Travel is something that means different things to different people, with the one common denominator being that it’s personal. Whether taking a trip for business or pleasure, as an escape from reality in the Seychelles or for an adventure to take the polar plunge in icy Antarctica, travel offers people a sense of freedom that is hard to come by in the mundane rituals of everyday life. 2019 saw 1.5 billion international tourist arrivals, up from 1.4 billion in the prior year and demonstrating just how important travel is the world over.
And for all of its adventure, travel isn’t only personal but it also contributes massively to economic expansion. For instance, in 2018, tourism added $1.7 trillion to the global economy, or roughly 2% of the world’s combined GDP. So for the travel industry to nearly come to a halt would require a massive undertaking, one that incidentally has taken the form of COVID-19, or coronavirus.
The novel coronavirus has taken the world by storm, and perhaps no segment of the economy is as deeply affected as travel. The $8.8 trillion industry is poised to lose billions of dollars as a result of the epidemic in a hit the likes of which haven’t been seen since the Great Recession.
COVID-19 has quashed travel plans all over the world, with Italy being hit harder than most. And while businesses are cancelling conferences and Italy is under quarantine, the world around it has not come to an utter stop.
For instance, as of February, Hawaii, a popular vacation destination, only saw a modest dip in tourism, and hotels are responding by slashing rates in order to fuel demand. That’s the irony of the situation. Despite all of the uncertainty surrounding when and where to fly, it’s one of the few times you can brave the airport without facing massive crowds and long security check-in lines.
Economic Impact of Coronavirus
It’s still early to assess the economic impact on the travel industry as it’s unclear exactly whether or not the illness has peaked yet. But there are enough anecdotal signs to determine that no segment of the travel industry has gone unscathed, from airlines, to rail, to shipping, the latter of which is where more than three-quarters of “world goods trade by volume” is completed by sea.
In the interim, early projections attach a price tag of $21 billion in lost sales from the illness for the U.S. and Canadian airline industry – unless coronavirus is brought under control. According to the latest updates in the United States, the next eight weeks are said to be critical. Meanwhile, the U.S. Travel Association is also bracing for a 6% drop in the amount of international travelers, which rivals the declines not witnessed since the Great Recession in 2008.
That number is bound to go up now that the US. has initiated a travel ban for Europe with the exception of the UK into the United States for the next 30 days. The move has already taken a toll on Norwegian Airlines, which has cancelled thousands of flights and laid off roughly 50% of its staff due to coronavirus.
Cruises have got to be the hardest-hit segment of the travel industry as a result of coronavirus, with cruise ships continuing to reel from infected passengers, quarantines and strict orders from various jurisdictions about docking privileges. The U.S. State Department has warned Americans to avoid cruise ship travel at all costs.
The economic impact is also being felt on a personal level. Pulitzer-winning journalist Mei Fong documented on Twitter the saga she’s experienced with Airbnb. Apparently the company declined to return a deposit even though its coronavirus policy suggests it should, deciding instead that she was not entitled to the refund because half of her group was planning to travel from Hong Kong, which Airbnb suggests “is not considered part of China.”
She called Airbnb out to her more than 7,500 followers, saying the behavior was “irresponsible” and “short sighted.” Airbnb’s “extenuating circumstances policy” covers mainland China, South Korea and parts of Italy.
Resilient Travel Industry
The silver lining is that travel has proven time and again its resilience and ability to eventually recover even through the worst of situations. For instance, there was SARS, which sent the travel industry reeling in 2003. Then there was HIN1, or swine flu, in 2009/2010, which hit Mexico’s travel industry especially hard. Meanwhile, the Ebola outbreak, which began in 2013 and persisted for more than two years, wreaked havoc on the West African travel industry but had ripple effects throughout the entire African continent.
And while history shows conditions won’t return to normal overnight, each epidemic helps us to learn how to better combat the next one. While it’s unclear exactly how coronavirus will play out, the world has certainly had a lot of practice with other epidemics in the last two decades alone.
Coronavirus was recently classified as a pandemic placing it in the dubious company of the 2009 swine flu, which hit the United States and Mexico particularly hard.
China’s SARS outbreak of 2003 lobbed a hefty price tag on $40 billion on the global economy, the cost of which was said to be more greatly tied to the panic than the illness itself. The cost to the global airline industry was $7 billion. The swine flu outbreak of 2009 that started in Mexico reportedly had an “enormous” economic impact, while corporate America has a history of recovering from epidemics within about six months.
Using historical evidence from these past outbreaks, we can predict that If history is any indication, coronavirus will eventually come to an end. Travel companies and airlines have proven that they have the ability to recover from crises.
When the coronavirus panic eventually subsides, travel-related businesses are expecting things to return to normal. For instance, Marriott International predicts it will lose roughly $75 million in fee revenue from coronavirus in Q1 2020. But CEO Arne Sorenson doesn’t appear overly worried, instead saying during the company’s latest earnings call that while he couldn’t predict when, “travel will come back and it will probably come back fairly quickly.”
Technology has played a major role in the resilience of the travel industry. For example, remittance services such as Sharemoney allow money to be transferred internationally with more ease and fewer barriers for entry than ever before. Before sending with such a service, however, you should take a close look at their exchange rates and transfer fees to make sure remittance is really the best option for your fund transfer.