MRP hotels interviewed the analyst of a leading European bank. He tried to document the effects of the crisis from a big picture perspective. The most important messages:
The world is being hit these days by a crisis that it did not expect and was not prepared for. The coronavirus is spreading, pushing health systems to their limits and de facto paralyzing entire economies. Italy has become sadly famous in this context, prompting a Brussels newspaper to headline it “Death in Venice”.
Tourism as a burning mirror of the crisis
As tragic and momentous as the medical, social and human dimensions of the drama are, the economic implications soon come to the fore. Here, in turn, tourism becomes a kind of burning mirror of the crisis. Hardly any industry is more severely affected by the current restrictions that the developed world has imposed on itself in the fight against the virus. Here are a few figures first.
According to the UN World Tourism Organization or WTO (which tragically has its headquarters in Madrid), the industry generates around 10% of the world’s economic output and thus also of jobs. Last year, international arrivals increased by 4% to 1.5 billion. At the beginning of March, the WTO was still talking about a 1-3% decline in tourism as a result of the corona crisis, but recently it was forced to raise its forecast by a factor of ten. Now there is talk of a slump of between 20 and 30%, which could cost the industry up to 450 billion dollars or a third of its income this year. It goes without saying that these forecasts are subject to a high degree of uncertainty in view of the precipitous events.
So far rapid recovery after crises & pandemics
Nun ist es sicher richtig, dass es auch schon in der Vergangenheit Krisen und selbst Pandemien gegeben hat. Die internationalen Ankünfte gingen 2009, als Folge der Finanzkrise, um 4% in die Knie, noch geringer waren paradoxerweise die Auswirkungen der SARS Epidemie 2003, als die Ankünfte nur um 0,4% rückläufig waren (alle Zahlen WTO). Heute ist der Gegner aber ein anderer, das wird allein schon angesichts der Tatsache deutlich, dass sich aktuell über 3 Milliarden Menschen unter Ausgangsbeschränkungen befinden.
Impact of the crisis
So what might be the impact of the crisis on global tourism? First of all, one must distinguish between leisure and business tourism. The latter also operates under the acronym “MICE” (for meetings, incentives, and conferences) and, according to the expectations of many experts, will not recover as quickly. Many companies are now focusing on home office and teleconferencing, and once these practices are established they are likely to consolidate, especially as they save costs. In the wake of the crisis, this factor will become a sine qua non, you don’t have to be a prophet. The situation is different with holiday travel, where there is more hope of a complete recovery, even if this may take longer than the tourism industry would like. We know from past, painful experiences (e.g. with terrorist attacks) that it takes an average of 12 months before a tourist destination is fully “accepted” by travelers again. Whether in the case of the Corona crisis similar periods will be effective, or whether leisure tourism will take longer this time, after all, that is still the big question. Incidentally, many analysts see consumer behavior AFTER the pandemic has abated as a decisive factor for economic recovery in the western industrialized countries. How lasting is the corona shock in the bones of all of us, when will we go out again and go on vacation again, even if we are allowed to?
USA – the new epicenter of the crisis?
Finally, a look at the USA, which recently became the new epicenter of the crisis. Since the beginning of the year, for example, the shares of the Marriott hotel chain have halved in value (all figures as of 30 March), and casino operators such as Wynn Resorts (- 57 %) and cruise lines such as Royal Caribbean (- 70 %) have been hit even harder. The USA, and in particular President Trump himself, had reacted too hesitantly to the threat. One observer pointed out a remarkable fact: one would think that Trump was more concerned with tourism, which is the industry from which he originally came.