Global Tourism Set to Lose $730 Billion in Revenue Due to Pandemic-Related Travel Restrictions
As many countries around the world moved to impose stringent travel restrictions in an effort to mitigate the spread of the deadly pandemic, the global tourism industry has taken a tremendous hit, with international arrivals plunging by a staggering 70% in the first eight months of the year.
According to the UN World Tourism Organization (UNWTO), international arrivals fell by 81% and 79% in July and August respectively, despite historically being the two most busiest months of the Northern Hemisphere travel season. Up until August, the drop in air travel amounts to a decline of 700 million arrivals compared to the same time a year prior. The decline in air travel amounts to a $730 billion loss in export revenues for the international tourism industry, which is over 8 times the loss recorded during the 2009 financial crisis.
All regions around the world have experienced an unprecedented drop in travel since the onset of the pandemic, with Asia and the Pacific, which were some of the first places to suffer from the COVID-19 pandemic, saw arrivals decline by 79% in the first eight months of the year. However, given that the US quickly transitioned into less stringent travel restrictions before the beginning of summer holidays, the Americas only suffered a 65% drop in arrivals.
Likewise, following Europe’s deadly first wave in the spring and resulting lockdowns, the virus remained relatively under control during the summer; as a result, Europe was able to gradually reopen its international borders, and comparatively smaller arrival declines of 72% and 69% in July and August respectively, were recorded. However, the recovery in Europe’s tourism industry turned out to be only short-lived, as a resurgence in cases prompted governments to reimpose advisories and restrictions. Additionally, Asia and the Pacific recorded the steepest decline in those two months, with a drop of 96% in arrivals as China’s borders remained closed for a significant portion of the pandemic.
Nonetheless, demand for travel still remains significantly subdued heading into the fall and winter seasons in the Northern Hemisphere, with the UNWTO projecting an overall drop of 70% for the entirety of the year. Going forward, the agency anticipates that international tourism will rebound by the third quarter of 2021, contingent on the severity of mitigation measures undertaken by governments. Some experts forecast that the lack of a global coordinated response to the pandemic will likely hinder the rebound in international tourism, pushing the recovery into 2022.
Information for this briefing was found via the UNWTO. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
