What Is the Continuing Impact of Covid-19 on International Travel?
Covid-19 had a devastating impact on international travel, with border closures and quarantining decimating the trade. Emerging from the shadow of Covid-19, many people are more excited than ever to start traveling again.
United Nations World Tourism Organization (UNWTO) data indicates that international tourism showed strong signs of recovery from January through to July of 2022, with arrivals reaching 57% of pre-pandemic levels. The UNWTO World Tourism Barometer revealed that in the first quarter of 2022, international tourist arrivals almost tripled compared with the same period the previous year, equating to an almost 60% recovery of the sector compared with pre-pandemic levels.
A steady recovery
Zurab Pololikashvili, the UNWTO’s secretary general, explained that the tourism industry has continued to recover steadily, although he cautions that several economic and geopolitical challenges remain. Nevertheless, tourism brings back hope and opportunity for everyone. As Mr. Pololikashvili indicates, perhaps the pandemic-induced pause was an ideal opportunity to rethink the tourism industry, looking at where it is going, and how it impacts both people and the planet.
According to the World Economic Forum, tourism was one of the worst affected industries in terms of the impact of Covid-19. International arrivals increased by just 4% in the second year of the pandemic, with an estimated 1 billion fewer arrivals compared with pre-pandemic levels.
Economic effects
In March 2022, the International Monetary Fund presented its Special Series on Covid-19, exploring the economic effects of the pandemic. Specifically addressing the impact of Covid on travel and hospitality activity, the International Monetary Fund reported that by May of 2020, flight departures had fallen by around 80% compared with the previous year, with hotel bookings falling by more than 70%, and restaurant bookings down by over 90%.
It is easy to appreciate that many businesses operating in the travel and leisure industry simply could not sustain such heavy losses, battling against repeated infection resurgences, with lenders losing patience with defaulting property owners.
In the United States, the pandemic took its toll on small to mid-sized enterprises and industry giants alike. Washington’s Marriott Wardman Park was forced to close its doors, followed by multiple properties across the country owned by Eagle Hospitality Real Estate Investment Trust.
Lessons learned during the pandemic
In January 2022, the European Environment Agency published a report entitled Covid-19: Lessons for Sustainability, as part of its Narratives for Change series. The report explores the diversity of ideas required to help European societies on the road towards sustainability, fulfilling the goals of the European Green Deal. The report also reflects on lessons learned during the pandemic, identifying how these lessons can be applied for sustainability, and how societies can be governed in a way that respects planetary health as a precondition for both economic and human prosperity. The report cites Covid-19 as a “late lesson” against environmental degradation increasing the risk of pandemics. However, it cites the pandemic as an important teachable moment in terms of highlighting the immense power of collective action triggered by a perceived emergency.
In its September 2022 report, UNWTO’s panel of tourism experts showed cautious optimism regarding the future of the tourism industry. Although the current global economic climate has reversed prospects for a return of pre-pandemic levels of tourism in the near term, 61% of experts anticipated a return of international arrivals to 2019 levels in 2024, citing the main impediments to the industry as the economic environment, with spikes in oil prices and rising inflation pushing up transport and accommodation costs.
Data from HSMAI Global indicates that trends lingering from Covid-19 include a shift in interest away from cities, with a sustained uptick in bookings for suburban destinations. There has also been a widespread shortening of booking windows compared with pre-pandemic travel, and a far higher proportion of people traveling for leisure purposes rather than for business.
Tourism industry ripe for transformation
Some industry experts surmise that the tourism industry is ripe for transformation. With hugely successful vaccination programs implemented in countries all over the world, Covid cases have been driven down, and virtually all international borders have reopened. Experts from the World Economic Forum suggest that a new age of international travel might be on the horizon.
One McKinsey survey reveals that travel is the second most desirable activity for US citizens today, after eating out. The travel and hospitality industry may well be on the verge of its biggest boom in modern history. However, if the sector and its key players fail to prepare, it could buckle under the pressure.
Investing in digital innovation, building capacity, and revisiting commercial approaches are all important priorities for countries that wish to seize value from this surge. Although the emergence of Covid-19 variants in the future could create stumbling blocks, by and large, travelers are taking to the skies in increasing numbers. After all of the rules, restrictions, and curtailment of freedoms arising from Covid, many people just want to escape the confines of their homes and countries. In the wake of the pandemic, people seek to reconnect, revisiting their favorite destinations, or exploring new ones.
