COVID-19 Pandemic Impacts on the Travel and Tourism Industry
Wed, April 14, 2021

COVID-19 Pandemic Impacts on the Travel and Tourism Industry

 

 

The COVID-19 pandemic has caused an economic slowdown in many countries. Lockdowns and community quarantines in many parts of the world have forced schools and businesses to shut down. Several industries are already suffering from the impacts of these, especially their workers. The latest statistics from the International Labor Organization (ILO) revealed that full or partial lockdown measures affected nearly 2.7 billion workers - four in five of the world’s workforce.

“No matter where in the world or in which sector, the crisis is having a dramatic impact on the world’s workforce. Policy responses need to focus on providing immediate relief to workers and enterprises in order to protect livelihoods and economically viable businesses, particularly in hard-hit sectors and developing countries,” the ILO said in its report.

The report also revealed that workers in four sectors have experienced the most “drastic” effects of the disease and falling production. These industries include manufacturing (463 million), retail and wholesale (482 million), business services and administration (157 million), and food and accommodation (144 million workers). With only 136 million health and social professionals working in the frontline of the fight against the virus across the world,  ILO Director-General Guy Ryder said that they must be kept safe. 

“We need to make sure that those who are at work are adequately protected…that they have the right types of protection”, he insisted.

While every worker is affected by the pandemic, experts said that workers in low and middle-income countries are the most vulnerable. The worst-hit industries and services have a high proportion of low-wage workers in informal employment. “Without appropriate policy measures, workers face a high risk of falling into poverty and will experience greater challenges in regaining their livelihoods during the recovery period,” the report said. 

Just like other industries, the coronavirus pandemic is putting up to 50 million jobs in the global travel and tourism sector at risk. The ban on international flights has effectively crippled this sector. While the impacts of the crisis in sectors such as aviation and hospitality are widely discussed, experts say that there are several travel-related industries such as foreign exchange, which are even more impacted than aviation and hotels, abd are often overlooked entirely.

 

 

A Shrink by More Than 50%

For the past few months, many countries have decided to ban all international flights due to the rapid spread of the pandemic. The US government, for instance, extended national limits on travel, work, and gatherings of more than 10 people for at least another month. “This is the worst time of the year for this to happen,” Isabel Hill, director of the Commerce Department’s National Tourism Office, said, primarily because the industry generates $2.6 trillion in economic output and supports 15.8 million jobs in the US alone. 

Roger Dow, president and CEO of the US Travel Association, said that the impacts on travel during this pandemic are six or seven times greater than the 9/11 attacks. Recent studies and reports support this statement. The researchers said that while the travel and tourism industry has faced many challenges in the past, none of them are similar in magnitude to the coronavirus. 

A study from Tourism Economics, a company that consults in the tourism sector, recently predicted the US tourism industry will lose at least $24 billion this year due to the widespread loss of spending at restaurants, hotels, theme parks, and more. According to Phys.org, an internet news portal that provides the latest news on science, the researchers interviewed more than 2,000 travelers from 28 countries about their travel behaviors during the pandemic.

The findings revealed that more than half of the respondents canceled their business travel immediately due to the coronavirus. About 63.8% of travelers will reduce their travel plans in the next 12 months. With this loss, the results showed that the number of international travelers could shrink from 1.4 billion to fewer than 1 billion. This would be the first time the international traveler number has fallen that low since 2015. Also, the researchers predicted that the industry will shrink by 50% in 2020, which would mean a significant loss of jobs and revenue.

According to National Geographic, an American pay television network and flagship channel that is owned by National Geographic Partners, based on travel restrictions and an expected global recession, the International Air Transport Association (IATA) estimates that global air transport industry revenues could fall $252 billion, 44% below 2019’s numbers. This is at least twice the $113 billion in losses the IATA predicted last March before countries started shutting down borders.

Some countries where the travel and tourism sector provides between 16% and 50% of the GDP from exports are more vulnerable to declines in arrivals, including Thailand, Portugal, Jamaica, Spain, Turkey, and the Dominican Republic. Experts predict that these nations will experience a more severe economic blow due to the relative importance of the sector to them. They may not be able to recover in the short or medium term.

 

 

Job Loss in the Travel and Tourism Industry

A recent report from the World Travel and Tourism Council, which represents the global private sector of Travel & Tourism, predicted that up to 50 million jobs in the global travel industry could be lost due to the coronavirus pandemic. Virginia Messina, WTTC’s managing director, said that this impact would depend on how long the epidemic lasts and could still be exacerbated by recent restrictive measures. 

According to the World Economic Forum, an independent international organization committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas, the findings revealed that of the 50 million jobs that could be lost, around 30 million would be in Asia, seven million in Europe, five million in the Americas and the rest in other continents. WTTC said that this is equivalent to a loss of three months of global travel in 2020, leading to a corresponding reduction in jobs of between 12% and 14%.

“Certain measures are not helping and they can prompt the economic impact to be way more significant,” Messina said. 

The overall impact of the pandemic on the industry will be devastating, at least in the short run because a large share of the labor will be out of work. Considering that the first waves of unemployment affect those with a very small, or zero marginal propensity to save, aggregate consumption will decline to lead to greater unemployment levels.