Taking a snapshot of tourism losses is difficult, as the data changes as quickly as the virus spreads. In terms of impact and losses no country has incurred more than America.
If the pandemic continues for several more months, a global loss of 75 million jobs and $2.1 trillion in revenue is likely. This is projected by World Travel and Tourism Council, the trade group representing major global travel companies.
“The impact on travel is six or seven times greater than the 9/11 attacks,” says Roger Dow, president and CEO of the U.S. Travel Association, which encourages travel to and within the country and represents an industry that generates $2.6 trillion in economic output and supports 15.8 million jobs in the U.S.
With so much at stake, Congress passed a $2 trillion stimulus package that couldn’t have come at a more urgent time. The focus is to help those unemployed and to support businesses large and small.
Much of the tourism industry built its financial strategy around a trouble-free future, planning for eternal blue skies: open borders; high tourism demand, an $8 trillion industry that defies the ups and downs of the market.
On average, international carriers, including Delta and United Airlines, had less than two months of cash on hand to cover expenses before the coronavirus hit, according to the International Air Transport Association (IATA).
With much of its fleet grounded, the airlines’ projected revenue losses could climb to more than $250 billion.
Airlines could benefit from several provisions of the stimulus: $425 billion from the Federal Reserve for distressed industries; $75 billion in loans, and $25 billion in direct grants, with the government taking a stake in the companies.
Much of the money is conditional — it can’t be used for corporations to buy back stocks, a practice that led many companies to be short of cash.
The bailout comes on the heels of a $100 million bill Congress passed weeks before, which provides increased unemployment insurance, paid sick leave, extended food assistance and free testing for the virus.
The lodging sector — which has suffered as much as transport, with companies such as Marriott losing as much as 75 per cent in revenue —is also a big recipient of the bailout.
Hotels (and restaurants) can benefit from the $350 billion lending programme for small businesses and from a small adjustment to federal tax law that could save them as much as $15 billion.
Cruises have become beleaguered poster children of the pandemic as news stories chronicle the plight of ships carrying infected passengers.
In March, the Centre for Disease Control and the State Department told Americans to stop taking cruises and published a detailed explanation why those ships increase the virus’s risk and impact.
The effect on the cruise business has been swift. Companies have lost $750 million in revenue since January, according to reports. Shares of the big fish—Royal Caribbean, Carnival, and Norwegian — have dropped by 60 to 70 per cent.
Future losses will mount, and it’s likely that sailings will be postponed at least until July or August. Unlike the airlines and hotels, cruise companies aren’t eligible for the $500 billion in aid because they don’t count as American enterprises.
All hope is not lost though. China, where the pandemic began, offers a glimpse into the future. Now that the pandemic is reportedly under control there and restrictions are being lifted, there are early signs of recovery.
Hotel bookings in China have increased by 40 per cent the first week in March, according to Bloomberg, while peak daily flights rose 230 per cent from the previous (albeit disastrous) month.
Arne Sorenson, CEO of Marriott, says he’s seen initial improvement in his company’s properties in China. In several surveys the domestic industry says it’s planning for a recovery of 70 per cent over the next six months. But that recovery largely rests on domestic tourism, with China severely limiting foreign visitors to ensure the virus doesn’t resurface.
The United States isn’t following China’s trajectory, so the comparison may be more hopeful than realistic. Still, the U.S. Travel Association’s Dow remains optimistic.
Economists, though, are warning that few industries, let alone travel, will return to normal anytime soon.
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