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COVID-19: Was Jumia Right After All to Have Exited its Travel Business?

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Monday, December 9, 2019, was an unforgettable day in the lives of many employees of the travel arm of Jumia, Jumia Travel.

On this faithful day, Jumia unceremoniously offloaded its travel business in Africa to Travelstart and employees paid-off.

Jumia was lambasted for this action which came a few weeks after the eCommerce startup downsized in Kenya and suspended operations in Tanzania and Cameroon.

In an official statement, Travelstart said that it had entered into a distribution and commercial agreement with Jumia Travel to power the latter’s pan-African online travel booking portal.

“We have a strong belief in the potential of the online travel industry and travel portals in Africa and have built a strong platform across our markets to address this opportunity.

“In TravelStart, we have found the perfect partner to build on the success Jumia Travel has achieved so far. While we will continue to promote the travel category, Travelstart will be responsible for the operational side of the business.

“The travel ecosystem in Africa will be further be energised by this partnership said Joe Falter, EVP Jumia On-Demand Services”

Entry of coronavirus

On December 31, 2019 (about 21 days after Jumia offloaded Jumia Travel), the World Health Organisation’s (WHO) China office heard the first reports of a previously-unknown virus behind a number of pneumonia cases in Wuhan, a city in Eastern China with a population of over 11 million.

What started as an epidemic mainly limited to China has now become a truly global pandemic. There have now been over 2,165,500 confirmed cases and over 145,000.

Coronavirus and travel industry: The impact

The travel industry is the hardest hit of all the economic sectors. The United Nations World Tourism Organisation (UNWTO) estimates that in 2020 global international tourist arrivals could decline between 20-30%, down from an estimated growth of 3% to 4% forecast in early January 2020.

The World Tourism Body added: “This could translate into a loss of US$ 30 to 50 billion in spending by international visitors (international tourism receipts) while estimates for other world regions are currently premature in view of the rapidly evolving situation.”

The economic impact of coronavirus on the Nigerian travel industry

Nigeria is probably in an economic mess. The price of crude oil has crashed and slumped to an all-time low of $19.  Meanwhile, the Nigerian travel industry since the beginning of COVID-19 is non-existent as countries battle to flatten the curve of the coronavirus pandemic.

Commenting on the economic impact of COVID-19 on the Nigerian travel industry, Michael Balogun, the CEO of Tour2Nigeria, a Nigerian tour firm said the impact cannot be captured anytime soon.

“The economic impact of the coronavirus pandemic cannot be quantified anytime soon as the travel and tourism industry is the hardest hit. Over 96% of global destinations have imposed travel restrictions and this has caused a major ripple effect around the world.

“Major outbound destinations have become a no go area for Nigerian travelers while the inbound/domestic tourism was not spared as well.

“The ecosystem of tourism has suffered from the hotel owners, hospitality businesses that feed off the travel industry economy as well as the small and medium scale enterprises connected in one way or the other.

“Imagine the food vendors at different resorts and destinations, the souvenir shops in the hotels, to the airport’s staff.  Domestic tour operators and logistics companies in this ecosystem have all taken a major hit with this covid19 pandemic”, he said.

On measures to take to ensure that the industry quickly recovers, the travel expert said the coronavirus is an opportunity for the country to market her domestic tourism to over 200 million Nigerians.

“Over 50 million jobs are at risk due to this global pandemic. The best way for Nigeria’s tourism post-COVID-19 recovery journey is for the government to look at the tourism sector holistically with stakeholders and see this as a great opportunity to push the industry forward because, to be honest, a lot of people won’t be too eager to jump on a plane for holidays so we can use this opportunity to market our domestic tourism to over 200 million Nigerians as well.

“Total rebranding of our travel and tourism sector, investing in the infrastructures and creating sustainable policies to encourage investors from the private sector and foreign businesses. Now is the time to showcase and market the Beautiful and vibrant tourism industry. We have the Sun and the Seas, colorful festivals to Heritage sites and picturesque landmarks”, Balogun concluded.

Was Jumia Right After All to Have Offloaded its Travel Business?

On April 16th, Mark Essien, the CEO of hotels.ng, one of the leading Online Travel Agencies in Nigeria had tweeted that this was a difficult time for Hotels.ng. There is no doubt about this.

Consequently, looking back at the action of Jumia handing over its travel arm to Travelstart, only a handful of people would still question that decision.

Presently, Jumia is focused on profitability and cutting operations/business costs which were why it took the drastic steps it took back in December 2019.

Had it been it had not, the travel arm would have been hard-hit and unarguably derailed the eCommerce firm’s roadmap to profitability.

The travel industry will definitely bounce back. However, for now, stakeholders, employees, and businesses in the industry should get ready an elaborate plan to immediately oil and ignite the already battered travel industry when the coronavirus is eventually over.

Musa Suleiman
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