Latest update: March 21, 2020
The coronavirus virus outbreak has a significant impact on businesses around the world. Some dive industry players believed there was unjustified panic, and ‘staying positive’ would get us through this. We’re way past that. The consequences are real – especially on the travel industry on which a big part of the dive industry depends.
Early March was already late to start planning and acting.
Were you active in the dive industry in the weeks and months following September 2001? What lessons have we learned?
What should we expect from the current coronavirus crisis? What impact will it have on dive resorts, charters, liveaboards, and local dive shops? What should you do to face the music and be ready for the aftermath?
The Coronavirus Packs a One-Two-Three Punch
Just as we saw after 9/11 in 2001, the coronavirus is giving us a recession and a fear of flying.
Recessions always have an impact on luxury items and activities like scuba diving. And the fear of flying is making things worse for scuba diving businesses since most scuba diving activities and spendings are linked to travel to destinations around the equator.
But there’s a 3rd punch in this case: contagion.
Following 9/11, some local dive shops partially offset their loss of revenues by actively promoting local diving activities, including indoor pool outings for those living in a northern cold climate. It involved renting gear. Do you want to put somebody else’s regulator in your mouth at the moment?
Cleaning Scuba Diving Gear Rental vs. Coronavirus
Whether we think this is over-reacting or not, this is the world we live in. This is the context in which you operate your dive resort, charter, liveaboard, and local dive shop.
If the lawyers at the largest retailer of outdoor gear in Canada deem it appropriate to stop renting equipment, starting last March 7, how will you justify continuing to do so?
One cynical way of looking at it is as an opportunity to sell more scuba gear! Perhaps you should evaluate the possibility of stopping dive gear rental as well. For a starter, I believe that wetsuits should never be rented. They should be treated the same way we do with bathing suits.
Otherwise, for dive gear you are continuing to rent out, Divers Alert Network (DAN) states that “cleaning and disinfecting equipment meant for personal use (such as second-stage regulators, masks, snorkels, and BCD oral inflators) is very important.”
Therefore, at the very least, you need to ensure you have a well-documented and rigorous process to clean and disinfect rental gear, between clients.
You may consult the US EPA (Environmental Protection Agency) list of decontamination solutions for dive gear in Attachment 1 (page 220) of its Dive Safety Manual. To help out, at the bottom of this post, you’ll find an excellent video tutorial from Tec Clark at Nova Southeastern University in Florida.
If you are trying to offset a loss of dive revenues with more first aid and CPR courses, the Red Cross published guidelines on how to do so during this pandemic.
Coronavirus, Dive Travel, Dive Industry & Market Data
Of the 6 groups of products and services sold to customers by the dive industry, dive travel is the single most significant health indicator.
People do not decide to leave the comfort of their couch because they have an urge to buy dive gear, or they’re longing for taking more courses. They step out of their home because they want to do something – in this case, scuba diving. Dive travel or the ‘action of going scuba diving’ is what drives sales in the dive industry. Sales of dive gear and scuba courses depend on the availability of scuba diving activities and the participation rate.
The action of going scuba diving is concentrated around the equator – under warm sunny skies. It requires travel. Therefore, identifying and understanding what is happening with dive travel is crucial in establishing your business plan for the next few weeks and months.
Unfortunately, we have little to no data on that front. The lack of market data in the dive industry is a constant issue, but it is even more damaging in times of crisis like today.
We’ve contacted a few players in dive travel, including PADI Travel (formally Diviac) and Caradonna, but we haven’t been able to get any information from them. The dive industry is one of the rare industries where players like to operate blind-folded! I will update this article once I obtain information or identify trends.
The simple fact that airlines around the world are canceling flights left, right and center will have an impact on dive travel. Countries putting entire regions in lockdown is another impacting fact. You can’t go on a planned dive trip when you are locked down!
With numerous countries and counties closing their borders, like the Cayman Islands and the Florida Keys, many dive trip destinations are no longer available. From early to mid-March, Egypt suspended all flights and closed touristic cities in response to a growing number of coronavirus cases. This closed the door to numerous Red Sea dive destinations.
Dive resorts, charters, and liveaboards operating in these closed areas are hit with sales plunging to zero almost overnight. If you operate an origin dive center and you still send divers on trips, you may also have clients stranded somewhere along the way as it happened to ‘Aqua Hut Scuba & Travel’ from Toledo, Ohio, or scuba divers stuck abroad like this Massachusetts scuba diving group in Honduras.
With the events of the last few days, you need to plan your operating budget around no dive travel for a while. And, consequently, you need to prepare for fewer sales of scuba diving gear and dive certification courses. I’ll get back to this when discussing ‘financial planning.’
Leadership From Our Scuba Diving Industry Trade Association: DEMA
In a time of crisis, we expect our dive industry trade association, DEMA, to help lead the way.
So far, DEMA has provided a one-page summary of what the coronavirus is, with some links to external resources.
We’ve contacted Tom Ingram at DEMA. He stated: “I think the best thing we can all do is follow the WHO and CDC guidelines – these organizations continue to emphasize that the risk to the general public is very low, and with some simple precautions, the public can avoid the virus.”
This statement was appropriate went it was made in mid-March, but it is no longer enough.
To start with, we need DEMA to figure out a way to provide its members with an indication of what is happening in the marketplace so that they can plan a proper response for their businesses.
When I first published this article, I believed getting data on what is happening on the dive travel front was the first thing we needed. Do we see a drop in bookings? Do we see a higher than usual rate of cancellations? How are occupancy rates in dive resorts? DEMA could collect this information and share aggregated results that do not identify specific dive operators.
At this point, with travel at a standstill around the world, I’d like to know how many local dive centers are managing to keep scuba diving courses running. I suspect this is also coming to a standstill.
But ‘suspecting’ is not a way to run a business. Where is the leadership in this industry? Small scuba diving businesses managed by hobbyists need market data and guidance.
Help from Your Dive Training Agency
By now, you’ve probably received communications about the current crisis, from your scuba diving training agency. If not, I would seriously question your affiliation with that agency!
Among these messages from different dive training agencies, some are definitively better than others. For instance, the only message in Brian Carney’s communication from TDI/SDI is about asking for our ideas on what to do. We would expect dive training agencies to be leaders in providing guidance and insights to local dive shops, dive charter boats, dive resorts, and liveaboard. Dive training agencies’ business model is based on profiting from a series of small businesses managed by hobbyists. It’s time for these agencies to take their responsibilities and help their ‘members.’
One agency with a healthier approach is PADI. In Drew Richardson’s message, there are concrete and immediate actions. For instance, it is brilliant to promote eLearning, while numerous people are staying at home.
If you believe you need more help from your dive training agency, simply reach out to them. Go for it! You’re a ‘member,’ after all!
Dive Shows & The Coronavirus
Every day or so, we hear about significant events being canceled or postponed, including Miami Ultra Music Festival, Coachella, Tortuga Music Festival by Rock the Ocean, and SXSW festival.
So… What about dive shows?
Besides the question of whether or not a dive show should be canceled to mitigate the risk of propagation of the coronavirus, there’s also the question of how many people would attend even if you move forward with it.
On March 7 & 8, 2020, it was the annual Boston Sea Rovers consumer show in the Boston area. I’m awaiting confirmation from the organizers, but initial observations from attendees indicate a small volume of consumers walking in.
The DRT (Diver, Resort, Travel) Expo in Shanghai was scheduled for March 24 to 26. The organizers postponed it to July 17-19.
The European Dive Show (EUDI) scheduled for February 27 to March 3, in Bologna, Italy, has been rescheduled to November 27 to 29, 2020.
We’ve reached out to the following upcoming dive shows, and here’s the information we have so far.
Beneath The Sea, Secaucus, New Jersey: It was planned for March 27 to 29. It is now rescheduled for October 9 to 11, 2020.
At this point, it is safe to assume that any consumer or trade shows planned for March and April are or will be canceled. Contact the organization to confirm.
The situation evolves by the hour. For instance, for TekDiveUSA planned for April 24 to 26, 2020, in Orlando, Florida, Kerstin Thornton Olcott told me on March 10 that at this time, they were moving ahead with the conference and encouraging attendees to monitor their health. She added: “We are working with our show team and venue to ensure the highest level of control measure and best practices are implemented around the show and onsite.” Then, three days later, the show was canceled.
The TekDiveUSA website is not very well produced for such an announcement, though. It’s a popup that disappears if you click somewhere – and never comes back! To help those of you who missed it, here’s what TekDiveUSA posted in that short-lived popup on their website:
As for the DEMA Show planned for November 4 to 7, 2020, in New Orleans, it is too early to discuss. Since the DEMA Show produces most of the annual revenues for our trade association, a cancellation of the show would have devastating consequences for the organization.
Financial & Operational Planning for Your Dive Business
In a time of crisis, having cash on hand is the best insurance policy for the survival of your business. But even if you currently have cash liquidity, you don’t know how deep this recession and how long it’ll last. Start planning and acting yesterday!
If you expect reduced sales, you need to review your operational plan to maintain profitability at these lower levels. It will involve making tough decisions on cost-cutting.
At the same time, maintain communication with your dive gear suppliers. Scuba diving equipment manufacturers may run out of inventory if the crisis continues. A lot of accessories, fins, masks, and snorkels come from China, where numerous plants have been shut down. The supply chain may be disturbed even for equipment manufactured outside China. Italy, for instance, is currently in a country-wide shutdown.
So, on the one hand, you need to find ways to maximize your cash liquidities. Yet, on the other hand, you may want to boost your inventory to ensure continued sales operations.
Furthermore, you need to review your insurance policies – primarily if you sell scuba diving trips. What happens if the entire trip is canceled? What happens if your clients get stranded in transit somewhere?
Otherwise, what insurance do you have for income supplements if you need to close your own business for a few days or weeks? What if some of your employees catch the coronavirus? What will be your response? Do you have insurance to cover their medical leave of absence?
There’s a lot to consider—a lot to do. And what you’ll do, or not do, will determine how strong you emerge on the other side of this coronavirus pandemic.
The first thing you must do is ensure the safety of your staff and clients.
Then, you have to determine if you will close or remain open. In many regions in the world, you have no choice as governments implement full shutdowns.
Otherwise, a big question for many small businesses operating in the dive industry is financial. How long can you remain closed before running out of cash? Will you have enough money to reopen and slowly ramp up your operations as the world gradually reopen? We have to expect a recession (or worse) with a lot of customers unable to travel or buy luxury items and activities. Plan your cash flow and expect profitability to be significantly lower for the rest of the year.
If you remain open, as discussed above, we recommend you add the following items to your to-do list:
- Review or establish a strict cleaning process for your facilities and rental dive gear.
- Contact DEMA to ask for current market data and help with establishing your mitigating plan.
- Review your operations to ensure you have enough cash liquidity and insurance coverage to weather the storm and reopen after it.
Let us know what impact you see in your business from the current coronavirus outbreak.
I will update this article as the crisis evolves, and new information becomes available.
The dive industry bounced back after 9/11 and after the 2008 financial crisis. We will bounce back again. The question is, how well your own business will do.