The United Nations World Tourism Organization (UNWTO) reports that almost all countries have implemented travel restrictions of one sort or another, such as travel bans, visa controls and quarantines (UNWTO 2020).
Article continues below
As a result, international tourism was almost totally suspended in April and May of 2020. Inbound tourist arrivals declined 74 per cent between January and December 2020, about 1 billion trips. However, if the pre-COVID months of January and February 2020 are excluded, the fall in arrivals amounts to 84 per cent.
The most affected regions are North-East Asia, South-East Asia, Oceania, North Africa and South Asia. Least affected regions are North America, Western Europe and the Caribbean. This shows that the greatest impact has fallen on developing countries. The reduction in tourist arrivals across developing nations is relatively consistent, mostly between 60 and 80 per cent.
Tourism is an important source of income for many developing countries, accounting for 50 % of total exports for many small economies, particularly Small Islands Developing States such as Maldives and Saint Lucia (UNCTAD 2020b). Tourism has relatively low barriers to entry and employs a high share of young people and women.
UNWTO (2021a) estimates that 100-120 million direct tourism jobs are at stake. The UNWTO (2021b) reports that tourism experts do not expect a return to pre-COVID arrival levels until 2023 or later.
In fact, nearly half of the experts interviewed see a return to 2019 levels in 2024 or later (UNWTO, 2021c). The main barriers are travel restrictions, slow containment of the virus, low traveler confidence and a poor economic environment.
Travel has adapted to the impact of COVID particularly in terms of travel restrictions. Domestic travel has increased, but this does little to help developing countries that are dependent on international travel.
Retirees, who tend to spend more per trip, are more likely to stay at home. Younger travellers, such as backpackers, who seem more willing to travel during this pandemic tend to stay longer but spend less than older travelers. Cruise ships, involving extended confinement, are likely to be less popular. Developing countries dependent on cruise ship arrivals may need to diversify their industries.
The proportion of vaccinated people can be an indicator of tourists’ wanderlust and their possibilities to travel. Although the proportion in the countries of origin as well as in the destination can be decisive, it is likely that tourists will nevertheless hesitate to travel long-distance, preferring closer destinations with high vaccination levels.
The share of vaccinated people varies significantly across countries, from below 1 per cent to over 60 per cent (Reuters COVID-19 Vaccination Tracker).
It is likely that tourism in countries with a high share of vaccinated people will rebound faster than in countries with a low share. Travel within Europe and North America, for example, is likely to pick up faster beginning this summer than many developing countries, who are still struggling to get sufficient vaccines and are thus expected to rebound slower.
In July 2020, UNCTAD, in its report COVID-19 and Tourism (UNCTAD 2020a), presented three scenarios on the potential economic impact of the pandemic on the tourism sector and sectors directly or indirectly linked to it.
A 12-month lock-down was estimated to incur a cost of $3.3 trillion, including indirect costs. Unfortunately, even the worst-case scenario has turned out to be optimistic.
Few observers expected that international travel would still be very low after 12 months.
This note updates this report and estimates the economic effects going forward. As in the previous report, a general equilibrium model that captures the backward and forward linkages between sectors is used.
Therefore, indirect losses to upstream industries that supply food, beverages, accommodation and transport to the tourism sector are estimated. It is also taken into account that labour and capital no longer needed in the tourism sector may be employed in other sectors.
In the short run, however, labour and capital are likely to remain unemployed due to frictions in labour and capital markets. It is difficult to find alternative uses for empty planes, cruise ships and hotels, and in the short term for staff who work in these industries. In a prolonged downturn, the ability to reemploy labour and capital in other industries is crucial. ■