COVID-19 and Tourism: Is This the End of a prosperous and growing Industry?

The adverse effects of the COVID-19 epidemic may be seen in practically every economic sector, but tourism is clearly at the top of the list. Before the epidemic, the global tourism industry was growing at a rate of more than 3.5 per cent, while the global economy grew at a rate of 2.5 per cent. 1st The travel and tourist industry has been severely harmed as planes have been grounded and luxury hotels have been converted into ghost towns. The sector, which accounted for 10.3 per cent of global GDP in 2019, has been hit hard by COVID-19, which has resulted in travel bans and airline restrictions.

According to the United Nations World Tourism Organization, 96% of worldwide tourist destinations have entirely or partially closed their borders. Universal vaccines have yet to be produced, and herd immunity, which refers to many people developing immunity as a result of surviving after being exposed to a disease, is still a long way off. As a result, the tourism industry’s revenue is expected to stay negative for the rest of the year. The tourism industry’s restoration appears improbable soon, which is why it is in desperate need of financial and policy support.

Projected COVID-19 impact on tourism industry revenue in 2020

A Downward ‘Travel’ in the Global Tourism Industry

In 2019, the travel and tourism industry employed over 330 million people worldwide, accounting for 10% of total employment. According to the World Travel & Tourism Council (WTTC), the tourism industry is currently putting 100.8 million people at risk, with 1 million jobs lost every day. The tourist market in Asia-Pacific, which was growing at 5.5 per cent, is still the most affected among the other areas.

Estimated job losses in tourism sector by region (In USD million)

In 2019, the worldwide tourism industry contributed USD 8.9 trillion to global GDP. On the other hand, the travel economy has been in a severe crisis, with WTTC studies predicting that the pandemic will wipe away about USD 2.7 trillion of global GDP. As one of the world’s largest travel economies, Asia is expected to lose the most GDP, amounting to USD 1041 billion.

Estimated GDP losses from tourism sector by region (In USD billion)

Adverse Effects on the Asian Tourism Market

In 2019, the tourist industry in the Asia-Pacific area generated roughly USD 2970 billion, accounting for 9.8% of total GDP and 182.2 million jobs, accounting for 9.6% of full employment. China had the most contribution to Asia’s GDP in 2019, followed by Japan, Australia, and Thailand.

Contribution of travel and tourism to GDP in the Asia-Pacific region in 2019 by countries

The pandemic has adversely impacted the Asian tourism industry. The best-performing tourist destinations in Asia, such as China, Thailand, Singapore, South Korea, Japan, Malaysia, and Indonesia, have seen a significant drop in tourist arrivals.

China will be the worst-affected Asian country, as the country is known for being the source of coronavirus sickness (COVID-19). During the pre-pandemic phase, Bangladesh’s travel and tourist industry gained traction as a potential economic driver, but it was not immune to COVID-19’s catastrophic effects.

Is the Bangladeshi tourism industry doomed?

Bangladesh’s travel and tourism industry were a growing one in 2018, accounting for 4.4 per cent of the country’s overall GDP and being viewed as a potential economic engine.

Bangladesh spent USD 1208 million on international tourism, a tiny sum among South Asian countries. On the other hand, domestic tourism was thought to be given special attention because it had begun to gain popularity as people’s disposable income increased. However, the future of tourism in Bangladesh must now be viewed in a new light.

International tourism expenditure in South Asian countries (In USD million)

On-arrival visas for all nationalities have been suspended, according to the Bangladesh Civil Aviation Authority. The tour companies in Bangladesh may struggle to stay afloat due to booking travel packages from overseas. Domestic visitors are also obliged to preserve self-isolation. As a result, Bangladesh’s domestic, inbound, and outbound tourist sectors will suffer significant economic losses and job losses. Bangladesh’s tourist industry is expected to lose USD 470 million in 2020, according to the UNWTO.

Estimated forecast of loss of turnover by tour operators in Bangladesh

Tourism employs around 4 million people in Bangladesh, either directly or indirectly. According to the Bangladesh Chapter of the Pacific Asia Travel Association (PATA), more than 0.3 million persons employed in the travel and tourist industry are at risk of losing their jobs.

Estimated forecast of number of jobs at risk in tourism sector in Bangladesh 

The luxury hotel industry has also been hit by the economic consequences, with travel restrictions and corporate flight cancellations. In April, the occupancy rates of upscale hotels fell by astonishing levels. Hotel occupancy rates have plummeted to an average of 30%, compared to an average of 80% in normal circumstances.

Change in occupancy rates of luxury hotels in Bangladesh

Saving the Travel and Tourism Industry’s Future

Because the aviation, tourism, and hospitality industries are all interconnected, the effects of the COVID-19 epidemic will be felt much more strongly in these industries. As a result, the enterprises will require significant financial and policy support from the government to limit economic harm.

Bangladesh’s government intends to promote the tourism industry by incorporating it in the recently announced stimulus package. According to this strategy, banks will give loans at 9% interest, with the business responsible for 4.5 per cent of the loan. To promote this downing business, ensuring the equitable distribution of packages should be a top priority. The government can use several methods to preserve the goal of reversing the negative economic impact.

Solutions for the Short Term

Because travel and tourism are such a large industry, the government should focus on the worst-affected initiatives to provide cash flow support. To protect the enormous number of employment in the sector, significant financial support is required. The government must, however, ensure that the assistance is not distributed among the beneficiary groups.

The Ministry of Civil Aviation and Tourism has organized a committee to assess the tourism industry’s financial losses, take decisive action, and make appropriate suggestions to the government to help the struggling sector. Micro-enterprises in the most desperate need of assistance should be identified and prioritized for assistance. The team should be in charge of completing these responsibilities effectively, and the government should act on the recommendations right away.

Solutions for the Long Run

Without a doubt, the travel and tourist business has experienced an unprecedented collapse. Even after the lockdown is lifted, travel will not return to normal any time soon. International tourists will seek safer tourist destinations. To attract foreign tourists, the Philippines has launched online training programs for tourism stakeholders to create a sanitary tourism experience. Bangladesh might adopt such steps to advertise itself as a new tourism destination.

Tourists will choose experiences that promote the health and well-being of people and the planet in the post-pandemic era, so the tourism sector should focus on these factors. To summarize, attempts to build a strategic framework for the early post-pandemic recovery of the tourist and hospitality business should begin as soon as practicable.

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