Global Tourism Faces Innovation and Re-Engineering Challenges: Jorge Leal Kirchbach

Jorge Leal Kirchbach, a hotel businessman and CEO of Fibra Kapital, a Mexico based real estate investment trust (REIT), explained that in order to reactivate the tourism related economy, the most prominent players are having massive challenges that have to do with innovation and re-engineering efforts, not only on the processes and operational standards’ side, but also on finances and creating new experiences for guests.

Jorge Leal Kirchbach pointed out that “the industry as a whole will never be the same and will certainly be transformed. Look at airbnb and local tourism, demand is through the roof. This is proof that innovation and experience re-engineering are two pillars that will drive the birth of a completely different global tourism set of trends. Suddenly, massive hotel complexes where people got all crowded in public spaces, are way less appealing to the consumer”

The businessman explained that the pandemic induced losses seen in recent weeks and months are not the worse to be seen. For instance, the United Nations World Tourism Organization estimated that global international tourist demand for hotel and hospitality services might decrease by 20–30% in 2020, leading to a potential loss of US$30–50 billion, maybe even more.

“This is a time where innovation will make or break major players. It is imperative that large hotel and hospitality-centric chains innovate in order to attract better financing and therefore to alleviate the huge unemployment crisis that the industry is experiencing. The old model is obsolete and some early reopening of traditional resorts has put that into evidence” Jorge Leal Kirchbach highlighted.

“The global perspective is certainly dire. In Mexico alone, the pandemic caused the closure of 4,000 hotels, which makes up to about 52,000 rooms, and 2,000 restaurants. The airline industry lost US$1.3 billion) through March alone. The fact that a large percentage of those hotels and restaurants will not reopen is out of the question”. Jorge Leal Kirchbach added.

“The global tourism industry will not come back as it was before the pandemic, what we will see is the rise of new hospitality related experiences, the fall of old school players that failed to innovate, and massive disruption caused by remote work. This is very exciting for any investors that are out there looking for unprecedented opportunities” Jorge Leal Kirchbach said.

He considered that the TMEC Agreement between Mexico, the US and Canada, will be an exceptional opportunity that will open doors for many innovative hospitality related businesses to be launched in the region. “Just consider that there is a large number of exceptionally talented developers and tech related specialists that before the pandemic were paying sky high apartment rents in the Bay Area, and are currently now sipping natural coconut water in Cancun, earning their same salary, but spending around 60% less in their cost of living. This is massive disruption”, Jorge Leal Kirchbach declared.