The U.S. seems to suffer from chronic Nothing Works Syndrome.
By Derek Thompson The Atlantic June 26th 2022
“The very first symptom of the general collapse was an old one: nothing worked.” The sentiment is old—it comes from Doris Lessing’s 1969 novel, The Four-Gated City—but it’s hard to think of a better epitaph for the economic vibes of 2022. From the oil markets to the baby-formula markets to the general sense of safety and disorder, the U.S. seems to suffer from chronic Nothing Works Syndrome.
The latest victim of acute NWS is air travel. Around the world, security lines are getting brutally long and cancellations and delays are spiking. The major carriers JetBlue, American Airlines, and Delta canceled nearly 10 percent of their flights last weekend, creating mayhem at major airports.
In an interview for my podcast Plain English, I spoke with Scott Keyes, the founder of the Scott’s Cheap Flights newsletter, about why air travel has been such a mess this summer. This transcript has been edited and condensed.
Derek Thompson: Scott, what’s happening and why?
Scott Keyes: The amount of turmoil in the airline industry over the past two years is unlike anything we’ve ever seen in travel. The 9/11 attacks caused a 7 percent drop in overall travel. But 2020 travel was down 70 percent. Airlines were worried about surviving. That meant laying off staff, shedding pilots, selling airplanes, and retiring aircraft. Now, as travel rebounds, we are paying the price.
Delta shed 30 percent of their employees—almost 30,000 people cut from their staff. American Airlines laid off 30 percent of their staff, through buyouts, early retirements, or otherwise. Airlines were trying to become as lean as possible to reduce those operating expenses with the anticipation that they were not going to be making much money. They also retired older planes.
Those decisions certainly helped improve the balance sheet throughout 2020. But would they have made the same call if they had known how quickly travel demand would rebound? Almost certainly not. They assumed that this was going to be a six-year recovery period, not an 18-month recovery period. So when travel demand started rebounding much quicker than they anticipated, the airlines were caught flat-footed.
Thompson: Why is it taking so long to adjust? Why is it so hard to hire pilots or bring back more airplanes?
Keyes: Being a pilot is not an entry-level job. It takes years of training. There are many regulatory requirements, like a mandatory retirement age for pilots: 65 years old. There are mandatory training requirements for U.S.-based pilots. They have to fly 1,500 hours before they’re allowed to pilot those commercial planes.
Similarly, Boeing doesn’t have tons of 787s or 737s sitting in a warehouse waiting for airlines to come pick them up. There’s a years-long delay in a manufacturing process plagued with supply-chain disruptions, just like so many other parts of the economy.
Thompson: The industry is so woefully understaffed that whenever there’s a storm, or a pilot who calls in sick, there’s no redundancy or resiliency in the system, and you get these cascading cancellations. But wasn’t it obvious 18 months ago that we’d have vaccines? Wasn’t it obvious six months ago that Americans wanted to get out of the house? Why is all this mayhem happening now?
Keyes: There’s a labor-supply issue, not just for airlines but also the TSA. If you live in Milwaukee and you’re looking for an entry-level job, you could become a transportation security officer for $19.41 an hour, or you could go on Amazon’s website and see that there’s a job in the area for $19.50. Would you rather help load and unload bags outside in the dead of winter in Milwaukee, or work in a climate-controlled environment in a warehouse for Amazon? That’s the trade-off a lot of folks are making. Labor shortages cause delays and cancellations. In normal times, airlines might have a reserve crew of pilots or flight attendants that they can call in. But now there is not the reserve in place to bridge the gap. The result is a huge swath of delays and cancellations.
Thompson: Laurie Garrow, a professor at Georgia Tech, directed me to FlightAware, a website that tracks airline-industry statistics. On any given day, it seems normal to have a cancellation rate of about 1 percent—or one cancellation for every 100 scheduled flights. Last Thursday, JetBlue canceled 14 percent of its flights. Last Thursday and Friday, American canceled 10 percent of its flights. On Friday, Saturday, Sunday, Delta canceled 8 percent of its flights. Meanwhile, Frontier and Spirit canceled just 1 percent of their flights in that time. Why are the major carriers having these major problems right now?
Keyes: Today’s airline that gloats about not having cancellations is tomorrow’s airline that’s experiencing a meltdown. I don’t want to pretend that Spirit and Frontier don’t experience meltdowns. They absolutely do. That said, a few factors can explain why we’re seeing higher rates of cancellations among legacy full-service airlines. First, many of the budget airlines like Spirit already trimmed their summer schedules when they realized they didn’t have enough pilots and crew to operate the schedule they had planned. The legacy full-service airlines can suffer sometimes from hubris.
Second, many of the legacy airlines have hubs in crowded corridors like New York, Chicago, and Boston, which can suffer from compounding cancellations when there’s a thunderstorm [which are more common in the summer]. Those cancellations beget more cancellations. A flight from JFK to Miami that gets canceled results in a further cancellation for that flight out of Miami.
Thompson: Has anything changed about air travelers? Are we doing something different in 2022 that is contributing to these delays?
Keyes: Leisure travel has fully rebounded, whereas business travel is still down 30 percent. Now, why does that matter? Because leisure travelers tend to be more inexperienced when it comes to travel. They need more support from the airlines handling their itinerary ahead of time. They might need more time going through security. They don’t remember to take their shoes off or to take their laptop out. When each person takes an extra 20 seconds, you multiply by 3,000 passengers, and these little micro events matter at scale.
Relatedly, the two airports with the biggest growth since the summer of 2019 are Miami, up 17 percent, and Las Vegas, up 10 percent. San Francisco is down 26 percent. Detroit is down 25 percent. Chicago O’Hare is down 18 percent. The business-heavy destinations are down, and the leisure destinations are up.
These changes have bigger knock-on effects for some airlines than others. Historically, the budget airlines have had the leisure traveler as their bread and butter. Spirit Airlines does not have a significant amount of business travel within its portfolio. Conversely, American Airlines and Delta make the most money from business travelers, who are up to seven times more profitable on a per-person basis. And they orient their entire operation around serving those business travelers and fly more to Chicago, San Francisco, and New York.
Because a pandemic came along that crushed business travel, Delta and American and United are now playing away games. The budget airlines have home-field advantage. And budget airlines have basically eaten all the growth over the past three years. Allegiant [flights] are up 17 percent since 2019. Spirit is 7 percent. Frontier is up 6 percent. Whereas Delta, United, American are down.
Thompson: To what extent do you think regulatory policy is making America’s airlines particularly fragile to the sort of problems we’re currently experiencing?
Keyes: One of the front-and-center issues discussed in the airline industry right now is this question of pilot training. Is 1,500 hours the proper amount of air time we should be expecting from pilots before we certify them to fly commercial jets? On the one hand, it’s easy to say, “You can’t be too careful.” Just imagine the attack ads if somebody votes to decrease the training requirement, and then all of a sudden there’s a crash. The optics are horrendous. On the other hand, the U.S. is a bit of an outlier. Most other countries do not require anything near this level of training ahead of being certified. The U.S. historically has not required that level of training. And we let foreign pilots fly to JFK and SFO and LAX without this requirement. All that said, there’s still no quick overnight fix that will immediately get you more flights, more pilots, and a greater supply of air travel. Certainly not for this summer.
Thompson: So when does this end? When can we expect traveling to feel more normal?
Keyes: Cheap flights aren’t gone forever. They’re just gone for this summer. The rolling delays and cancellations you’re seeing are predominantly a side effect of the demand for travel right now. So many folks are making up for trips they haven’t been able to take over the past couple of years, and summer’s always the most popular time of year to travel. By mid-September and beyond, you have less people traveling. We’ll have more pilots and planes in reserve to be able to come in when there is a thunderstorm, or an IT meltdown. We’ll have more reserves to help prevent a catastrophic wave of cancellations and delays. So, bad news for the short term. Good news for the fall and beyond.
The huge reduction in global travelers has proved positive for many places in the world. Now some locations are either maintaining pre-existing limits on visitors or introducing new ones.
Whether the goal is to protect sensitive environments or provide a more enjoyable visitor experience, an increasing number of destinations around the world are limiting the number of visitors they welcome each day.
In some cases, these tourism caps have been around for more than a decade, in other cases, pandemic travel patterns have encouraged new restrictions to take effect. Regardless of when or why the visitor caps were put in place, having to work with them means spending a bit more time planning your trip, such as booking a timed-admission ticket months in advance then planning your entire trip around it. But, is that such a bad thing?
Visitation caps make for an inherently less flexible travel experience but as well as minimizing crowds and putting less strain on staff (which continue to be in short supply), limiting the number of visitors also helps to preserve and conserve natural resources.
If thousands of people were to descend on an ancient archeological site that can only support a few hundred visitors, impatient tourists might stray from designated paths and potentially trample sensitive areas or wander onto historically-significant ruins and artifacts. Staff would struggle to manage crowds and clean up the mounds of trash that would, no doubt, be produced, and the visitor experience would suffer due to long lines, cramped pathways, overflowing garbage cans, and overcrowded (and under-serviced) bathrooms.
Opting for lesser-known and off-the-beaten-path destinations is a great way to minimize overcrowding but, let’s be honest, some popular destinations just don’t have a less-visited alternative so if you want to explore them, you’ll have to work within the visitation cap restrictions. Here are a handful of alluring places to visit around the world that currently (and possibly indefinitely) impose tourism caps.
Glacier National Park, Montana, United States
As one of the most popular national parks in the United States, Glacier National Park has long suffered from over-tourism. Parking lots are often full by sunrise, some trails see more than 1,000 hikers a day, and entire areas of the park are temporarily restricted until traffic congestion clears up. As Americans who were unable or unwilling to travel abroad sought out outdoor spaces closer to home, Glacier saw an especially steep jump in the number of visitors during the COVID-19 pandemic. As a result, the country’s 10th national park imposed an online reservation system for the popular Going-to-the-Sun Road corridor during peak visitor season (late May to early September 2021).
Lord Howe Island, Australia
Rising from the Pacific some 370 miles northeast of Sydney, Australia, lies Lord Howe Island, part of a group of isolated islands born from volcanic activity that now appear on the UNESCO World Heritage list. This semi-tropical island is less than seven miles long and two miles wide, but the island’s status as a Marine Park, and the fact that nearly 75% of its land is classified as a Permanent Park Preserve, makes this protected piece of paradise perfect for nature and wildlife lovers. Rare flora and fauna blanket the island while the world’s most southerly coral reef encompasses surrounding waters. Tourism is the main industry supporting the island’s 400 residents, but a strict tourist cap allows only 400 visitors a night. The cap (which is equal to the number of available beds on the island) was put in place to protect the island's delicate ecosystem and is instrumental in conserving the high number of threatened and endemic species that have evolved to live in the area.
Machu Picchu, Peru
Often considered to be the poster child of over-tourism, Machu Picchu customarily received more than 4,000 visitors per day. When the site opened at 6am, there typically were hundreds of tourists already lined up at the gate, all attempting to be the first to enter. Tickets were issued as half-day admissions though the four-hour time restrictions weren’t strictly enforced so most visitors arrived early and stayed as long as they liked.
As a result of the COVID-19 pandemic, the site closed in March 2020, as did pretty much everything in the world. Four months later, Peruvian authorities decided that when the site re-opened, the number of daily visitors would be limited to 2,244 but it didn’t tackle the problem of everyone visiting at the same time (usually early in the morning). Now, a limited number of tickets are issued in time blocks so if you buy a ticket for 10am, you’re only allowed to enter between 10am-11am. Tickets often sell out several months in advance and are not available on-site so if you are planning to visit, it would be wise to confirm your admission ticket before booking your flight or accommodations.
Tourism to Antarctica was growing steadily until 2009, when the 28 nation members of the 50-year-old Antarctic Treaty decided to limit tourism in the region to protect the continent’s fragile eco-system. Changes included banning ships with more than 500 passengers from landing sites, restricting landings to one vessel at a time, limiting the number of passengers on shore to 100 at a time, and requiring at least one guide for each 20 visitors while ashore. Given the extremely harsh environment, the only way to get to Antarctica is to go with a tour operator or organization that has been approved by its national authorities, all of whom must comply with the new regulations. Given the visitation caps and requirements have a larger impact on the experience of visitors of large ships, if you want to be able to dock and explore on foot, your best bet is to book a trip on a small ship.
Officially the Republic of Seychelles, but better known simply as Seychelles, this archipelagic island country consists of 115 islands in the Indian Ocean, about 1,100 miles southeast of Somalia and northeast of Madagascar. In 2007, the country recognized the problems associated with its swelling number of visitors (which were up 10% over the previous year) and proposed to cap the number of visitors at 200,000 beginning in 2010. The primary motivation for the cap was concern for protecting the environment but it was unsuccessful and visitor numbers reached 250,000 by 2015. While the country has struggled to enforce visitor caps, it has already begun restricting the building of large hotel developments in favor of smaller, locally-run properties.
To “stop the city from becoming like Venice”, in 2015, Barcelona’s mayor introduced a cap on the number of tourists visiting the Catalan capital, which then hovered around 7.5 million annually. The mayor issued a temporary freeze on new developments while deciding which areas of the city could receive more tourists and imposed caps on groups visiting iconic places. La Boqueria market on La Rambla boulevard began limiting groups to no more than 15 people and Gaudi’s Park Güell, formerly free, began charging admission and limiting the number of visitors to 800 per day. Unlike other destinations, which typically impose tourism caps to preserve the environment and make for a better visitor experience, the main motivation behind Barcelona’s caps was a desire to improve the quality of life of residents, who, for years, had complained that tourists had taken over their city and made it unlivable.
By Cassandra Brooklyn, World Nomads.
Geneva - The International Air Transport Association (IATA) announced that air travel resumed its strong recovery trend in April, despite the war in Ukraine and travel restrictions in China. This was driven primarily by international demand.
Note: We have returned to year-on-year traffic comparisons, instead of comparisons with the 2019 period, unless otherwise noted. Owing to the low traffic base in 2021, some markets will show very high year-on-year growth rates, even if the size of these markets is still significantly smaller than they were in 2019.
Total demand for air travel in April 2022 (measured in revenue passenger kilometers or RPKs) was up 78.7% compared to April 2021 and slightly ahead of March 2022’s 76.0% year-over-year increase.
April domestic air travel was down 1.0% compared to the year-ago period, a reversal from the 10.6% demand rise in March. This was driven entirely by continuing strict travel restrictions in China, where domestic traffic was down 80.8% year-to-year. Overall, April domestic traffic was down 25.8% versus April 2019.
International RPKs rose 331.9% versus April 2021, an acceleration over the 289.9% rise in March 2022 compared to a year ago. Several route areas are actually above pre-pandemic levels, including Europe – Central America, Middle East – North America and North America – Central America. April 2022 international RPKs were down 43.4% compared to the same month in 2019.
“With the lifting of many border restrictions, we are seeing the long-expected surge in bookings as people seek to make up for two years of lost travel opportunities. April data is cause for optimism in almost all markets, except China, which continues to severely restrict travel. The experience of the rest of the world is demonstrating that increased travel is manageable with high levels of population immunity and the normal systems for disease surveillance. We hope that China can recognize this success soon and take its own steps towards normality,” said Willie Walsh, IATA’s Director General.
Air Passenger Market Detail - April 2022
International Passenger Markets
European carriers’ April international traffic rose 480.0% versus April 2021, substantially up over the 434.3% increase in March 2022 versus the same month in 2021. Capacity rose 233.5% and load factor climbed 33.7 percentage points to 79.4%.
Asia-Pacific airlines saw their April international traffic climb 290.8% compared to April 2021, significantly improved on the 197.2% gain registered in March 2022 versus March 2021. Capacity rose 88.6% and the load factor was up 34.6 percentage points to 66.8%, still the lowest among regions.
Middle Eastern airlines had a 265.0% demand rise in April compared to April 2021, bettering the 252.7% increase in March 2022, versus the same month in 2021. April capacity rose 101.0% versus the year-ago period, and load factor climbed 32.2 percentage points to 71.7%.
North American carriers’ April traffic rose 230.2% versus the 2021 period, slightly above the 227.9% rise in March 2022 compared to March 2021. Capacity rose 98.5%, and load factor climbed 31.6 percentage points to 79.3%.
Latin American airlines experienced a 263.2% rise in April traffic, compared to the same month in 2021, exceeding the 241.2% rise in March 2022 over March 2021. April capacity rose 189.1% and load factor increased 16.8 percentage points to 82.3%, which easily was the highest load factor among the regions for the 19th consecutive month.
African airlines’ traffic rose 116.2% in April 2022 versus a year ago, an acceleration over the 93.3% year-over-year increase recorded in March 2022. April 2022 capacity was up 65.7% and load factor climbed 15.7 percentage points to 67.3%.
Domestic Passenger Markets
Australia’s domestic demand rose 47.5% compared to April 2021, an improvement over the 36.5% rise in March traffic, owing to the lifting of travel restrictions and rising consumer confidence.
Japan likewise saw monthly gains, with domestic RPKs up 57.0% year-over-year, up from a 46.5% rise in March 2022 compared to March 2021.
2022 vs 2019
Total April passenger demand was down 37.2% compared to the same month in 2019, which is an improvement compared to the 41.3% decline for March 2022 versus March 2019.
Air Passenger Market Detail 2022 vs 2019
The Bottom Line
“With the northern summer travel season now upon us, two things are clear: two-years of border restrictions have not weakened the desire for the freedom to travel. Where it is permitted, demand rapidly is returning to pre-COVID levels. However, it is also evident that the failings in how governments managed the pandemic have continued into the recovery. With governments making U-turns and policy changes there was uncertainty until the last minute, leaving little time to restart an industry that was largely dormant for two years. It is no wonder that we are seeing operational delays in some locations. In those few locations where these problems are recurring, solutions need to be found so passengers can travel with confidence.
“In less than two weeks, leaders of the global aviation community will gather in Doha at the 78th IATA Annual General Meeting (AGM) and World Air Transport Summit. This year’s AGM will take place as a wholly in-person event for the first time since 2019. It should send a strong signal that it is time for governments to lift any remaining restrictions and requirements and prepare for an enthusiastic response by consumers who are voting with their feet for a full restoration of their right to travel,” said Walsh.
Navnesh Reddy | The Fiji Times | 31 May, 2022
The Tourism Fiji Corporate Plan 2022-2024 outlines our target of reaching visitor expenditure of $3 billion by the end of 2024.
This was the comment made by Tourism Fiji chief executive officer Brent Hill during the media launch of the two-year road map document in Nadi yesterday.
“Our tourism industry is the heartbeat of the Fijian economy, and we strongly believe that our Corporate Plan gives us a clear vision to work collectively in order to achieve our goals,” he said.
Mr. Hill said the plan would also outline Tourism Fiji’s strategic priorities and would guide them over the next two years.
“It will prompt us to work more sustainably, channel our resources towards the right goals and challenge our team to go the extra mile for our tourism industry and more importantly for Fiji.”
He said the plan and its execution are undermined by the many hundreds of tourism businesses promoting the sector and promoting our country’s unique beauty and depth of experiences we could offer.
Mr. Hill also acknowledged the Pacific Private Sector Development Initiative (PSDI) which funded the Corporate Plan.
PSDI Tourism Expert Sara Currie said, “ADB’s PSDI welcomed the opportunity to work with Tourism Fiji to set targets and goals for the next two years ahead, as Fiji recovered from COVID-19.” she said.
The Corporate Plan document was also yesterday shared with industry stakeholders, media and representatives organizations, who according to Tourism Fiji were consulted and had provided data for the plan.
For a copy of the full plan click below
Luxury travel market could see growth in 2022 as COVID-19 has spurred new consumer trends, says GlobalData
Vicky Karantzavelou | Travel Daily News | 31 May 2022
Despite the demand for luxury travel, there is a growing demographic of socially conscious, high-net-worth consumers who are rejecting overt displays of wealth in favor of inconspicuous and responsible consumption. Their approach to luxury is driven by ethical living, artisanship, authenticity and sustainability.
In the luxury travel market, there has been an influx of consumer travel trends as a result of the COVID-19 pandemic. This includes a boom in private aviation services at the high end of the market, remote working from overseas locations and demand for private buyouts of large villas or boutique hotels, finds GlobalData.
The leading data and analytics company’s latest report, ‘Luxury Travel Market Trend and Analysis of Traveler Types, Key Destinations, Challenges and Opportunities, 2022 Update’ reveals that as luxury travellers resume travelling both domestically and abroad in the aftermath of the COVID-19 pandemic, they may begin to seek experiences that are more immersive and more exceptional than in previous years.
Hannah Free, Travel and Tourism Analyst at GlobalData, comments: “With travellers determined to make up for lost time, 2022 could see an increase in holiday budgets for luxury travellers, with an uptick in demand for ‘once in a lifetime’ adventures. According to a GlobalData poll*, when respondents were asked if their holiday budgets had changed due to COVID-19, 16% reported that their budgets were ‘a lot higher than pre-COVID-19’, while 12% of respondents stated that their budgets were ‘slightly higher than pre-COVID-19’.”
Despite the demand for luxury travel, there is a growing demographic of socially conscious, high-net-worth consumers who are rejecting overt displays of wealth in favor of inconspicuous and responsible consumption. Their approach to luxury is driven by ethical living, artisanship, authenticity and sustainability. Experience is the new currency for these holidaymakers, who seek self-fulfillment through greener travel and eco holidays, while wanting to ‘do good’ for people and the planet. If luxury travel brands ignore this trend, it could put them at tremendous risk of total disconnect with an audience who are looking for sustainable options.
Free concludes: “While COVID-19 has changed many aspects of luxury travel, there are still several defining features which sets the sector apart from mass market tourism. This includes hyper-personalization, exclusivity, unique experiences, intuitive service and the ever important ‘human touch’ element.”
*GlobalData poll – Ended on 17 Jan 2022 (428 Responses).
David Jessop | Caribbean Council | May 27 2022
After two lean years, Caribbean tourism is recovering. As travel restrictions are removed, there is widespread optimism about the coming summer and winter season.
Industry reports suggest that 2022 got off to a good start. The World Travel and Tourism Council, a body supported by major international travel companies, says that the region’s recovery is outpacing the rest of the world and that it expects Jamaica, the Dominican Republic, and Aruba to be among the Top 20 best-performing destinations anywhere.
However, a deeper dive and conversations with industry professionals suggest that the picture is mixed, the structure of the Caribbean market is changing, and new thinking may be required to ensure sustainability.
The view is that the present positive picture may prove difficult to repeat next year when post-pandemic traveller exuberance fades and present levels of excess disposable income and pent-up demand are tempered by a now near certain recession in the region’s main visitor markets.
Although arrivals figures produced by Aruba-based Tourism Analytics indicate that overall average recovery rate for Caribbean long-stay visitors in calendar year 2021 was equivalent to 54.4 per cent of the arrivals numbers recorded in 2019, its metrics and analysis indicate significant national variations.
Last year, three Caribbean destinations saw extraordinary levels of visitor recovery. This was either because as US destinations, they were largely exempt from United States public health protocols – Puerto Rico and the US Virgin Islands recorded, respectively, 103 per cent and 129 per cent recovery rates in arrivals over 2019 – or in the case of the Dominican Republic, its 77.5 per cent recovery arguably reflected pandemic-related entry requirements that were not particularly challenging.
The Turks & Caicos Islands, the Dutch-speaking Caribbean, Jamaica, Antigua, The Bahamas, and St Lucia also all showed an above-average return to pre-COVID arrival numbers.
However, elsewhere, the bounce-back in 2021 was slow, with Barbados, for example, experiencing only a 20 per cent recovery over 2019, Cuba 8.3 per cent, and The Cayman Islands just 3.0 per cent. These trends continued in the first quarter of 2022.
What these wide variations point to are country-specific factors. These range from the complexity and longevity of entry protocols, infection rates and travel advice in principal source markets, and Caribbean concerns about domestic vaccination and infection rates. Just as significantly, recovery rates also reflected a precipitate decline in US travel to Europe and Canada, with the big winners being US-oriented Caribbean markets and Mexico.
Most Caribbean destinations now hope to end 2022 in a much better place.
Jamaica’s Minister of Tourism, Edmund Bartlett, says he expects to see 3.2 million arrivals this year (2019: 4.3 million) and full recovery in 2024; Cuba, despite losing its significant Russian and Ukrainian market and being closed to US tourism, is hoping to receive some 2.5 million visitors (2019: 4.3 million); while Barbados’ Minister of Tourism and International Transport, Lisa Cummins, has predicted a ‘healthy’ 2022.
This, of course, is welcome news but should come with a warning.
The global impact of the war in Ukraine is leading to a near-certain recession in the region’s principal visitor markets as well as high levels of imported inflation, significant price increases across the industry, and a consequent reorientation in visitor demand. This will be damaging, particularly to those countries and enterprises that have just begun to repay significant levels of debt built up during the pandemic.
As currently configured, the tourism sector imports almost everything from food to cutlery and linen. Not only will global food shortages and surging energy prices drive up all hotel operating costs, but they will also put pressure on wages, making the Caribbean, an already expensive US dollar-denominated destination, less able to compete with other warm-water destinations that are hoping to replace lost Russian and Chinese clients with some of the region’s European and North American visitors.
In addition, airfares are likely to continue to rise. The global supply of oil and its derivatives has tightened because of sanctions. According to the International Air Transport Association, the cost of jet fuel is now nearly 149 per cent more than a year ago and will remain high going into 2023 at a time when carriers expect crew and equipment shortages to continue.
What this suggests is that as the recession and higher prices bite, the Caribbean market may fragment with high end properties continuing to benefit from rising demand among affluent leisure travellers, while many less prosperous United States, European, and Canadian citizens turn to lower-cost destinations such as the Dominican Republic and Cuba, or head for the Maldives and Thailand.
More fundamentally, as room rates and air fares rise, significant numbers of visitors are expected to turn to cruising, all-inclusive hotels, Airbnb types of accommodation, and villa rentals.
In Puerto Rico, demand for short-term rental accommodation is already surging. Elsewhere in the region, industry professionals suggest that clients are taking over large houses and villas in preference to globally branded properties, and according to Rick Sasso, the president and CEO of MSC Cruises, the cruise industry, especially in the Caribbean, is set to benefit from the growing disparity between lodging prices onshore and cruise pricing.
Jim Hepple, the managing director of Tourism Analytics, fears that the primary tourism conversation now under way in the Caribbean has become dominated by the recovery of 2019’s arrival numbers. He says that instead of creating a long-term sustainable industry, the conversation at the moment is about getting back to 2019 and is not about the kind of tourism the region wants moving forward or whether the tourist has changed and will want different things in the future.
“If the pandemic taught the Caribbean anything it was how vulnerable the region can be to external shocks. Governments and the private sector must sit down together to plan a sustainable future for the sector which plays to the region’s strengths and minimizes the impact of such exogenous variables,” he observes.
Despite the IDB, the OECD, and others producing reports on reshaping the post-pandemic Caribbean tourism economy, few in the sector, let alone among its external partners, have shown much interest in change or recognise the need to reform the Caribbean’s largely undiversified model, which remains little different from decades ago in terms of its source markets, offering, import leakages, and capital structure.
Change, however, may be under way. Minister Bartlett argues that the time has come for Jamaica to “repatriate sovereignty” in tourism. He wants to identify how the industry might better drive sustainable economic growth through product diversification, induce growth in productive capacity, and place greater emphasis on quality, human development, secure employment, and the contribution of tourism’s multitude of SMEs.
His counterparts in Barbados and St Lucia are of the same opinion.
- David Jessop is a consultant to the Caribbean Council. Email: firstname.lastname@example.org. To access previous columns, visit: www.caribbean-council.org/research-analysis
Growth in Cancún and Tulum highlights the country’s jump to the top of the global destination charts. Some question whether it can—or should—stay there.
By Maya Averbuch May 10, 2022
It’s 2 p.m. in the Mexican resort town of Tulum, and the beach club at the Ikal Hotel is heating up for its “ecstatic dance” session. Inside a thatch-roofed pavilion, a sweaty crowd bops to a “folktronica” track spun by a DJ whose next stop is Berlin. Down a set of wide stone steps, fit thirtysomethings smack volleyballs on a beach that smells of seaweed and sunscreen. A “treehouse” room will set you back $800 a night, and a bottle of Crémant de Bourgogne sparkling wine runs $110.
A decade ago, Tulum was a sleepy fishing village that served as a gateway to nearby Mayan ruins. These days it’s part of the international party circuit—marketed as a jungle paradise with really great nightlife. The town’s beach strip is lined with tony restaurants, designer clothing boutiques, and chalkboard ads for yoga classes and hand-poke tattoos. With its clubs, linen-clad models, and ample supplies of weed, ayahuasca, and cocaine, it’s the kind of place where “the hippies become millionaires and the millionaires become hippies,” says tour guide Hervé Pech.
Tulum and its older cousin Cancún, a two-hour drive up the coast, are in the midst of a boom. Tourism is 6% ahead of 2019, and airlines have scheduled 20% more seats on flights from the US this year than they had before the pandemic. Arrivals at Cancún International Airport surpassed 22 million last year, up 82% from 2020. In the past two years more than 16,000 new hotel rooms have been built in the state of Quintana Roo, which includes Cancún and Tulum. The expansion is evidence of—and is fueling—Mexico’s move up the global tourism charts. In 2019 the country was the seventh-most-visited destination; today it’s No. 1 or No. 2, depending on whom you listen to.
That’s largely because unlike almost everywhere else, Mexico never really shut down. Even as European capitals were requiring Covid-19 passes and PCR tests and the US largely barred travelers from dozens of countries, Mexico was quick to throw open its doors, no questions asked, no tests required. The government said tourism was such an important driver of the economy that Mexico could ill afford to close its borders. Poverty in Quintana Roo rose early in the pandemic and the state lost 97,000 jobs, but by June 2020 hotels were already opening up again. That December the governor tweeted that people should keep a safe distance to stop Covid—while boasting that Cancún was back to almost 500 flights a day.
For workers who had to wait tables, scrub toilets, and drive buses or taxis for all those visitors, it’s been a mixed blessing. Mexico’s biggest beach destinations circled in and out of the news as they suffered from coronavirus spikes presumably brought on by tourists. Roger Martín Moreno says he thinks he got the virus while handing out drinks and coffee on a tour bus. “It started with a fever, and little by little I started to be short of breath until I could only breathe lying down,” says the 34-year-old, who says at least two drivers from his agency died from Covid.
And there are growing concerns about the boom’s sustainability. The increasing numbers of visitors threaten the area’s signature freshwater caverns, called cenotes, as well as the largest barrier reef in the Western Hemisphere. Some fear Tulum could go the way of Acapulco, which in the mid-20th century became a glittering destination where Frank Sinatra escaped for a secret birthday, Elizabeth Taylor held her third wedding, and the Shah of Iran’s family holed up after the revolution. But the town suffered from unplanned, explosive growth and, later, drug crime. Today it’s one of the most dangerous places in a dangerous country. “When the drug-trafficking violence got bad, the international tourists fled,” says David Espino, author of Acapulco Killer: Chronicles of a Lost Paradise.
Cancún was intended to be the anti-Acapulco. The government in the 1960s designated the pristine stretch of sandy beach on the Caribbean coast as its next great resort destination, with specific areas for hotels, homes, and an international airport. Large swaths of land were set aside for conservation, streets and parks were laid out, and contractors installed modern electric and wastewater systems. But the city’s hinterlands—what’s come to be known as the Riviera Maya, stretching down to Tulum and beyond—didn’t get the same attention.
In Tulum only 15% of the buildings are connected to the sewage system, meaning tons of untreated waste ends up seeping into the groundwater, fouling the beaches, and killing the reef. Many hotels haven’t been connected to the electric grid, forcing them to use diesel generators. Construction workers from other states often build squatter camps on undeveloped land. A train line along the coast planned to open next year, as well as a local airport expected in 2024, will only add to the crowds. “It’s getting to a state of crisis because it’s grown so fast,” says Gonzalo Merediz, head of a local conservation group.
While the state government says it’s aiming for responsible development, divers say the cenotes are sometimes coated with gunk from nearby settlements and the sun creams that the tourists slather themselves in. That puts guides in a bind: Risk the health of the local environment—and the long-term economic benefits it offers—or be denied tips from customers angered when they’re told they can’t get in the water. “If the cenotes get contaminated, it won’t be worth it,” says diving instructor Alan Chuc.
And many visitors come for easy access to drugs, creating another set of problems. Gangs are engaged in a turf war in the area, which has fueled growing crime such as protection rackets that are hitting everyone from hotel owners to coconut sellers and bikini hawkers on the beaches. Since October, repeated shootings in the area have left alleged criminals and at least three tourists dead. In January two Canadians were murdered in nearby Playa del Carmen. In February two suspected dealers were gunned down in an upscale restaurant in Tulum, and in May a shootout in Cancún left one dead and six people injured.
Locals say police are quick to clean up after shootings to avoid spooking tourists, but not always quick enough. After a shootout in Tulum, one guest who happened to be nearby checked out immediately—in the middle of the night, recalls Samantha Raga, a former manager at a luxury hotel. “She said she didn’t care if she lost her deposit,” Raga says. “She grabbed her bags and left.”
24 May 2022 Zurab Pololikashvili Secretary-General, UNWTO
Tourism has never been more relevant. Nor has its importance to both our societies and our economies been more visible as it is right now. The pandemic, in prompting the introduction of travel restrictions, and a massive fall in demand for travel, brought the sector to a near-complete standstill. In doing so, it put many millions of jobs at risk, placed millions of businesses in jeopardy and led to a sudden fall in vital funding for work to conserve cultural and natural heritage.
As the world steadily opens up again, the restarting of tourism is bringing hope to people around the globe. Moreover, the return of tourism offers a chance to reassert the values that define the sector, namely peace, solidarity and international cooperation. The sector’s recovery also represents a unique opportunity to reassess the impact that tourism has on people and on our planet and to build a more inclusive, sustainable and resilient future.
The World Economic Forum’s latest Travel & Tourism Development Index makes clear the scale of the challenge but also of the enormous untapped potential of tourism, particularly for developing countries. It also demonstrates that sustainability and resilience are key pillars of tourism growth and that tourism development can only be successful if built on a systemic approach where people, planet and prosperity go hand-in-hand.
Changes in demand, including the drive towards greater digitalization, growing interest in nature-based experiences and the emergence of digital nomads, will come with many challenges but also immense opportunities for new businesses, entrepreneurs and entire communities.
Destinations that cater to tourists with non-traditional tastes are already being established. But for these opportunities to be realized, the sector needs both economic and practical support. Now is the time for all countries to prioritize tourism and back the sector through post-COVID recovery and beyond. The time is now to build a new governance structure for tourism. This includes both governments and the private sector. Governments need to place tourism at the centre of development policies and the private sector can contribute to greater coordination and partnerships as well as new innovative financing.
International Tourism Data collected by UNWTO in March, 2022.
The World Tourism Organization (UNWTO) is the United Nations agency responsible for the promotion of responsible, sustainable and universally accessible tourism. As much of the world begins to open up, the UNWTO is working to promote investments in projects that will help destinations scale their tourism industries sustainably, inclusively and resiliently. We also have the ambitious objective to achieve net-zero tourism emissions.
In this context, unlocking innovative finance will be key to enabling tourism’s transformation at every level, including through the development of essential infrastructure and the strengthening of socio-economic resilience in developing states.
Investment will also be crucial to enable destinations in all global regions to successfully adapt to meet the changing demands of consumers while working towards attaining the Sustainable Development Goals. And, of course, it will provide both countries and communities with the economic support they need to be part of tourism’s movement towards greater sustainability, allowing the sector to meet its climate action obligations.
In response to the resolutions set out at the COP26 in Glasgow, UNWTO is looking to create a UN NetZero TOURISM Facility and Ecosystem. The ecosystem will rest on the following pillars:
UN TOURISM, a unique alliance of United Nations partners, which will lead the change at global and national level.
International financial institutions and equity funds to support the green investment required.
International organizations, development partners and the private sector at large to support both the transformation and investment to reach net-zero emission levels for tourism.
Importance of investing in tourism
Investing in tourism will pay significant dividends, not least for destinations and their host communities. To a significant extent, this will depend on stability and peace. War, uncertainty and a lack of confidence in travel, global governance and institutions will only hamper the return of tourism and prevent our sector from delivering on its unique potential.
As such, UNWTO calls on all governments and international partners to recognize tourism’s role as a pillar of peace and to ensure the right conditions are in place to allow the sector to recover and kickstart wider recovery.
Supporting tourism at this crucial juncture will provide a lifeline for the most vulnerable in society, empowering them through jobs and education. At present, about 80% of the sector is made up of small and medium-sized businesses, many of them individual or family-owned enterprises. This shows the fragility of the sector but also its unique ability to drive transformation and development from the grassroots up. The restart and recovery of tourism will, in turn, help drive global inclusive recovery and build resilience against future shocks.
24 May 2022 Kate Whiting World Economic Forum
In 2019, international tourism grew for the ninth consecutive year. Tourist arrivals reached 1.4 billion and generated $1.7 trillion in export earnings, according to the World Tourism Organization (UNWTO).
Travel and tourism: post-pandemic
The picture looked very different two years later, as COVID-19 lockdowns hit the travel and tourism (T&T) sector hard. In 2020 alone, it faced losses of $4.5 trillion and 62 million jobs, impacting the living standards and well-being of communities across the globe.
While the roll-out of COVID-19 vaccines and easing of restrictions means a recovery has now started, it’s proving gradual and uneven largely due to variations in vaccine distribution, and because of Omicron and its BA.2 subvariant. And customers are not only being more cautious when it comes to health, but also around the impact of travel on the environment and local communities.
International tourist arrivals rose by 18 million in January 2022 compared with a year earlier. This equals the increase for the whole of 2021 from 2020, but January’s numbers were still 67% below the same month in 2019, according to the UNWTO.
The war in Ukraine has added to instability and economic disruption for the sector. Against this backdrop, the World Economic Forum’s inaugural Travel and Tourism Development Index reflects the growing role of sustainability and resilience in T&T growth, as well as the sector’s role in economic and social development more broadly.
The Travel and Tourism Development Index 2021
The index covers 117 economies, which accounted for around 96% of the world’s direct T&T GDP in 2020. It measures the factors and policies that will enable sustainable and resilient development of the sector.
These include everything from business, safety and health conditions, to infrastructure and natural resources, environmental, socioeconomic and demand pressures.
“As the sector slowly recovers, it will be crucial that lessons are learned from recent and current crises and that steps are taken to embed long-term inclusivity, sustainability and resilience into the travel and tourism sector as it faces evolving challenges and risks,” says the publication, a collaboration between many of the sector’s stakeholders.
The index consists of five subindexes, 17 pillars and 112 individual indicators, distributed among the different pillars, as shown below.
On average, scores increased by just 0.1% between 2019 and 2021, reflecting the difficult situation facing the sector. Only 39 out of 117 economies covered by the index improved by more than 1.0%, while 27 declined by over 1.0%.
Nine of the top 10 scoring countries are high-income economies in Europe or Asia-Pacific. Japan tops the ranking, with the United States in second, followed by Spain, France, Germany, Switzerland, Australia, the United Kingdom and Singapore. Italy completes the top 10, moving up from 12th in 2019.
Viet Nam experienced the greatest improvement in score, with a rise of 4.7% lifting it from 60th to 52nd on the overall index. Indonesia achieved the greatest improvement in rank, increasing its score by 3.4% to climb from 44th to 32nd, while Saudi Arabia achieved the second greatest improvement in rank, moving up to 33rd from 43rd as its score rose by 2.3%.
Rebuilding travel and tourism for a sustainable and resilient future
Here are some of the key findings from the publication:
1. The need for travel and tourism development has never been greater
The sector is a major driver of economic development, global connectivity and the livelihood of some of the populations and businesses most vulnerable to, and hard hit by, the pandemic. In 2019, T&T’s direct, indirect and induced GDP accounted for about 10% of global GDP. For many emerging economies, T&T is a major source of export revenue, foreign exchange earnings and investment. Research has shown that T&T growth can support social progress and create opportunities and well-being for communities, so supporting travel and tourism development and recovery will be critical.
2. Shifting demand dynamics have created opportunities and a need for adaptation
In the shorter term, challenges such as reduced capacity, geopolitical tensions and labour shortages are slowing recovery. However, opportunities have been created in markets such as domestic and nature-based tourism, the rise of digital nomads and “bleisure” travel – the addition of leisure activities to business travel. Many countries have provided incentives to boost domestic tourism. For example, Singapore, South Korea, Japan and Hong Kong SAR, China, have rolled out programmes that provide discounts, coupons and subsidies for domestic travel. The trends towards more rural and nature-based tourism offer an opportunity for less-developed economies to harness the benefits of travel and tourism given that the distribution and quality of natural assets are less tied to performance in economic development, with natural resources being one of the few pillars where non-high income economies typically outperform high-income countries. The travel and tourism sector stakeholders’ ability to adapt under these conditions highlights its capacity for adaptation and flexibility.
3. Development strategies can be employed to help the sector build back better
Amid the current challenges, shifting demand dynamics and future opportunities and risks, a more inclusive, sustainable and resilient travel and tourism sector can be – and needs to be – built, says the publication. But this calls for thoughtful and effective consideration. It also requires leveraging development drivers and strategies. This can be done by: restoring and accelerating international openness and consumer confidence through, for example, improved health and security; building favorable and inclusive labour, business and socioeconomic conditions; focusing more on environmental sustainability; strengthening the management of tourism demand and impact; and investing in digital technology.
A note on the methodology
Most of the dataset for the Travel & Tourism Development Index (TTDI) is statistical data from international organizations, with the remainder based on survey data from the World Economic Forum’s annual Executive Opinion Survey, which is used to measure concepts that are qualitative in nature or for which internationally comparable statistics are not available for enough countries. The index is an update of the Travel & Tourism Competitiveness Index (TTCI), but due to the altered methodology, framework and other differences, the 2021 TTDI should not be compared to the 2019 TTCI. To help address this, the 2019 results were recalculated using the new framework, methodology and indicators of the TTDI. Therefore, all comparisons in score and rank throughout this report are between the 2019 results and the 2021 results of the TTDI. Data for the TTDI 2021 was collected before the war in Ukraine.
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics.