To counter the COVID-19 impact countries are exploring possible course corrections like bilateral travel bubbles, domestic tourism and touchless travel.• The travel and tourism industry has been among the most severe casualties of the COVID-19 induced lockdowns & ensuing travel and entry restrictions at international borders.
• Unfortunately, owing to its linkages to allied sectors like aviation and hospitality industry, this has ripple effects both in terms of employment and revenue generation.
• This is a cause of concern since in 2019, the tourism sector accounted for 29% of the world’s services exports and about 300 million jobs globally, as per UNCTAD estimates.
• To revive the industry, measures such as strict enforcement of safety & hygiene protocols, creation of travel bubbles & tourist passes, offering COVID-19 travel insurance and facilitating touch-less travel need to be adopted.
COVID-19 has brought about significant disruptions in the global economy, coupled with a widespread unrest pertaining to an unsettling fear about the loss of lives & livelihoods. As the uncertainty grows, the world faces dimming prospects of an early economic recovery, sending governments and international humanitarian & financial organisations into a tizzy.
This international health exigency, accompanied by lockdowns, quarantines and border closures has proved to be particularly grim, or rather in some cases catastrophic, for the international travel and tourism industry. This is a cause of concern since in 2019, the tourism sector accounted for around 29% of the world’s services exports and about 300 million jobs globally. The World Travel and Tourism Council has cautioned the pandemic could cut 50 million jobs worldwide in the travel and tourism industry. This includes around 30 million jobs in Asia, 7 million in Europe, 5 million in the Americas and the rest in other continents.
The universal contraction in tourist arrivals could have devastating economic consequences. Economies like Maldives (39.6% of GDP), British Virgin Islands (35.4% of GDP), Macau (29.3% of GDP), Aruba (28.1% of GDP), Seychelles (26.4% of GDP) and Curacao (23.4% of GDP) are heavily dependent on tourism.
Measuring the impact
The World Tourism Barometer by the United Nations World Tourism Organization (UNWTO) states that there was a 56% year-on-year dip in international tourist arrivals in the first five months of 2020. In fact, during the month of May 2020, international arrivals declined by 98%, indicating travel restrictions in almost all parts of the world. To put this in numbers, it represents 300 million lesser international tourist arrivals & a loss of US$ 320 billion international tourism receipts in the first five months of 2020 as compared to the same period last year. The barometer notes that Asia Pacific region has been one of the most affected regions in terms of drop in international tourist arrivals
Source: World Tourism Organization (UNWTO)
According to some UNCTAD estimates, the world’s tourism sector could lose at least US$ 1.2 trillion, or 1.5% of the global GDP owing to the coronavirus pandemic. These losses could escalate to US$ 2.2 trillion or 2.8% of the world’s GDP if the break in international tourism lasts for upto eight months. Further, in the most pessimistic scenario, a 12-month break in international tourism is to cost the sector dearly at US$ 3.3 trillion or 4.2% of global GDP.
The UN’s trade and development body warns that for every US$ 1 million lost in international tourism revenue, a country’s national income could drop by upto US$ 3 million. This is a particularly disturbing fact since in 42 out of 47 Least Developed Countries, tourism is considered a key sector comprising 9.5% of their GDP on average. Therefore, the virus can significantly jeopardise the prospects of their development. Further, it can also cause a dent in some more developed economies, which thrive on tourism. For a few larger high- or middle-income countries such as Croatia, Greece and Thailand, inbound tourism accounts for 8-18% of their GDP.
Source: COVID-19 & Tourism, UNCTAD, for the moderate scenario of 4 months standstill
As per the UNCTAD report, in the worst-affected countries, including Thailand (-17%) Jamaica (-15%) and Croatia (-12%), employment for unskilled workers could shrink at double-digit rates even in the most moderate scenario. Similarly, in the case of wages for skilled workers, the steepest drops could be seen in Thailand (-12%), Jamaica (-11%) and Croatia (-9%), in the optimistic case.
As far as India is concerned, the Federation of Associations in Indian Tourism and Hospitality (FAITH) estimates a loss of around ₹15 trillion for Indian tourism sector in FY21. The industry body also anticipates around 40 million cumulative job losses for the full year in the organized and the unorganized categories of tourism.
Resurrecting the industry
Findings from UNWTO indicate that as on 15th June 2020, around 48 destinations across the world had started easing travel curbs. Despite the gradual reopening of borders, signs of recovery elude the sector in some countries. For example, sources from the Government of India suggest that despite an easing of operational curbs by the Centre, airlines are not flying as often and to as many stations. Albeit carriers can locally fly 1,500 flights a day, i.e. 45% of the pre-COVID daily run, they continue to operate 750 to 800 flights with an average of about 60% of seats full.
However, other regions across the world have started showing encouraging signs. For example, according to the UNWTO, the Carribean registered 4 consecutive weeks of positive net bookings while in the week of 13th July, the EU recorded more bookings than cancellations from Europe, Africa & the Middle East.
As travel curbs are eased, restoring the confidence of consumers will be the key to the sector’s recovery. Strict enforcement of safety & hygiene protocols such as mandating thermal screenings & wearing of PPEs for all those who board a flight or enter an airport, can be some important ways to do this.
Source: UNWTO
Another move that is likely to go a long way in establishing confidence among travellers is offering COVID-19 travel insurance. Portugal’s national tourism authority Turismo de Portugal, for example, has introduced a travel insurance scheme for foreign tourists that covers COVID-19 related claims. Benefits include among others, medical, surgical, pharmaceutical and hospital expenses associated with COVID-19. It also encompasses cancellation, interruption or extension expenses due to the pandemic. Apart from this, the country has also adopted some other measures to instill confidence in travellers such as the renewal of the Portugal Health Passport, which now includes tests for COVID -19 available to all who visit the country.
Buoyed by the low revenue figures, regions like the Baltic States (Latvia, Lithuania and Estonia) are creating a “travel bubble”, allowing citizens to travel freely between them to lure tourists. Similarly, on May 5, the leaders of Australia and New Zealand, Prime Ministers Scott Morrison and Jacinda Ardern respectively, announced their commitment to introducing a trans-Tasman COVID-safe travel zone. This zone will be mutually beneficial and help their trade and economic recovery by kick-starting the tourism and transport sectors.
Meanwhile, since experts expect domestic tourism to recover faster, countries can also explore the idea of boosting internal travel. For instance, Japan has launched the ‘Go To’ campaign to spur domestic tourism, which bears a part of travelling expenditure. Similarly, Greece has decided to grant EUR 30 million to subsidize holidays for citizens through its ‘Tourism for All’ Initiative; while Italy has designed a holiday bonus for its citizens. Romania & Serbia have created tourist passes & vouchers for the same purpose.
Lastly, this crisis could prove to be the perfect opportunity to help the tourism sector evolve and to embrace the concept of touchless travel. The World Economic Forum states that such an endeavour will be supported by digital tools such as the ‘Known Traveller Digital Identity’ initiative. Contactless fingerprint, as well as iris and face recognition will emerge as solutions for identity verification, and their use will become more widespread as physical fingerprint and hand scanners are phased out. Digital health passports will be one example of this. Apple and Google are already close to finalizing a contact-tracing software scheme for developers to help automate the process of health scans & screenings.
