Collaboration with Byte Size Story: The Economics Of... Tourism During COVID-19
This collaboration is also published on Byte Size Story
Bad as it is missing out on travel during your summer/winter holidays this year, and probably next, imagine working in tourism right now. This post will talk about the impact of COVID-19 on tourism.
As we approach the sixth month of global legislative and economic responses to the coronavirus pandemic, the industries most financially crippled by a restriction of consumer mobility are conducting holistic analyses of their expanding data. Many producers of goods and services have transitioned to delivery or online formats, but services provided by the travel and hospitality industry, such as flights and accommodation, cannot be replicated at the same value within a conservative framework of disease containment. According to the United Nations World Tourism Organization (UNWTO), the UNWTO World Tourism Barometer “[…]shows a 56% year-on-year drop in tourist arrivals between January and May. This translates into a fall of 300 million tourists and US$320 billion lost in international tourism receipts[.]” This is a result of travel restrictions enacted by destinations as early as the World Health Organization’s declaration of COVID-19 as a Public Health Emergency of International Concern (PHEIC) on January 31, 2020. As of July 19, 2020, 53% of tourist destinations maintain closed borders and 50% of these destinations have high dependency on air travel, according to the UNWTO’s COVID – 19 Related Travel Restrictions - A Global Review for Tourism (Sixth Report as of 30 July 2020).
Local tourism has also been devastated
Containment measures have put a halt on domestic tourism too with many governments imposing restrictions on movement within their country. Typically, domestic tourism would be a buffer against falling visitor numbers, accounting for 3/4s of the tourism economy in the OECD. Internal travel restrictions are devastating for the industry. The demand impact of restrictions on the tourism industry will vary depending on strictness. In the UK, an early estimate of the fall in domestic tourism spending is 24%, or GBP 22 billion. However, it's important to recognise that some of the fall in tourism spending from COVID-19 will be because people choose not to travel rather than because of government restrictions. Tourism has been hit with a double whammy of restricted mobility plus reduced desire to travel in the first place.
Many governments are pinning part of their recovery hopes on a surge in domestic tourism following containment. Finland is running the “100 reasons to travel in Finland” campaign to support domestic demand. Japan announced an economic package including discount vouchers to support tourism. The Czech Republic and Bulgaria are using vouchers to encourage domestic tourism. It’s likely that domestic tourism will pick up faster than international tourism due to the inherent risk of air travel.
[In NZ, Jacinda Ardern floated the idea of a four-day work week to encourage more people to take long weekends away. We have also initiated the Strategic Tourism Assets Protection Programme to protect vital NZ domestic and international tourism assets.]
[In Auckland, NZ we are currently at alert level three, but alert level two in other parts of the country. This means Aucklanders can’t travel to other parts of NZ. The rest of NZ is of course grateful for this move having been trying to get rid of Aucklanders for years.]
Typically tourism contributes ~7% of employment in OECD countries. Many of those jobs are now on the line. The International Air Transport Association estimates ~25million jobs are at risk in the aviation industry alone. Globally job losses in travel and tourism are estimated at ~100million. Some of these people will find alternative employment, but governments will still need to step up with support. It’ll be interesting to see whether these employees return to the industry after COVID-19.
Every cloud has a silver lining
Given this practical dependence of tourism on air transportation, the International Air Transport Association (IATA) claimed that “2020 will be the worst year in history for airlines (net loss of $84.3bn)[…]” in their Airline Industry Economics Performance - June 2020 – Report. The financial consequences of the current pandemic are severe and obvious, but the environmental benefits of reduced tourism is already encouraging a more sustainable industry. The UNTWO’s Global Tourism Crisis Committee released The One Planet Vision for a Responsible Recovery of the Tourism Sector on May 28, 2020, which “aims to support the development and implementation of recovery plans which contribute to the Sustainable Development Goals (SDGs) and the Paris Agreement.” The best practices introduced in this vision are closely related to current trends in public health, such as implementing epidemiological indicators as the basis of restrictive tourism policies and discouraging health protocols that are excessively harmful to the environment. This vision also promotes nature-based solutions (NBS), as defined in the European Union’s ThinkNature Nature-Based Solutions Handbook, that produce multi-functionality; “[f]or instance, NBS can improve air quality (environmental benefit), which allows a decrease of diseases related to air pollution (health benefit), which in turn allows savings in healthcare (economic benefit).” Environmental benefits of the pandemic have already been observed as the contraction of the tourism industry and other industrial carbon emitters “[d]uring the COVID-19 crisis[…] reduced emissions and improvements in air quality[…] and it is estimated that global CO2 emissions for 2020 will decline by 8%,” according to the UNTWO.
With the timing of a vaccine still in doubt it’s difficult to know when the tourism industry will be in a good space to recover. As of August 10th there are 34 vaccine candidates beyond pre-clinical studies. Even with compressed timelines a vaccine is still far away. Long-term we can expect that COVID-19 will change how we see tourism. Perhaps it's viewed as more of a luxury. Perhaps people will think twice before jumping on a plane, and decide to go somewhere local. Only time will tell what the long-term effects on tourists are are. It’s an awful consolation prize, but at least in the mean time we can check out the Mona Lisa using virtual tours.
“The UNWTO World Tourism Barometer “[…]shows a 56% year-on-year drop in tourist arrivals between January and May. This translates into a fall of 300 million tourists and US$320 billion lost in international tourism receipts[.]””
Works Cited
“25 Million Jobs at Risk with Airline Shutdown.” IATA, 2020, www.iata.org/en/pressroom/pr/2020-04-07-02/.
“COVID - 19 RELATED TRAVEL RESTRICTIONS A GLOBAL REVIEW FOR TOURISM Sixth Report as of 30 July 2020.” UNWTO, 2020, webunwto.s3.eu-west-1.amazonaws.com/s3fs-public/2020-07/200730-travel-restrictions.pdf.
“COVID-19 Vaccine Development Pipeline.” COVID-19, 2020, vac-lshtm.shinyapps.io/ncov_vaccine_landscape/.
“Economic Per Formance of the Airline Industry.” IATA, 2020, www.iata.org/en/iata-repository/publications/economic-reports/airline-industry-economic-performance-june-2020-report/.
“Home.” Tourism for SDGs, 23 June 2020, tourism4sdgs.org/covid19_initiatives/one-planet-vision-for-a-responsible-recovery-of-the-tourism-sector/.
Lock, Published by S., and Aug 21. “Loss in Global Tourism Jobs Due to COVID-19 by Region 2020.” Statista, 21 Aug. 2020, www.statista.com/statistics/1104835/coronavirus-travel-tourism-employment-loss/.
“NATURE-BASED SOLUTIONS HANDBOOK.” ThinkNature, 2020, platform.think-nature.eu/system/files/thinknature_handbook_final_print_0.pdf.
“ONE PLANET VISION FOR A RESPONSIBLE RECOVERY OF THE TOURISM SECTOR.” UNTWO, 2020, webunwto.s3.eu-west-1.amazonaws.com/s3fs-public/2020-06/one-planet-vision-responsible-recovery-of-the-tourism-sector.pdf.
“Online Tours.” Online Tours | Louvre Museum | Paris, 29 Apr. 2020, www.louvre.fr/en/visites-en-ligne.
“Tourism Policy Responses to the Coronavirus (COVID-19).” OECD, 2020, www.oecd.org/coronavirus/policy-responses/tourism-policy-responses-to-the-coronavirus-covid-19-6466aa20/#boxsection-d1e417.
“WORLD TOURISM ORGANIZATION.” UNWTO, 28 June 2019, www.unwto.org/news/impact-of-covid-19-on-global-tourism-made-clear-as-unwto-counts-the-cost-of-standstill.
