The COVID-19 crisis has spurred far-reaching travel restrictions, lockdown, and business regulations that have caused tourism to screech to a standstill. All types of transport are affected, and the longer the lockdowns remain in place, the more traditional tourist destinations will suffer. In the coming weeks, many of the operations that once defined the travel and tourism industries will have to be rewritten.
Deutsche Bank’s Take
A report this week from Deutsche Bank analyst Eric Heymann calls our attention to the fact the unequaled level of uncertainty we are now operating under. With the holiday season about to begin in the Northern Hemisphere, the normal contribution to GDP travel generates for tourism destinations, will certainly be upset.
Heymann points out how in Italy and Spain travel and tourism amounted to a share of about 13% (nationwide average) and to 14.6%, respectively, in 2018. And in Greece, this share was 20.6% of aggregate GDP. The analyst also highlighted tourist “hot spots” in other countries with higher percentages. The chart below is from the report.
The Deutsche Bank executive goes on to describe how coronavirus-related travel restrictions and lockdowns, hotel closures and cancellations of cultural events, fairs and conferences have already led to irrevocable revenue losses.
WTTC Weighs In
In support of the DB figures, the World Travel and Tourism Council now projects a global loss of 75 million jobs and $2.1 trillion in revenue. WTTC CEO Gloria Guevara is now out lobbying governments to offer support to travel companies, and she’s quoted by National Geographic as saying these potential job losses are “bringing real and profound worry to millions of families around the world.”
Returning to the DB report, many firms are already diving into their reserves and how the unique situation is beginning to eat away as everyone’s resources. As national economies are impacted in the coming weeks, worst-case scenarios begin to look like an open abyss, according to the bank’s perspective. The experts at Deutsche Bank do offer some recommendations, however.
Some measures decisionmakers can take already include things like helping “holidaymakers travel at acceptable risks even during coronavirus times, once the curve has flattened.” The bank’s analyst suggests canceling mass events since events like concerts carry higher infection risks than a family going on a mountain hike or cycling tour. We can add here, that destinations like Crete are ideal for hosting families and smaller groups keyed in on niche tourism such as outdooring.
In addition, Mr. Heymann says capping visitors via regulations can also help to reduce crowds, which will, in turn, make an overall safer environment. Other logical strategies like immunity and special medical documentation only make sense given the gravity and expanse of the pandemic. The aforementioned National Geographic story talks about a tourism industry that’s built its financial strategy around a trouble-free future, once were “open borders; high tourism demand, generated $8 trillion, and one which is now upended.
The UNWTO says small and medium-sized businesses are the ones that will be most impacted. These enterprises make up about 80% of the tourism sector today. Jobs all over the world are already dramatically affected, and now communities are starting to feel the negative impacts. Against a backdrop of unimaginable loss, the UNWTO is now calling for:
- financial and political support for recovery measures targeting the tourism sector in the most affected countries;
- recovery measures and incentives to be planned and implemented in coordination with international development and donor organizations; and
- tourism support to be included in the wider recovery plans and actions of affected economies.
This advice comes at a time when Spain and other destinations seemed to ignore what was going on in China, Italy, and other harder hit COVID-19 stricken nations. This report covers the tendency for governments to act as exceptionalism. A recent New York Times story speaks to this issue and others.
Destination X,Y, and Z
According to Raphael Minder, Spanish authorities initially “treated the virus as an external threat, rather than considering that their country could be the next domino to fall.” Had they been thinking globally, their country might not be second only to the United States in the number of COVID-19 cases. I mention this primarily because it’s likely the coronavirus recovery will follow the same pattern.
Some tourism destinations will be ahead of the curve and will make the right contingency plans for moving forward. Others, as was the case with Spain, will assume the game will restart on its own.
This helpful report from PhocusWire offers some helpful strategy tips for destinations once the tide starts turning. This series of reports follow a line I have been on, one where the pandemic offers a rare chance for a world and its industries to not just reboot but to make a positive paradigm shift. destination specialist Doug Lansky (video above) offers some common sense advice and a fresh outlook I believe the whole industry can benefit from.