Despite recent improvements, the report warned that demand for travel could be further affected by “uneven vaccination rates around the world and new COVID-19 strains which had prompted new travel restrictions in some countries
The coronavirus pandemic will likely cost the global tourism sector $2 trillion in lost revenue in 2021, the UN’s tourism body said Monday, calling the sector’s recovery “fragile” and “slow.”
According to the latest forecast by the United Nations World Tourism Organization (UNWTO), the same amount was lost in 2020, making it one of the sectors hit hardest by the health crisis.
Despite recent improvements, the report warned that demand for travel could be further affected by “uneven vaccination rates around the world and new COVID-19 strains which had prompted new travel restrictions in some countries.
In the past few days, the emergence of the Omicron variant has led dozens of countries to reinstate restrictions on arrivals, or to delay relaxation in COVID-19 travel and testing rules, leading to wide uncertainty for holiday season travellers worldwide.
Spikes in oil prices and the disruption of global supply chains have also had an effect. According to the latest UNWTO data, international tourist arrivals are expected to remain 70-75 per cent below 2019 levels in 2021, a similar decline as in 2020.
‘We cannot let our guard down’
Although a 58 per cent increase in tourist arrivals was registered in July-September of this year compared to the same period in 2020, this remained 64 per cent below 2019 levels, the UN body found.
In August and September, arrivals were at 63 per cent lower than 2019, which is the highest monthly result since the start of the coronavirus pandemic. Between January and September 2021, worldwide international tourist arrivals stood at 20 per cent lower, compared to 2020, a clear improvement from the 54 per cent drop, over the first six months of the year.
“Data for the third quarter of 2021 is encouraging,” UNWTO Secretary-General Zurab Pololikashvili said. “However, arrivals are still 76 per cent below pre-pandemic levels and results across the different global regions remain uneven.”
In light of the rising cases and the emergence of new variants, he added that “we cannot let our guard down and need to continue our efforts to ensure equal access to vaccinations, coordinate travel procedures, make use of digital vaccination certificates to facilitate mobility, and continue to support the sector.”
Airlines are scrambling to limit the impact of the latest coronavirus variant on their networks, while delays in bookings are threatening an already-fragile recovery for global tourism.
Shares in airlines performed better on Monday following a sharp sell-off Friday on the discovery of the Omicron coronavirus variant.
The latest outbreak, first reported in southern Africa, dealt a blow to the industry just as it had recovery in its sights, especially following the easing of U.S.-bound travel.
Multiple countries including Japan, the United States, Britain and Israel have imposed travel curbs in order to slow the spread of the new variant. read more
“The hope for U.S. and European carriers had been that opening the Atlantic would allow them to operate long-haul routes on a cash-positive basis, but border restrictions make it even harder to get the demand in,” said James Halstead, managing partner at consultancy Aviation Strategy.
A pickup in long-haul traffic is seen critical for many carriers, which have been left with severely strained balance sheets following the plunge in air travel last year.
Southern Africa accounts for only a tiny portion of the world’s international travel, but sudden border restrictions and route suspensions have left some carriers with an uncertain future.
Spain’s Air Europa, caught in a months-long acquisition process by IAG-owned (ICAG.L) rival Iberia, which British and European regulators have so far been loath to approve, is especially vulnerable to renewed travel curbs. read more
President Joe Biden said while the restrictions were needed to give the United States time to get more people vaccinated, he did not anticipate the need for additional curbs.
But Willie Walsh, head of global airlines industry body IATA, called the restrictions a “knee-jerk reaction.” In an interview with BBC Radio, he urged authorities to institute “sensible” testing regimes and avoid measures that have caused “massive” financial damage to the industry in the past.
“This virus cannot be beaten in the way some of these measures would have people believe,” said Walsh. “We have to adjust. We have to take sensible measures.”
Rising COVID-19 cases as well as the new border restrictions have prompted analysts to adjust their outlook for the industry. Analysts at HSBC, for example, expect the industry’s recovery would be pushed back by a year.
It is a setback for companies including the interconnecting Gulf carriers and Lufthansa (LHAG.DE), which depends heavily on transit traffic at its Frankfurt base, analysts said.
Big carriers acted swiftly to protect their hubs by curbing passenger travel from southern Africa, fearing that the spread of the new variant would trigger restrictions from other destinations beyond the immediately affected regions, industry sources said.
Singapore deferred plans to open its borders to vaccinated travellers from the United Arab Emirates, Qatar and Saudi Arabia because those countries are transit hubs for African travel.
Singapore Airlines (SIAL.SI) said it had converted some of its flights to Johannesburg and Cape Town to cargo-only.
Qatar Airways said it would no longer accept passengers travelling from five southern African countries, but would fly passengers to those countries in line with current restrictions.
In the United States, United Airlines (UAL.O) and Delta Air Lines (DAL.N) are the only passenger carriers with direct flights to the region. Both airlines said on Monday they have not made any adjustments to their flight schedules.
Delta said it is offering fare difference waivers to customers looking to change travel to, from or through South Africa, Israel and Japan. Both Israel and Japan have banned the entry of foreign travellers.
Concerns have also been raised about future bookings.
Some Australian travellers booked through Flight Centre Travel Group Ltd (FLT.AX) have cancelled or delayed trips amid new requirements for arrivals to isolate at home or a hotel for 72 hours while awaiting the results of a COVID-19 test, a spokesperson for the travel agency said. read more
In Germany, DER Touristik said that after very positive bookings at the beginning of autumn it had seen a reluctance to book, including for southern African destinations.
Some companies seemed exasperated by the latest threat to business-as-usual.
“It’s too early to make any predictions,” a spokesperson for Spanish carrier Iberia said. “As for contingency plans, do the flexibility and capacity to adapt that we have demonstrated throughout the pandemic seem insignificant to you?”
Despite the improvement seen in the third quarter of the year, the pace of recovery remains slow and uneven across world regions.
In some sub-regions, such as Southern and Mediterranean Europe, the Caribbean, North and Central America, arrivals actually rose above 2020 levels in the first nine months of 2021.
However, arrivals in Asia and the Pacific were down by as much as 95 per cent when compared with 2019, as many destinations remained closed to non-essential travel.
Africa and the Middle East recorded 74 per cent and 81 per cent drops respectively in the third quarter compared to 2019. Among the larger destinations, Croatia, Mexico and Turkey showed the strongest recovery in the period of July to September.
The Caribbean had the highest results of any of the subregions defined by the UNWTO, with arrivals up 55 per cent compared to 2020.
International tourist arrivals “rebounded” during the summer season in the Northern Hemisphere thanks to increased travel confidence, rapid vaccination and the easing of entry restrictions in many nations.
In Europe, the EU Digital Covid Certificate has helped facilitate free movement within the European Union, the report added.