Travel’s massive losses

The World Travel & Tourism Council has assessed the economic impact of covid-19 as being a loss of almost USD4.5trn in business. It says the sector’s contribution to global GDP dropped 49.1% and last year accounted for just 5.5% of the global economy. 

WTTC president Gloria Guevara praised government interventions that helped save jobs and businesses with initiatives such as furlough schemes. “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.” 

The WTTC reckons nearly 62m jobs have been lost globally across the sector, with the impact being felt particularly hard across the many smaller businesses that support tourism. 

With hopes high that vaccine rollouts could help facilitate a restart of international travel, WTTC is calling for action to get the world moving again in June. It says a coordinated testing regime, used for those not yet vaccinated, could remove the need for time-consuming quarantines. And, given a timely revival of travel, WTTC estimates the 62m lost jobs could be reinstated by 2022.  

And the UNWTO, which continues to lobby governments to act so that tourism can restart, reported an 87% year on year fall in international tourist arrivals, in January 2021.  

“2020 was the worst year on record for tourism,” said UNWTO secretary-general Zurab Pololikashvili. “The international community needs to take strong and urgent action to ensure a brighter 2021. Many millions of livelihoods and businesses are depending on it. Improved coordination between countries and harmonized travel and health protocols are essential to restore confidence in tourism and allow international travel to resume safely ahead of the peak summer season in the northern hemisphere.” 

UNWTO said 32% of all global destinations remained completely closed to international visitors, as of the beginning of February – leading the organisation to predict Q1 tourism numbers would be down 85%.  

The organisation has outlined two scenarios for the rest of 2021. The first, with a rebound in July, would see international arrivals increase 66% year on year, or turn out 55% below 2019 levels. A second scenario, which would not see a rebound starting until September, would leave activity for 2021 two thirds down on 2019 levels.  

UNWTO says that for the more optimistic scenario to happen, countries need to agree harmonized travel and certification protocols and push on with vaccination programmes, to help grease the wheels of travel.  

Japan, meanwhile, is facing the challenge of operating its longed-for Olympic campaign at a major loss. Already delayed by one year, the sporting festival will now take place from July 23 without any overseas spectators, as Japanese authorities worry about the potential for the spread of covid-19.  

The decision has been supported by the International Olympic Committee – but means Japanese investment in new hotels and tourism capacity will now not yield an income from the expected boost in visitor numbers around the event.  

Officially, the Olympics will cost Japan USD15.4bn to stage. In July 2019 – before the pandemic – it was estimated that the event would provide a JNY32trn boost to the country’s economy. But a January 2021 assessment of a spectator-free event suggested an economic loss of JNY2.4trn.  

A recent poll suggested 80% of locals believe there should be further postponement of the event, due to the pandemic, which has already claimed more than 8,700 Japanese; a vaccination programme is just getting under way in the country.  

Some countries are trying harder than others, to get travel restarted. Thailand has come up with a range of proposals and initiatives to encourage both domestic travel initially, and now to open up for international tourism. It has also provided a fresh lifeline to the country’s hoteliers, recently announcing plans to allow them to lodge their assets with banks, in return for credit that will allow them to restart trading, rather than be forced to liquidate those assets. The “asset warehousing” plan could allow trading businesses to lease back the assets, or repurchase them at a point in the future. 

HA Perspective [by Chris Bown]: As consumers, and as operators of businesses that rely on international travel, we are all in the hands of government-level authorities.  

Despite the efforts of WTTC and UNWTO, no single killer-app seems to have risen up, yet, by way of an internationally recognised health passport. Which leaves us in the hands of authorities who are wasting their efforts scoring political points, and worrying about the downside risks of doing anything too rash as they make up policy on the hoof. And executing travel restrictions and quarantine programmes with all the watertightness of a bucket with lots of holes in.  

Yet there is evidently plenty of pent-up demand to travel, in those parts of the world where governments are still restricting international travel. Here’s to the UNWTO’s optimistic scenario.  

Additional comment [by Andrew Sangster]: For the optimistic scenario under UNWTO’s projections to succeed, it is necessary for governments to move away from the precautionary principle so many seem to be adopting. 

Such has been the grip of the health officials during this pandemic that what would normally be seen as an acceptable risk is now viewed as too dangerous. The onus of proof has shifted from demonstrating the danger to demonstrating that a course of action is safe. Normal life and economic activity will never be able to resume under such orthodoxy. 

The UK Government is a good example of the problem. When vaccines were announced, the prevailing view was that they would provide freedom from current restrictions. But increasingly, the mood music is shifting towards retaining restrictions to prevent “worst case” scenarios. 

Unless this bewitchment is broken, the promise of a recovery boom will vanish and the hospitality sector will be left in a permanent state of limbo. 

A House of Commons Library Briefing Paper “Hospitality industry and Covid-19”, published in late March, outlined the damage already done. At its peak on the 10 April 2020, the number of jobs in the industry furloughed stood at 1.6 million out of a total in the industry at the end of 2019 of 2.53 million (7% of the UK workforce). At the end of January, there were still 1.15 million hospitality jobs furloughed. 

The Office for National Statistics, in its Business Impact of Coronavirus Survey, found that between 8 and 21 February, 22% of accommodation and food businesses reported that their debt repayments were more than 100% of their turnover. This compares to just 5% across all industries. 

If hospitality businesses are to recover and not fail; if the million-plus hospitality workers on furlough are to come back to jobs rather than be laid off; then there has to be an end to the current restrictions permanently and irreversibly, as the UK Government once promised.  

The precautionary principle has to be abandoned and normal, risk-taking life resumed by all. If not, the Government will take us to the doom-laden outlook that was feared at the start of the pandemic. 

There are signs of fightback against the pre-cautionary principle. Politically, until recently, the only voices arguing against the worst excesses of lockdown and associated restrictions have been Conservative backbench MPs. But now the Liberal Democrats have also come out opposing so-called vaccine passports – or Covid status certificates – with some mutterings of discontent from the official opposition Labour Party too. 

But perhaps the most effective attack has been launched by Sacha Lord, creator of Parklife festival and Greater Manchester’s night-time economy adviser, and Hugh Osmond, a founder of pub chain Punch Taverns and previously a key figure behind the initial success of restaurant group PizzaExpress. 

This pair of hospitality veterans have launched a legal action after indoor hospitality’s opening was pushed back five weeks behind that of non-essential retail. A Judicial Review could be heard from 19 April. 

They have already chalked up a victory: they forced the Government to backtrack on forcing customers to order a substantial meal with alcohol. 

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