How has COVID-19 impacted the future of the travel industry?
The travel industry has always been an important part of the economy. For many, it’s not just about vacations or getting away to see the world. Rather, travel is a livelihood that provides income, professional development opportunities, and other life-changing benefits.
The Covid-19 pandemic changed our lives forever. It took away many of our freedoms, and the tourism industry has been affected deeply by the spread of this pandemic. With the increase in international travel in the past two decades, it also became more difficult to control the spread of disease.
However, global citizens can’t stay indoors forever, and both travelers and transportation companies are eager to return to normal. So how has Covid-19 impacted the future of the travel industry? Let’s take a look.
Covid’s impact on the travel industry throughout 2020.
At the early onset of the pandemic, many countries enacted strict quarantine and travel-restriction policies, most notably China, but also including many in Africa, Europe, Southeast Asia, and South America.
The impact on travel flows was significant in those countries where there were a great deal of restrictions, with a significantly reduced number of tourists.
“A number of travel destinations from Miami to the Bahamas and Caribbean were affected. This includes beachfront resorts, popular beach bars, and other vacation staples. So even though our clients may have been technically able to charter a boat throughout this pandemic, it was logistically very difficult to provide them with a luxury vacation experience that they were accustomed to.” said Kate Kalamaga, owner of luxury yacht rental company Tropicalboat. “We made significant efforts to provide them with personalized on-board services and engage them in experiences and fun activities, despite docking restrictions at international seaports.”
As a result of the pandemic, many countries shut their borders to international travel for a period of time, and domestic travel was limited as well, such as grocery shopping during certain hours, or even requiring a travel pass in some parts of the world.
While the United States federal government did not enact relatively strict measures in comparison to other parts of the world, such as the European Union, numerous states had restrictions that limited personal travel and time spent outdoors.
The pandemic had become highly politicized inthe U.S., with Democrat-leaning cities such as Los Angeles and New York enacting stricter measures than Republican strongholds such as Texas, Tennessee, and North Dakota, and even wearing a facemask (or not) became a sign of political beliefs.
Overall, while American citizens may have enjoyed relatively more domestic travel freedoms than citizens of other countries, global travel and tourism was effectively paralyzed. Airlines and tour operators mostly stopped taking bookings, and made it difficult for their clients to get into and out of many destinations.
By October 2020, National Geographic reported that the travel and tourism industry had lost 8 trillion dollars globally, from the largest airlines down to small bed and breakfast owners.
As the dust settled, it became apparent that travel restrictions would have a strong impact on travel volume and profits in the future.
How will Covid-19 impact travel in the next four years?
Similar to the virus itself, a timeline to recovery for the travel industry has many mixed opinions from experts.
For example, the Global Business Travel Association (GBTA) projected a complete travel recovery by 2025, with annual business travel revenue in 2024 exceeding pre-Covid numbers. ome of their key findings and forecasts include:
• Business travel is expected to increase by 21% by the end of 2021.
• A significant increase in business travel throughout 2022.
• Above-average rates of growth in 2023, and $1.4 trillion in travel spending by 2024.
“The pandemic has been devastating for business travel and it’s clear our industry will take some time to recover given the challenges we’re facing on multiple fronts,” said Dave Hilfman, interim executive director of GBTA. “Economic recovery is already underway, although very uneven across countries and sectors.” (Source: HospitalityNet.org)
On the other hand, research conducted by tourism study group Phocuswright presented data that the travel industry may not have fully recovered by 2025, owing to airlines and hotels having furloughed both equipment and staff, and that restrictions will remain in place throughout travel destinations until a significant majority of the global population has been vaccinated.
It’s unknown how much weight this theory holds, however, as some countries with low vaccination rates are beginning to open their borders up anyway.
For example, the Philippines, a country notably dependent on its tourism sector bringing in a quarter of its annual GDP, is reportedly “more than ready” to welcome foreign tourists again, despite only 28% of the total population being vaccinated.
Thailand has similarly announced plans to begin allowing foreign tourism again, with only around 42% of their population being fully vaccinated. Thus, it seems that countries more reliant on their tourism industry are more willing to open up to foreign visitors, despite potential risks.
This comes as good news to airline companies who are eager to resume normal operations, and domestic airlines such as American Airlines are already projecting a return to normal, both in business and leisure travel and overall revenue, sooner rather than later.
In a September interview with Washington Post, American Airlines CEO Doug Parker stated that revenue and demand for leisure is as strong as it was in 2019, and the company had already seen a 65% return to normal revenue earlier in July.
“International travel being made more easy certainly will help. And again, and frankly, it’s not that important if it happens in the next three months or six months from now,” said Mr. Parker during the interview. “What’s important is the long term. What’s important is making sure that we get this pandemic behind us and people feel comfortable going about their business.”
As we move into 2022, it’s clear that the pandemic hasn’t fully run its course on the travel industry. However, there are numerous glimmers of hope that international travel will resume as it did before the 2020 outbreak began.
The overall impact on the travel industry was felt significantly, but as countries begin to open their borders to foreign tourists again, it’s quite possible there will be a heightened initial wave of travel as a result of restlessness among the global population.
What’s currently unknown is if a sudden sharp increase in tourism travel will lead to new outbreaks and Covid variants, but overall, countries seem prepared to handle the risk, and global vaccination rates continue to steadily climb upwards.