Covid has affected every industry in the world with its contagious spread but none have been as affected by the virus as the Travel and Tourism industry. The technology that enabled accelerated globalisation and easy worldwide travel could do nothing to slow or stop the effects of the virus which demanded nothing less than our full cooperation in distancing ourselves from each other.
Understanding this volatile landscape is difficult and even more so when it comes to projections for the future of this industry. The World Travel and Tourism Council trade group represents many global travel companies and they project a loss of 70 million jobs and close to $2 trillion in revenue. These losses are daily and imminent; something this industry never saw coming in the horizon.
America’s travel industry has taken one of the biggest hits. 4.6 million jobs have been lost- reported by the U.S. Travel Association and that was just reported in May. The U.S. weekly reported 6.6 million people to be jobless with the number doubling by the week- the highest numbers in half a century. Decline in tourism is definitely a reason for losses in jobs especially in states like Nevada where casinos in Las Vegas depend on the tourists for income. It also doesn’t help that the timing was bad; the pandemic hit right when tourism is at its peak in the country. The president and CEO of the U.S. Travel Association stated the impact on travel has been six or seven times greater than the 9/11 attacks.
Not staying ahead of the curve:
Most of the travel and tourism industry has its economical strategy based upon a future that is secure and unchanging. Open borders, a sky-high demand for quality tourism and ease of travel meant that the market has always seen success no matter what the rest of the world is going through.
Aid to the rescue:
Airlines could be one of the entities benefitting from the US stimulus package, a whopping $425 billion from the Federal Reserve for impacted industries. Not to mention $70 billion in loans and $25 in grants with the government itself taking stakes in the companies. A lot of the money comes with clauses- it cannot be used for corporates to buy stock back.
A $100 million bill that was passed by Congress increased unemployment insurance and helped with food assistance.
Hotels, Hospitality and Cruise Ships:
The lodging sector has suffered just as much as transport. Companies like the Marriot lost as much as 75% in revenue.
Cruise companies face an uphill battle. Cruise ships have become the examples of events not to attend since stories have come out of ships carrying infected passengers. In march, the Center for Disease Control told American citizens to stop taking cruises and explained in detail why these ships increase the risk of the spread of the virus. The effect has been harsh- companies involved in cruises have lost north of 750 million dollars since January 2020. Market shares of these cruise companies have dropped significantly- by 60 to 70%.
What the future holds:
A glimpse of the future can be seen in China where the pandemic is under control and restrictions have been lifted. In the first week of March, hotel bookings increased by 40% and peak daily flights increased by 230%.
China has a huge domestic tourism market and supports five billion trips a year. The domestic industry plans on recovering by 70% over the next six months. That recovery largely depends on domestic tourism since China does not intend to allow foreign visitors so as to ensure that the virus doesn’t resurface.
The U.S. Travel Association is now optimistic and is confident that they will get back to normalcy over the long term. The pent up desire to travel will definitely lead to people wanting to travel all over the world again.
It remains to be seen how this industry will improve as time goes by and we definitely hope to see it blossom in the future.