"Save the Tourism Industry" European and Other Tourist Countries Welcome Guests, but... Outlook Remains Pessimistic

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Countries that have relied on tourism revenue are taking a direct hit due to the spread of the novel coronavirus infection (COVID-19). Although the downturn in the tourism industry is exacerbating economic crises in Europe and emerging countries, pessimistic forecasts are gaining traction that tourism demand will not increase for the time being, as the spread continues in the absence of a COVID-19 vaccine.

According to CNN and others on the 13th (local time), the European Union (EU) Commission recommended the gradual lifting of internal border controls and travel restrictions and announced guidelines for the resumption of tourism. The Commission proposed measures such as wearing masks on public transportation, limiting the number of passengers, and restricting the number of customers in hotels and restaurants as part of a phased lifting of restrictions to prevent the spread of COVID-19. Although the actual lifting of restrictions is a matter for each government to decide, it appears that the EU issued these guidelines considering member states with a high proportion of tourism.

The EU Commission’s initiative to revive the tourism industry alongside the gradual easing of lockdown measures is due to the industry's significant share in the economy. Tourism accounts for 10% of the EU’s total gross domestic product (GDP). According to the World Tourism Organization (UNWTO), 51% of global travelers’ destinations in 2018 were in Europe.

The Greek Tourism Confederation forecasted that its tourism sector would earn only 30% of the revenue it made last year due to the impact of COVID-19 this year, expressing concerns about the ripple effects on the economy. Tourism accounts for 20% of Greece’s GDP. Hotel occupancy rates in Athens, Greece, where COVID-19 has spread, reportedly dropped sharply to around 10% in March compared to 60-70% a year earlier.

In addition, EU member states with a high proportion of tourism such as Italy, Portugal, Spain, and Austria are struggling due to COVID-19 containment measures centered on movement restrictions. Margrethe Vestager, Vice President of the EU Commission, said, "This will be an opportunity for a better season for many Europeans who depend on tourism for their livelihood and those who want to travel this summer."

The tourism industry expects a loss of more than 100 million jobs this year. Germany’s TUI (Touristik Union International), the world’s largest travel company, announced on the same day that it would cut 8,000 employees, calling it "the biggest crisis in tourism." The World Travel & Tourism Council (WTTC) predicted earlier this month that losses amounting to $2.7 trillion would occur in the tourism industry, which accounts for about 10% of global GDP, due to overseas travel restrictions and bans, and this forecast is becoming a reality. TUI said it is preparing trips to some countries such as Croatia and Greece and expects to resume operations in July.

Outside Europe, small island developing countries highly dependent on tourism, such as the Maldives and Seychelles, are also expected to be severely affected. The International Monetary Fund (IMF) revised its forecast for the Maldives’ GDP this year from an initial 6% growth to an 8% decline following the COVID-19 outbreak. The Maldives government plans to open its borders and welcome tourists in July. Macau, known as the "city of casinos," also saw casino revenues drop by more than 90% year-on-year last month.

Although governments around the world have begun to resume economic activities, the outlook is not very bright. The International Air Transport Association (IATA) predicted in a report on the same day that air travel demand would not return to pre-COVID-19 levels until 2023. This analysis is based on the scenario that the domestic market will begin to recover in earnest in the third quarter, while the international market will recover gradually at a slow pace. IATA forecasted that passenger traffic next year will decrease by 24% compared to last year. Credit rating agency Fitch also projected that hotel room occupancy in Europe will decrease by 60% this year and that recovery will be difficult at least until 2023.

This content was produced with the assistance of AI translation services.