History shows the travel and tourism sector will not only survive a global crisis like the coronavirus, but thrive in the aftermath.
With airline sales plummeting, hotels emptying, and events being canceled as concerns over the coronavirus (COVID-19) continue to grow, things look bleak for the travel industry.
In an attempt to contain the spread, many countries have implemented stringent travel restrictions. The World Travel and Tourism Council (WTTC) predicts that up to 50 million travel and tourism jobs could be lost and warns the travel industry could ultimately shrink by up to 25%.
Flight carriers alone are slated to lose $113 billion in sales if the pandemic continues. The hotel industry, cruise lines, and travel influencers are also bracing for impact. There is no denying that the effects of this global pandemic will be severe.
But even amid this time of fear and uncertainty, travel experts are confident—and history confirms—that the travel sector will bounce back. As WTTC chief executive Gloria Guevara told the BBC, “Travel and tourism have the strength to overcome this challenge and will emerge stronger.”
The coronavirus pandemic may be unprecedented, but we have been in similar circumstances before. From 9/11 to SARS to the swine flu, the travel industry has not just survived many global crises, but has thrived in the aftermath.
The global travel and tourism sector is vital to the world’s economy, contributing $8.8 trillion to the global economy and creating 319 million jobs in 2018.
Considering the importance of travel in both our economy and our lives, the world always learns from shocks to the system and emerges stronger. Below we’ve look at the decline and resurgence of the travel industry during three major global crises events:
9/11 Terrorist Attack
In terms of immediate impact on the travel industry, few events in recent history could compete with the 9/11 terrorist strike on the United States.
The airline industry, in particular, was brought to its knees because commercial planes were used as weapons in the attacks. The entire month of September 2001 saw a 31.6% drop in travel volume compared to the previous year.
Though the recovery was perhaps the slowest of the three events discussed in this article, we saw the travel sector not only endure but flourish in the years after the attacks.
It took five years for the number of international visitors to the U.S. to surpass pre-9/11 levels, but subsequent efforts to streamline visa and entry procedures resulted in a surge in foreign visits—from 54 million in 2009 to 75 million in 2014.
Meanwhile, globally, modern aircraft has a near-unprecedented high load factor of over 84%, and air travel is forecasted to double by 2035.
It was 2002 when a mysterious type of pneumonia known as SARS (Severe Acute Respiratory Syndrome, also a type of coronavirus) began spreading through China and Southeast Asia.
On March 12, the World Health Organization (WHO) released a global travel advisory that caused travel to these regions to plunge.
However, the outbreak was contained by July that same year. By 2004, air traffic had resumed to pre-SARS levels. The following years saw the country grow into the second-largest air travel market in the globe.
The recovery has been so strong that the International Air Transport Associated predicted in 2018 that China will overtake the U.S. as the world’s largest air travel market by 2025.
SARS may have been disastrous to the industry, but the economic recovery over the last two decades demonstrated that panic was no more than a blip on the long-term trend of tourism industry growth.
Swine Flu & Economic Crisis
With the world already in economic recession, the swine flu (H1N1 influenza) couldn’t have hit at a more unfortunate time. Even before the flu pandemic broke out, the international airline industry was expected to lose $4.7 billion in 2009.
The Obama Administration declared the swine flu a national emergency in April of that year, and authorities warned that the outbreak would paralyze travel.
Mexico, in particular, was hit hard. The country lost millions of dollars in revenue, and hotel occupancy fell by 50% in coastal destinations and mainland cities.
Because tourism plays a bigger role in the Mexican economy than it does in China, the effects were more damaging. But while the impact of the swine flu on tourism was hard on Mexico, it was short-lived.
In May, the Mexican government introduced initiatives to support the hotel, restaurant, and leisure sectors and launched a campaign to promote top Mexican destinations. Their efforts were by all accounts successful—today, Mexico is a top global destination that drew 41.4 million international visitors in 2018.
Learning From the Past
Regardless of the outcome of the coronavirus outbreak, history shows the panic will subside, and the travel industry will recover. In fact, the coronavirus recovery is expected to be even more immediate—perhaps the fastest in history.
Consider China, where travel rates are already soaring as panic subsides. According to a statement from Chinese travel company Tongcheng-Elong Holdings Ltd., domestic flight bookings have risen a whopping 230% during the last week of February compared to the week before.
Similarly, hotel bookings in that same week rose 40%. The company predicts that 90% of hotels will be operating again in major Chinese cities by the end of the month.
Tourism rates across the rest of the world will likely follow China’s lead. As research from the WTTC shows, the global travel and tourism sector is stronger than ever.
According to their 2019 report, the industry’s average recovery time after a crisis dropped from 26 months in 2001 to 10 months in 2018. In addition, average recovery times for natural disasters and disease outbreaks have dropped to averages of 16.2 months and 19.4 months, respectively.
This chart shows the effect of past global crises and the resilience of the travel industry:
And it’s not just the travel industry that is likely to make a quick bounceback from the coronavirus outbreak.
This chart shows how quickly the stock market has rebounded during previous times of financial crisis:
With history as our guide, we believe the recovery of the travel industry and the world economy as a whole after the coronavirus pandemic could be the fastest in history.
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