The crisis that the coronavirus has unleashed throughout the world is truly unprecedented. It has been unexpected, fast and harsh in every front. Economic recession, social unrest, drastic measures of suspension of rights and freedoms by Governments… One of the main factors that have contributed to the rapid expansion is population movements across and within borders. For that reason, most countries have reacted through, among other measures, border shutdown. As a result, international tourism has been gravely impacted, and will continue to be so until the storm abates.
But how much has been (and will be) lost? And for how long? The unprecedented nature of the COVID-19 makes it difficult to come up with a reliable forecast on how this situation will unravel. However, the latest update assessment of the World Tourism Organization (UNWTO) regarding the coronavirus phenomenon sheds some light on the impact that this pandemic will have on international tourism. And the numbers are truly nightmarish. According to the UNWTO, international tourist arrivals will fall by 30 percent in 2020 compared to 2019 figures. But is this a lot or a little? Let us put these numbers into perspective. In 2009, at the height of the financial crisis that shook the global economy, international tourist arrivals declined by 4 percent as shown by UNWTO records. In short, it is a massive drop in international tourists, which will have a subsequent estimated loss of $300-450 billion in international receipts alone.
As for the duration of this disastrous period of international tourism, nobody knows for sure how long it will last. And this is partly because of the lack of some sort of international coordination to face this common threat, which will result in multiple battles which will be won (hopefully) at different speeds. What we can be sure of is that the COVID-19 hit to international tourism will last well beyond the medical crisis. And that it will leave behind some sequels.
Another point not to be overlooked is the fact this pandemic, unlike other regional crisis, affects us all equally. For example, after the Arab Spring outbreak in 2011, international arrivals fell over 30 and 40 percent in some North African countries while some Mediterranean European countries became the preferred destination of those lost tourists for many years. When some suffered the hit, others benefited from it. In this case, however, uncertainty and fear are spreading to every corner. As a result, even those countries that overcome soon this pandemic will not be able (or willing) to attract international tourists because of fear of further infection. Unless this crisis is overcome globally, international travel will be subject to much harsher controls, hence hampering the recovery of international tourism as a whole. For now, Asia-Pacific is expected to be the most affected region. But it will be so ought to prejudice and lack of information, as data shows how firmly and swiftly some countries have already overcome the virus. This region is expected to suffer a hit of 9 to 12 percent compared to 2019. However, it still remains unknown how the pandemic will affect two major regions in the world. Namely, Latin America and Sub-Saharan Africa.
Finally, one question remains. Who will suffer the hit the most? Contrary to what one might think, the overwhelming majority of tourism businesses are not multi-billion international organizations. Quite the contrary, 80 percent of all tourism businesses are small-and-medium-sized enterprises (SMEs). And these will not be able to cope with this phenomenon if the situation lasts long. Therefore, global travel and tourism market is predicted to suffer massive unemployment, with latest estimates of 75.2 million Jobs loss worldwide in 2020. As mentioned above, the region that is expected to see the biggest loss from COVID-19 is the Asia-Pacific region, losing approximately 48.7 million jobs, while Europe is forecast to be the second hardest hit with a forecasted employment drop of 10.1 million. One can only imagine the impact of these figures in countries, such as Spain, where tourism accounts for 14.6 percent of its GDP and 14.7 percent of all jobs. Around €178 billion and 2.8 million jobs are hanging by a thread.
This pandemic constitutes a countdown for global tourism, and when the clock strikes cero, many tourism-related businesses will not be able to endure this situation any longer. Hence, time is paramount, and so are the economic stimulus that countries adopt to fight this virus. Stimulus that can only come through tax alleviation and loosening the grip of regulation and red tape and not from indebtedness and tax raises. We cannot afford to get this wrong.
”Juan Ángel SotoEconomist, Lawyer, Political Expert and Executive Director of Civismo Foundation