The coronavirus pandemic has abruptly turned the tide on the booming global tourism industry, jeopardising the employment of millions of workers along the whole value chain as people are stuck at home and international movements are limited.
There were 62.9% fewer commercial flights in the final week of March 2020 than the same week in 2019, according to data from online flight tracker FlightRadar.
The World Travel and Tourism Council (WTTC) estimates that the Covid-19 pandemic may cause losses of up to $2100bn in 2020 alone, putting up to 75 million jobs at “immediate risk”.
Speaking at the G20 Virtual Summit on March 26, WTTC president Gloria Guevera pleaded with leaders to pool efforts to rescue travel business across the supply chain in order to save the jobs of the 330 million people employed by the travel and tourism sector.
The G20 countries were the main recipients of FDI projects in the tourism industry, as 45% of the 1306 announced global tourism projects in 2018 and 2019 were invested in these countries, suggesting they will be heavily affected by the limitations and shutdowns on travel.
However, smaller countries that depend heavily on tourism will be hit harder in relative terms. For example, the Philippines was the highest recipient of FDI capital expenditure in the tourism sector 2019, according to fDi Markets. The $6.3bn sourced in this sector accounts for 53% of the country’s total greenfield FDI inflows in 2019. The travel and tourism sector also accounts for 21% of total Philippines gross domestic product, making it the second most reliant country on the sector, according to WTTC data.
So while the larger G20 economies are likely to suffer greater losses in absolute numbers due to travel bans, it is the smaller nations who are likely to experience the most severe economic deterioration through the drop in tourism.
The crisis triggered by the coronavirus follows record years for the industry, which has had five years of consecutive FDI growth. A record 681 projects were announced or launched in the tourism sector in 2019, breaking the previous record of 625 projects in 2018, according to fDi Markets.
During 2018 and 2019, there was more than $131.3bn announced capital expenditure in the tourism sector. These two years account for more than half (52%) of invested capital in the tourism industry across the last seven years from 2012 to 2019, according to fDi Markets.
The WTTC also reports that the travel and tourism industry was responsible for 10.3% of all economic activity in 2019 and for one in 10 jobs (330 million) around the world.