea, AMAALA, NEOM, Al-Ula and Diriya Gate developments.

Consumers are bored of staying at home and staring at screens. They crave to explore new things again. People are willing to spend on travel today more than at any time over the last three years, and are willing to forgo the latest pair of sneakers for a week or two of great memories.

As global tourism rebounds, the industry needs to grab this opportunity with both hands. Destinations need to make sure they put the traveler’s passion points front and center, and welcome guests with unique and memorable experiences.

Entertain this returning customer — and they will never think about leaving again.

• Aradhana Khowala is a global authority on the luxury travel and tourism industries having worked across 75 countries. She is currently the chair of the global advisory board of The Red Sea Development Company.