Global tourism in the Covid-19 storm

Saturday, 2020-07-04 18:04:11
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A cleaner walks toward the atrium of MGM National Harbor as the complex opened its doors to guests after an easing of restrictions to control the spread of the coronavirus disease (COVID-19) in Oxon Hill, Maryland, U.S., June 29, 2020. (Photo: Reuters)
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NDO - The severe Covid-19 “storm” across the globe has “blown away” profits and pushed the tourism industry into a state of unprecedented difficulty. Although many big bailout packages and measures to remove difficulties for the tourism industry have been introduced, the smokeless industry has still not seen the "light at the end of the tunnel" in that the disease has not yet been fully and effectively controlled.

According to a new study by the United Nations Conference on Trade and Development (UNCTAD), coronavirus restrictions are expected to result in a shortfall of between US$1.2 trillion and US$3.3 trillion in tourism and related sectors in the coming months.

In light of these figures, the UNCTAD has developed three scenarios to assess “the shortfall for tourism and closely related sectors, such as hotels and restaurants, but also producers who sell their agricultural products to hotels, banks that have granted loans to hotels, energy producers, construction, etc”.

The intermediate scenario developed by UNCTAD, which is the closest to the assessment made by the UNWTO, assumes an interruption of international tourism for a period of eight months and estimates the total loss of income at $2,200 billion or 2.8% of world gross domestic product (GDP). It should reach US$1,200 billion, or 1.5% of world GDP, if the interruption lasts only four months, and US$3,300 billion, or 4.2% of world GDP, if it lasts one year.

In absolute terms, the US and China will record the largest shortfalls, followed by Thailand, France, Germany, Spain, the United Kingdom and Italy. Meanwhile, in the intermediate scenario envisaged, Jamaica will be the country most affected by the tourism crisis, in terms of the weight of the sector as part of the national economy, according to the UNCTAD study. Jamaica is followed by Thailand, Croatia and Portugal.

Before the UNCTAD released the above report, a series of other statistics and studies also pointed to the gloomy prospects for the tourism industry as this industry was at the “eye of the storm” of the crisis in the context of how widespread Covid-19 epidemic has become.

The Inter-American Development Bank in early July also issued three different forecasts for the tourism sector in Latin America in 2020, respectively at 43.8%; 56.3% and 68.8% compared to 2019.

African countries have lost almost $55 billion in travel and tourism revenue in the past three months due to the coronavirus pandemic, the African Union (AU) commissioner for infrastructure and energy said on July 2.

Amani Abou-Zeid told a news conference the economic impact of lockdowns and border closures implemented to curb the spread of the virus would be severe, with the continent's air industry hit particularly hard. She said tourism and travel represented almost 10% of the gross domestic product of Africa. “We have 24 million African families whose livelihood is linked to travel and tourism,”Abou-Zeid said, adding the downturn came in a year when Africa was expected to see an increase in travel and air transport.

In order to save the tourism industry, many governments have recently launched stimulus packages and efforts to restart this important economic sector. In Europe, Greece is gradually restarting tourism, a vital sector for the economy, contributing up to 20% of the country's GDP. From July 1, Greece restored flights to important tourist islands, with more than 100 flights expected to be operated at 14 regional airports.

Meanwhile, since the end of June, Denmark has allowed citizens from European countries with low numbers of Covid-19 infections to enter the country. Accordingly, visitors from Iceland, Germany and Norway are allowed to enter the country provided they have a stay of at least six nights. In another European country, Spain, the Government recently announced a US$4.78 billion bailout plan to help the tourism industry recover.

Egypt, a “tourist paradise” in Africa, has also been making efforts to revive the tourism industry. Hotels, archaeological sites and beaches have been cleaned and disinfected to welcome visitors back after long periods of closure due to the disease. In Southeast Asia, Thailand has also stepped up measures to rescue tourism. The Thai government has just passed two stimulus packages worth US$723 million to revive the smokeless industry. Accordingly, tourism stimulus packages will start to be deployed from July 1 to October 30, including US$64.5 million to support domestic airfare, bus fares, car rentalfees etc.

The aforementioned efforts to rescue the tourism industry seem to be inconsistent with the difficulties the industry is facing in the long term. In its newest report, the UNCTAD warned that International tourism has been almost totally suspended, and domestic tourism curtailed by lockdown conditions imposed in many countries. Although some destinations have started slowly to open up, many are afraid of international travel or cannot afford it due to the economic crisis. In fact, in the context of the Covid-19 pandemic continuing to boom as today, most world vacation resorts are struggling. Although major stimulus packages have been launched, once a vaccine is not strong enough to stop the Covid-19 “storm”, the “tonic pills” that governments are using for tourism are like “drops in the ocean”.