Former Spirit Airlines CEO Ben Baldanza argues that lower-cost carriers that ‘live more with leisure traffic’ can be ‘more aggressive in this environment’ and ‘gain participation’ because of their business models .
The prospect of a recovery in travel this year has dwindled after the global pandemic devastated the industry and affected tourism-dependent economies, with travelers postponing plans amid vaccine delays and border restrictions.
Tourist destinations from Thailand to Iceland hoped that Covid-19 vaccines would allow countries to reopen their borders and promote a much-needed recovery in 2021. Now, with the vaccine’s release delayed in some places and new strains of viruses appearing, it seems more likely that international travel can be paralyzed for years.
After declaring that 2020 was the worst year for tourism on record, with one billion fewer international arrivals, the United Nations World Tourism Organization says the prospects for a recovery in 2021 have worsened. In October, 79% of experts interviewed by the agency believed that a 2021 recovery was possible. Only 50% said they believed this in January, and about 41% did not think that travel would reach pre-pandemic levels by 2024 or more.
James Sowane, owner of a transport company serving tourists in Fiji, called a team meeting earlier this month and told employees to start looking for other jobs. He recently took advantage of a government assistance program and brought back some laid-off workers, optimistic that vaccines could trigger a recovery in travel as early as April.
But now Sowane doesn’t think tourists will be back until next year, and he and his wife cannot continue to pay wages at his company, Pacific Destinations Fiji. He’s taking a loan from his bank to keep some basic employees.
“The most difficult thing is to look them in the eye,” said Sowane. “You are seeing their wife, children and husbands because we know them very well.”
Before the pandemic, travel, tourism and related business activities accounted for 10% of the global economy and one in 10 jobs, according to World Travel & Tourism Council estimates. Many places, from the Pacific islands to Macau and Greece, depended even more on tourism than that.
“People will go broke,” said Ross Dowling, an honorary professor of tourism at Edith Cowan University in Australia. “They will not survive if they are unable to adapt, and no amount of resilience will help you for another year.”
Reykjavik, the capital of Iceland, in winter top view (iStock)
On February 1, air tickets issued for international travel in the next six months were 15.5% of what they were in 2019, down about 2 percentage points compared to January 1, according to the travel analysis company ForwardKeys. Flights scheduled this month have dropped nearly 50% globally compared to February 2019, with some markets dropping around 90%, according to data company Cirium.
In the U.S., demand for hotels is not expected to return to 2019 levels until 2023, with room prices not fully recovering until 2025, according to a joint forecast by hotel data company STR and Tourism Economics. Gross travel bookings in the U.S., including hotels, airline tickets and car rentals, are still expected to be below 2019 levels in 2024, estimates travel market research firm Phocuswright. He predicts that the recovery in Europe will be even slower.
“Vaccines were expected to be the big panacea,” said Charuta Fadnis, who leads Phocuswright’s research team. But at current vaccination rates, less than 20% of the world’s population is expected to be inoculated this year, according to recent UBS estimates. “We expect governments to be cautious when reopening borders,” she said.
Some destinations popular with domestic travelers hope that increased visits from locals will lessen the impact. But while it helped last summer in Europe, it is unclear whether governments will loosen restrictions as they did last year, a move that contributed to the harsh second wave of the continent’s pandemic.
Temporary changes in the sector may start to become permanent. Airlines and cruise operators have deactivated planes and ships and laid off or licensed tens of thousands of people around the world. Some hotels have closed to save until more customers return. Workers are looking for new careers.
At Angkor Wat, a former temple complex in Cambodia, Sam Sophea used to organize up to 150 excursions per month during high season. Now Mr. Sophea, who lives with his wife and two children, is unemployed.
Tourists visit the Grand Palace in Bangkok on May 24, 2014. (Reuters / Erik De Castro)
The number of foreign visitors to Angkor Wat decreased by 82% last year, and fell by 99.5% last month compared to January 2020, according to the local box office. Mr. Sophea is considering buying a truck to transport gravel to new roads, although he planned to travel with his nephew first to see if he is physically demanding.
“I’m a little sad, a little stressed,” said Sophea. “I hope the tourists will come back.”
In Spain, where travel and tourism previously accounted for about 14% of gross domestic product, one of the highest percentages in the developed world, the economy shrank 11% last year – the biggest drop in the euro zone. International arrivals dropped more than 75% in 2020. The government has injected billions of euros into the economy and protected jobs through leave programs, but those efforts may soon be over.
Although Spain’s central bank is forecasting 6.8% growth this year, it does not expect the economy to reach its pre-pandemic level until mid-2023, about a year later than the eurozone in general. Spain will recover more slowly in part because it will take time for tourism to recover, a central bank official said recently.
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The travel industry wants to speed up recovery with so-called vaccine passports, including smartphone apps that travelers use to notify governments of their vaccination status so they don’t have to be quarantined. Airlines and airports are testing several systems.
The government’s responses, however, were mixed. UK officials have ruled out a European vaccine passport, saying it is unclear whether the vaccines are effective in preventing transmission of the virus and that allowing people to travel based on the fact that they have been vaccinated is discriminatory. Denmark, however, plans to issue one by the end of the month.
It is also unclear when people will be comfortable traveling again. Becky Wentland, a high school teacher in Southern California, does not plan to fly to the country until her family is vaccinated. Before going abroad, she expects Covid-19 infection rates to drop considerably and is looking for strains that are potentially resistant to the vaccine.
His family would have traveled to Europe this summer had it not been for the virus. Last year, they canceled a trip to Japan. A trip to Peru was postponed to June this year, but will almost certainly be postponed again.
“I love to travel, but missing those trips was not a headache for me,” said Wentland. “Traveling is a total luxury and I would never lose sight of how horrible things are now.”
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Some companies and countries are confident that pent-up demand will eventually lead to a boom. Minor Hotels, which is based in Thailand but operates hotels worldwide, continued to expand during the pandemic, adding hotels in Europe and opening new properties in Dubai and the Seychelles, he said.
In Iceland, the authorities used the time without foreign visitors to improve the country’s tourism infrastructure. A few months ago, Iceland completed a road in the least visited north of the country connecting tourist sites, including waterfalls and its oldest settlement.
At the beginning of the pandemic, Elias Gislason, director of quality and development for the Icelandic Tourism Council, thought that tourists would be back in late summer last year. Now, he expects Iceland to receive about a third of the normal number of visitors this year, with a full recovery in 2023.
“The truth is, nobody knows for sure,” he said. “It all depends on how the vaccinations proceed.”