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Impact of Covid-19 on the Travel and Tourism Industry

Travel and tourism are some of the sectors most affected by the pandemic COVID-19. As per the latest report prepared by UNWTO, there seemed to be a fall of 84% in the number of international tourist arrivals between March and December 2020 compared with 2019. This article furnishes the prospective economic effects of the decline in tourism in 2021 as predicted by projections of tourist arrivals. Almost every government has implemented some form of travel restriction, such as visa restrictions, travel bans, or quarantines (UNWTO, 2020). During April and May 2020, tourism at the international level was put up completely. Between January and December 2020, the penetrating arrival of tourists has fallen by 74 %. North-East Asia, South-East Asia, Oceania, North Africa, and South Asia are the severely impacted regions. North America, Western Europe, and the Caribbean are the least impacted regions.

Tourism experts don’t contemplate a return to the pre-COVID arrival of tourists until 2023 or later (UNWTO, 2021b). Practically half of the experts probed to return to 2019 levels in 2024 or later (UNWTO, 2021c). Domestic traveling has enhanced, but it has a lesser impact to benefit developing economies that are based on international traveling.

The implied effects are essential. A decline in sales of tourists makes a 2.5 times loss in real GDP on average as there is a lack of stimulus packages. There are three scenarios depicted below that are consistent with UNWTO’s (2021b) prediction for 2021.

  • The first scenario is a fall in the arrival of tourists as depicted in 2020. The mean reduction is approximately a 75% fall in UNWTO’s pessimistic layout.
  • The second scenario is a fall in arrivals of tourists averaging 63% which the UNWTO looks at as a potential opportunity or optimistic result in 2021.
  • The third scenario describes different rates of immunization and assumes a 75% fall in nations with lesser immunization rates, and a 37% fall in nations with relatively high rates(ETH Zurich KOF Economic Forecast, 2021).

After considering three sides of this pandemic, one optimistic, one pessimistic, and one where the uneven speed of vaccinations is taken into account, the economic losses could range between dollar 1.7 trillion and dollar 2.4 trillion in 2021.

Impact on job opportunities: There is an unparalleled rise in unemployment, especially disguised, which is the main feature of this pandemic COVID-19. ILO (2013) pointed out that tourism often gives out the first entry path into work to women, youths, migrant laborers, and rural people. ILO (2017) states that a majority of tourism laborers are under 35 years of age. Women’s work in the tourism industry is influenced by long working duration, sub-contracting, flexible working conditions, informality through high staff turnover, seasonal changes in jobs, and the presence of temporary laborers as per (UNWTO 2019) report. Causal, low-skilled, temporary laborers are the first to be displaced and they find it difficult to search for job opportunities in other fields of the country. Job losses and wage effects are the highest in nations that are dependent on tourism. Wage effects can disseminate across nations as there are chances of mobility of laborers.

What could nations do to lessen the negative impacts of the lack of international tourism during and after the COVID-19 pandemic?

Securing people and creating a healthy travel and tourism sector is an essential task first of all. Suitable social security can seem to lessen the bad impact of the pandemic COVID-19. Temporary and independent laborers are customary in the travel and tourism sector and need to be protected where required. The government should help these laborers. The regaining of some undertakings is doubtful, wage assistance should be outlined to protect the laborer’s proceed to new undertakings. Government can also provide incentives for travel and tourism undertakings, such as airlines and hotels, that may otherwise go insolvent. One method for fiscal comfort is loaning at a lower rate or grants. As aid is required crucially, it needs an introspection of the cost-benefit of support to particular sectors.

The present pandemic is wreaking havoc on the tourism industry. According to the UNWTO (2021a), 100 to 120 million direct tourist employment is at risk. Taking into account the impact on closely related industries, the decline in international arrivals is expected to result in a $2.4 trillion loss in GDP in 2020, with a similar loss conceivable this year. Even in more optimistic scenarios for this year, such as a larger tourism return in the second half, a loss of $1.7 to 1.8 trillion is projected compared to 2019 levels. The uptake of vaccines, the removal and coordination of travel restrictions among countries, and the rebuilding of passengers’ confidence will all play a role in the recovery.

There are three major policy dimensions to consider.

First, resurrect tourism, even in poor countries. Much needs to be done to regain the trust of travellers who are worried about their health and the environment. Vaccinations appear to be the most essential factor.

Second, minimizing the socioeconomic repercussions for people’s livelihoods is important. To help tourism businesses and workers, developed countries have utilized fiscal measures.

Third, countries must make strategic choices about the future of tourism in their respective country. Even if travel restrictions are lifted, some tourism enterprises will fail. Governments must choose which initiatives to support and for how long. The pandemic’s long-term consequences must be evaluated. Some structural changes will likely be required. COVID-19 seems to stay here for a long time. A return to normalcy before 2023 appears to be a long shot.


Dr. Shubhi Agarwal

Assistant Professor, Department of Economics, Dyal Singh College, University of Delhi

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