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Economy

The Grim Plight of the Global Travel & Tourism Sector

A World Travel & Tourism Council (WTTC) report paints a grim picture of the global Travel & Tourism sector in the wake of the devastating impact of COVID-19 last year.

A World Travel & Tourism Council (WTTC) report paints a grim picture of the global Travel & Tourism sector in the wake of the devastating impact of COVID-19 last year.

The Travel & Tourism sector was one of the first to suffer the devastating repercussions of the Covid-19 global pandemic as border closures and travel restrictions cascaded around the globe as the world struggled to contain the deadly virus

In the first two quarters of 2020, at least 93 percent of the global population lived in countries with coronavirus-related travel restrictions, with approximately 3 billion people residing in countries enforcing complete border closures to foreigners. In monetary terms, the border closures and related measures cost the global economy some USD 400 billion a month.

The annual Economic Impact Report (EIR) by World Travel & Tourism Council (WTTC) puts the loss to the sector over 2020 at about USD 4.5 trillion. Some 121 million jobs vanished in 2020 while the loss in terms of GDP has been estimated at USD 3,435 billion. Some 96 percent of destinations in the world introduced travel restrictions.

International flights, hotel bookings came to a standstill. The global Travel & Tourism sector’s contribution to GDP plunged a staggering 49.1 percent in 2020, while the global GDP dropped by 3.7 percent.

Indubitably, all sectors of the global economy have has suffered unprecedented challenges due to the pandemic. However, the travel and tourism has been one of the worst hit industries due to worldwide border closures.

The crippling travel restrictions continue to threaten the urgent recovery of the world economy and vast losses continue to threaten the travel & tourism sector’s survival. The report says the travel & tourism sector’s contribution to global GDP plummeted to USD 4.7 trillion in 2020 (5.5 percent of the global economy), from nearly USD 9.2 trillion the previous year (10.4 percent).

In 2019, global Travel & Tourism was thriving and generating one in four of all new jobs around the world. The sector contributed 10.6 percent (334 million) jobs globally that year.

However last year, as the pandemic ripped through the heart of Travel & Tourism, nearly 62 million jobs were lost, representing a drop of 18.5 percent, leaving just 272 million employed across the industry globally. The job losses were heavily felt across the entire ecosystem of Travel & Tourism. The SMEs which make up 80 percent of all businesses in the sector were particularly affected.

The EIR also uncovers the loss in the international travel spending which was 69.4 percent in 2020. Domestic travel, however, saw a 45 percent decline which is lower owing to ease in internal travel in a number of countries.

WTTC President & CEO Gloria Guevara said, “With the sector’s contribution to GDP plunging by almost half, it’s more important than ever that Travel & Tourism is given the support needed so it can help power the economic recovery, which will be instrumental in enabling the world to revive from the effects of the pandemic.”

According to the research, the sector’s contribution to global GDP could rise sharply this year, up 48.5 percent year-on-year. The research also shows that its contribution could almost reach the same levels of 2019 in 2022, with a further year-on-year rise of 25.3 percent.

WTTC also forecasts that if the global vaccine rollout continues at pace, and travel restrictions are relaxed just before the busy summer season, the 62 million jobs lost in 2020 could return by 2022.

In addition to the economic collapse, the pandemic reshaped travel trends globally. The overall travel trends declined significantly in all areas of the world right after the outbreak. The region affected worst was Asia and Pacific with 51 percent decline in tourist arrivals.

Europe and the Middle East, both of which hosted millions of tourists annually, suffered 44 percent and 40 percent decline, respectively. The world saw 44 percent less tourists in just 4 months (January to April) following the worldwide lockdowns as the global pandemic arrived.

Likewise, the United Arab Emirates which is known to be one of the largest recipient of tourists and visitors, has also faced a sharp downturn. Emirati airlines, hotels, and other tourism-related businesses have experienced significant material losses. In particular, the drop in scheduled departure flights comprised 82 percent in 2020.

As far as the airline activity of the European countries is concerned, Covid-19 resulted in sharp fall in passenger revenues. The figure 2 shows the reduction in the percentages from January to June 2020 compared with 2019. It highlights a 100 percent decline in the first week of June for all European countries. China, Japan, and United States witnessed 40 percent to 80 percent decrease in their flight capacity in the same week. Globally, the flight capacity dropped 70 percent in June 2020.

Travelling is not the same experience anymore after the coronavirus pandemic. It decimated businesses and jobs in every country of the world, in every sector of the economy including travel & tourism, disrupting people’s lives. International immigration programs also seem to have come to a halt. Even countries like Canada and Australia reportedly gave permanent residence to people onshore only, disallowing people across borders to enter their countries.

Small wonder masses around the world are waiting for the pandemic to be over before they can get back on track of their travel plans as well as their future plans.

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