impacts of coronavirus on global tourism · 3/19/2020 · 3-month access for tourism forecast...

David Goodger Adam Sacks

Managing Director, EMEA President

Tourism Economics Tourism Economics

[email protected] [email protected]

March 2020

IMPACTS OF CORONAVIRUS ON GLOBAL TOURISM

mailto:[email protected]


Coronavirus is spreading more widely and rapidly than expected

Questions: Use the question panel on the right

• Over 220,000 cases worldwide

• More cases outside China than

inside China

• Over 140 countries affected

• Travel restrictions imposed by

over 150 countries accounting

for the majority of travel demandSource: Tourism Economics Global Travel Service (GTS)

Countries with travel restrictions, shaded according to

inbound travel spending

Coronavirus is having a major impact on economic activity


Q1 economic impact will be greater than during GFC


-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

-6

-4

-2

0

2

4

6

8

2004 2006 2008 2010 2012 2014 2016 2018 2020

% quarter (RHS)

% year (LHS)

World: GDP

Source : Oxford Economics/Haver Analytics

% year % quarter

Forecast

Unemployment spikes are likely in the near-term


-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

-4

-2

0

2

4

6

8

2001 2004 2007 2010 2013 2016 2019 2022

GDP (LHS)

Employment (RHS)

World GDP & employment

Source : Oxford Economics/Haver Analytics

% year % year

Travel impacts will far exceed those for GDP


2001 2004 2007 2010 2013 2016 2019 2022

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Baseline GDP (real price)

Downside GDP (real price)

Arrivals baseline

Arrivals downside

Source: Tourism Economics

Global GDP and tourist arrivalsAnnual growth, %

Impacts are being felt across all world regions


-11%-10% -10%

-15%

-6%

-3%

-18% -18% -18%

-22%

-13%

-6%

World Americas Europe Asia Pacific Middle East Africa

-25%

-20%

-15%

-10%

-5%

0%

Baseline

Downside


Inbound travel by region, 2020Annual growth, %

Hotel occupancy rates falling across APAC


-100 -80 -60 -40 -20 0 20

0

10

20

30

40

50

60

70

80

90

APAC: End-Feb

Source: STR, Tourism Economics

Hotel Occupancy Evolution in Selected APAC Cities

2020 occupancy rate, rolling 7-day averages

2020 occupancy % change

-100 -80 -60 -40 -20 0 20

0

10

20

30

40

50

60

70

80

90

APAC: End-Feb

APAC: Mid-March


Hotel Occupancy Evolution in Selected APAC Cities



Hotel occupancy rates have tumbled across EMEA


-100 -80 -60 -40 -20 0 20

0

10

20

30

40

50

60

70

80

90

EMEA: End-Feb

EMEA: Mid-March


Hotel Occupancy Evolution in Selected EMEA Cities



-100 -80 -60 -40 -20 0 20

0

10

20

30

40

50

60

70

80

90

EMEA: End-Feb


Hotel Occupancy Evolution in Selected EMEA Cities



All major destinations will be affected across Europe


Annual expected fall in arrivals by city, 2020

-3mn-2mn-1mn

-3.5mn 0

Hit to industrial production will be large

Worrisome amid elevated corporate leverage

Large share of consumer spending is discretionary or social

As in GFC, greatest social risks among low income earners

The disruptions to GDP growth in Q2 will be massive

We expect a 0.2% GDP contraction in 2020

Central banks with aggressive easing around the world


US travel sector revenue will average 75% below normal in March and April

• Gradually lessening declines are expected in the summer as travel restrictions are loosened. However, losses will continue through the rest of the year.

-5%

-80%

-70%

-55%

-35%

-25% -25%-20%

-15% -15% -15%

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

-100%

-80%

-60%

-40%

-20%

0%

Source: Oxford Economics

Projected COVID-19 impact on tourism industry revenue%


Employment losses

• The US economy is projected to lose 4.6 million jobs as a result of travel declines in 2020. This alone will increase the unemployment rate to 6.3% in the second quarter.

• Total US unemployment rate likely to surge above 10%

0%

1%

2%

3%

4%

5%

6%

7%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Th

ou

sa

nd

s Travel unemployment

Unemp rate (RHS)

Source: Oxford Economics

Employment impacts of travel declinesMillions


International markets will be hard hit

-4,592 -4,592

-4,487 -4,487

-3,937 -3,937

-3,237

-1,480

-20,000

-18,000

-16,000

-14,000

-12,000

-10,000

-8,000

-6,000

-4,000

-2,000

0

Europe Asia Canada Mexico LatinAmerica

World


Decline in International Visitors to the US in 2020Thousands

18 mn

-16.5%-18.0%

-19.0%

-23.0%

-29.0%

-32.6%

LatinAmerica

Mexico Canada World Europe Asia

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%


Decline in International Visitors to the US in 2020% change


International visitor spending impacts

• International market impacts will tally 13 times the impact of SARs and nearly double the impact of 9/11.

$25.2

-$3.6

-$49.2

9/11 SARS Covid-19 (estimate)

-$60

-$50

-$40

-$30

-$20

-$10

$0


Decline in International Visitor Spending in the US$ billions

2001

2002

2003

2020


Total US travel industry impacts

• Including international and domestic travel, $355 billion in travel spending will be lost in 2020.

• 6x impact of 9/11

-$49.2

-$306.2

-$400

-$350

-$300

-$250

-$200

-$150

-$100

-$50

$0

International Domestic Total Impact


Total Travel Revenue Loss in 2020$ billions

$355 bn


Source: STR. 2020 © CoStar Realty Information, Inc.

Do Italy and China show what’s to come?

China OCC Data Seems 8 Weeks Ahead of US OCC Data

0

10

20

30

40

50

60

70

China Italy USWeek End: US 3/7Italy: 2/22China: 1/18

Week End: Italy: 2/29China: 1/25


Week End: China: 3/14

Absolute Occ %, Select Countries, Aligned by level of OCC

Week end:US 3/14


Single Digit Occupancy

Source: STR. 2020 © CoStar Realty Information, Inc.

46.8 47.2

54.1

56.0

51.3

54.6

Luxury Class Upper UpscaleClass

Upscale Class Upper MidscaleClass

Midscale Class Economy Class

Class Performance: High End Occupancy Below 50%

Occupancy %, week ending March 14

Strong demand rebound is typical in recovery


2015 2016 2017 2018 2019 2020 2021 2022

500

550

600

650

700

750

800

850

Baseline

Downside

Counterfactual


European tourist arrivalsmillion

5% 5%6%

7%

9%

10%

14% 14%

10%

8%

6% 6%

0%

20%

40%

60%

80%

100%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0%

2%

4%

6%

8%

10%

12%

14%

16%

Source: UNWTO, Tourism Economics

European arrivals: average monthly seasonality

% share annual arrivals, 2013-18 Cumulative share arrivals

Uncertainty in outlook is related to duration of effects


• Current forecasts assume 5-8 month

period until containment.

• Continued travel restrictions are possible

which will further impact peak travel

season.

• “Typical airline had 2 months of cash at

the start of the year” according to IATA.

Short-haul prospects remain crucial for destination performance


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

-15%

-10%

-5%

0%

5%

10%

15%

Short-Haul Arrivals

Long-Haul Arrivals


Europe: Long-Haul vs Short-Haul Arrivals% year, contribution to growth

Once recovery begins, travel will surge


• US residents chose not to

travel abroad in 2003 and

outbound trips declined 5%

in 2003. Meanwhile,

domestic travel grew.

• A 20% drop in US

outbound travel this year

equals roughly 20 million

trips—a share of which will

eventually convert to

domestic.

Economic rebound in 2021

Global: Strong demand rebound is typical in recovery


2002 2005 2008 2011 2014 2017 2020

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%


Global tourist arrivals: downsideAnnual growth, %

SARS: -0.3%

GFC: -3.6%

+11.9%

+6.5%

3-month access for tourism forecast services

• Forecasts and associated research briefs will be updated on a more

regular basis during this period of uncertainty

• Tourism Economics are extending a time-limited offer to access our

forecasts for a 3-month period

• Including access to Global Travel Service (GTS) flows for 185

countries and Global City Travel (GCT) data and forecasts for over

300 cities

• Please contact Becky Hindley: [email protected]



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impacts of coronavirus on global tourism · 3/19/2020 · 3-month access for tourism forecast...

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