It could even improve, if properly managed
It is an unfortunate fact that the ease of throwing things into a wheelie-bag and travelling far and wide helped spread covid-19 around the world. The effects on leisure travel and destinations that rely on tourism will be felt for years to come. But just as the way we travel may improve as a result, so the chance for countries to rethink tourism industries could turn a bruised and battered industry into a better one.
The pursuit of pleasure using cultural pursuits as cover goes back to the days of the grand tourists, who trawled Europe’s artistic heritage as well as indulging in more hedonistic activities. As souvenirs they returned with paintings, sculptures and sometimes syphilis. Travel was hard and expensive. The earl of Salisbury spent the equivalent of nearly £500,000 today on his grand tour in the 18th century, according to mbna, a credit-card firm. Even 50 years ago foreign travel was a luxury pursuit. In 1970 a return flight from New York to London cost around $500 (equivalent to $3,500 today).
Lower fares and the rise of the internet have made holidays cheaper and easier to arrange. Airlines, hotel chains, car-hire firms and other businesses have moved online. Dedicated internet travel agents like Expedia and Booking.com have emerged. Online peer-to-peer review sites offer a mostly honest assessment of hotels, restaurants and tourist sites. Airbnb and its competitors have created a new class of accommodation. The frictional costs of travel have fallen sharply.
Such is the stunning growth of tourism that the 72% decline in trips in the first ten months of 2020 on a year earlier merely took international travel back to where it was in 1990. Leisure travel accounts for the biggest slice but the rest contributes too. Business travellers stay in hotels, eat at restaurants and hire cars. Some visits to relatives or friends may be barely distinguishable from a holiday.
Not only are there more trips, but the world is a bigger oyster. In 1950 the top 15 destinations—with America, France, Italy and Spain the most visited—claimed 97% of tourist arrivals. By 2015 that share had dropped to just over half. Europe, with its historic cities, countryside and beaches, still rules, taking just over half of all international travellers. That is twice the share of the Asia-Pacific region, the next most popular area. Europe rakes in the most receipts, around 37% of the global total, worth some $619bn in 2019. France and Spain are the most popular countries for a visit. The top spots may not have changed, but their arrivals have. Chinese visits overseas have grown from just 9m trips in 1999 to 150m in 2018.
Travellers’ preference for richer countries has created large industries. Spain relied on domestic and foreign visitors for 11.8% of gdp in 2019, France 7.4% and Mexico 8.7%. Poorer countries lean even more on tourist dollars. America is the biggest country for travel spending, some $1.8trn in 2019, but overseas visitors have put tourism at the heart of many economies. In Aruba it accounts for nearly three-quarters of gdp; in most other small Caribbean islands it is also the main economic activity. Other poorer countries are less reliant overall but have vast tourist industries. Thailand welcomed around 10m foreign tourists in 2001. By 2019 it had grown fourfold (with a quarter of the total coming from China), bringing in 1.9trn baht ($60bn) and contributing some 18% of GDP.
The emptying of tourist trails and resorts resembling ghost towns is causing massive upheaval. UNCTAD estimated that losses could amount to 2.8% of world output if international arrivals dropped by 66% in 2020. The OECD now reckons that the drop was more like 80%. And the expectation is that international arrivals will probably not recover to pre-covid levels until 2023.
Tourism is a resilient industry. But it faces a downturn like no other. Firms reliant on visitors may not be best placed to survive. According to the WTCC, around 80% of tourist businesses worldwide, from hotels to restaurants to tour guides, are small businesses. Large hotel chains may have the balance-sheets to weather the storm or the management skills to reconfigure their business to cater more to domestic travellers. Small businesses probably lack the cash to invest in equipment for contactless payments or better cleaning and hygiene to reassure returning tourists.
The uncertain path to recovery raises questions over what will remain. The UNWTO reckons that countries with a big share of domestic tourism—America, China and India have the largest home markets—will recover more quickly. Travel restrictions have kept China’s high-rollers at home, giving its fanciest hotels their best year ever. But even domestic tourism is far from a saviour. Britain and Spain, for example, reckon on a decrease in domestic tourism of 45-50% in 2020.
These problems have prompted various responses to keep businesses alive. Some countries such as France, which launched an $18bn bail-out in May, have aimed cash directly at tourist businesses. Others are trying to reassure tourists that their countries are safe by developing protocols and guidelines for tourism workers. Luís Araújo, president of the Portuguese National Tourism Authority, says his organisation has arranged training for 60,000 workers at restaurants, hotels and travel agents to create a safer travel experience. Finland and Greece are among countries with new training programmes aimed at improving the digital presence of tourist businesses.
Some parts of the tourist economy will do better than others. Travel firms have noted a rising preference for self-catering and private accommodation over hotels. Coastal and rural locations, far from crowds, will recover faster than cities. Cyril Ranque of Expedia notes that his customers are more inclined to drive to domestic locations but then to stay longer than before. But these trends, he believes, are “all temporary”.
Waiting for the rebound
The travel bug seems certain to outlast the virus. Its first manifestation may be “revenge tourism” as people get away after a year of lockdowns and quarantines. But some things will change for good. A preoccupation in previous centuries, health and hygiene will re-emerge as central to holiday planning. Guidebooks from Baedeker, a German publisher, were never reticent about warning travellers of the filth they faced in foreign climes even in the early 20th century, bemoaning the “evil sanitary reputation of Naples”. Destinations will continue to boast of their scenery, cuisine and beaches but safety and hygiene will become as important, says Ian Yeoman, a tourism academic at Victoria University of Wellington, New Zealand. This may benefit longer-established destinations, tilting visitors away from poorer countries.
Those countries will not be deliberately trying to avoid tourists, even so. Some remote places have used the hiatus to build a better online presence, says Mr. Ranque. He points to other innovations to make travel less of a bother. Flexibility, to cope with last-minute changes of plans, will endure. Late or even last-minute bookings are more common. Josh Belkin of Hotels.com reports that, because people are taking more staycations and travelling by car rather than plane, they are booking hotels later, on average 13 days before a trip rather than the 20 before covid-19.
Many travel companies and airlines have introduced more flexible rebooking policies. Faced by a wave of cancellations as covid-19 took hold, Expedia introduced “one-click cancellation” to deal with all elements from flights and hotels to car hire. Firms that use its platform can deploy new tools to add special offers to listings to encourage last-minute bookers and manage refunds. Gathering real-time data on searches, and sharing them with businesses that relied on information from previous years to set prices, could also lead to a better match between supply and demand and encourage more dynamic pricing. In future, personalised customer data should allow travel firms to recommend holidays in a more focused way.
Covid-19 presents a “once-in-a-lifetime opportunity to move towards more sustainable and resilient models of tourism development”, says the OECD. “Tourism was seen as unambiguously good 20 years ago...now it’s a double-edged sword,” says Paul Flatters of the Trajectory Partnership. Concerns about the impact of tourism on the environment predate the pandemic. But tourism also broadens awareness of different cultures and environmental issues and helps pay for wildlife conservation, as well as providing employment and economic development.
Many destinations failed to strike a balance between tourist numbers and local sensibilities. Venetians have long protested against vast cruise ships, prompting some firms to drop the city from their itineraries. Venice also plans to impose a levy on all visitors from 2022. Anti-tourist slogans daubed on walls have greeted visitors to Barcelona, which has clamped down on illegal holiday letting (as have Berlin and other places in which holiday lets have replaced rental properties, forcing up prices for residents). Amsterdam is considering a ban on non-residents buying cannabis in its notorious coffee shops, to encourage a better class of tourist. Machu Picchu, where trails were overrun, imposed a pre-covid limit of 5,000 visitors a day. That will be cut to 675 to ensure social distancing.
Covid-19 offers the chance not only to reset tourism to reduce the numbers who spend the least but also to spread them out. Barcelona has run a campaign to encourage people to venture away from the old city. Thailand has a scheme to promote 55 less visited parts of the country. Concentrating on attracting fewer tourists ready to spend more is one way to promote a healthier business. And sustainability may become a more important guide to choices as awareness of climate change and the less welcome effects of tourism grow. Getting the right balance between economic, environmental and social benefits and costs has seen a new emphasis on sustainability. Mexico thinks covid-19 will help with its “Mexico Reborn Sustainable” campaign, which aims in part to create new routes that spread tourist dollars more widely and promote destinations that tap into fast-growing nature tourism.
A dynamic tourism economy depends on the availability of a variety of services, from accommodation and good services to attractions, activities and events. Whether a critical mass of services will remain everywhere is less clear. Less choice and competition, if businesses go bust, may mean higher prices. The rapid growth of tourist economies in recent years suggests they can be rebuilt swiftly. But for all those governments that redesign their tourism strategies to keep down crowds and protect the environment, others may compete by racing to the bottom, using deep discounts to fill hotels and planes. Tourist numbers will recover and continue to grow either way. Greater efforts to manage them carefully should make for a better experience for everyone.■
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics.