Worldwide export revenues expected to fall by US$1.2 trillion, 100 million jobs at risk in 2020
The global tourism standstill due to COVID-19 has cost the sector dearly, especially in countries heavily reliant on it, like small island nations.
For Mahmood Patel, 2020 was supposed to be a bumper year for his Barbados-based, tourism-dependent small business ventures.
They include beachfront apartments, an organic farm-to-table café and Coco Hill – a 53-acre agro-tourism rainforest that offers guided tours and is dedicated to promoting food security and land rehabilitation.
The Barbadian entrepreneur says 2019 was the best year he had in almost a decade, and 2020 was tracking to be even better.
“We broke even for the first time last December, and recorded profits in January and February this year,” he said. “We were also able to start paying off the debts we incurred during the 2008 recession.”
The entire tourism sector – the island’s largest – was booming and Mr Patel’s optimism for 2020 was widely shared.
But those hopes were dashed when, in March, the sector came to a standstill, as Barbados closed its borders and announced a complete lockdown to stem the spread of the coronavirus pandemic.
This proved to be catastrophic for all the small island nation’s tourism businesses.
With no tourists, and the restricted movement of locals, Patel had to close doors and lay off his entire staff of 20.
He’s not alone. As chairman of the 45-member Intimate Hotels of Barbados (IHB) group, he hears a lot from fellow hoteliers facing the same predicament.
“One of our members recently called in a state of despair saying that from March until now (August) she has had only two rentals,” he said. “That’s bankruptcy.”
Worldwide blow, 100 million jobs at risk
This experience is being echoed worldwide. The blow to tourism is putting the world’s third largest export sector (after fuels and chemicals) and 100 million direct jobs at risk, the United Nations said in a policy brief on how COVID-19 is transforming the sector, released 25 August.
In 2019 tourism accounted for seven per cent of global trade. The report projects that export revenues from tourism, which supports one in 10 jobs globally, could fall by $910 billion to $1.2 trillion in 2020.
For small island developing states (SIDS), where tourism accounts for as much as 80 per cent exports, the impacts of the pandemic are devastating.
A policy solution is needed to mitigate the impacts on livelihoods, especially for women, youth and informal workers, the United Nations Conference on Trade and Development (UNCTAD) says, and it should be balanced with ensuring health is a priority, with coordinated health protocols firmly in place.
Gloomy outlook as more restrictions kick in
In July, UNCTAD published a report that showed a protracted shutdown of the global tourism industry could raise the loss to $2.2 trillion or 2.8 per cent of the world’s GDP, if the break in international tourism lasts for a total of eight months. UNCTAD estimates losses in the most pessimistic scenario, a 12-month break in international tourism, to be as high as $3.3 trillion or 4.2 per cent of global GDP.
Fears abound that the 2.8 per cent scenario is becoming more likely, especially as travel restrictions that were lifted come back into force.
For instance, in Europe, travel restrictions that were lifted for the summer are now coming back as some countries implement new measures to curb a rise in COVID-19 cases. This will have a significant impact on the recovery process.
“Never before has tourism’s economic impact on global GDP been so sharply in focus. We cannot sleep while the third largest global export sector is threatened with collapse,” UNCTAD’s Secretary-General Mukhisa Kituyi said.
He urged governments to protect workers, assist tourism enterprises facing the risk of bankruptcy, such as hotels and airlines, and called on the international community to support access to funding for the hardest-hit countries.
UNCTAD’s Special Adviser for the Blue Economy, Dona Bertarelli, said there are opportunities to rebuild tourism and the hospitality industry in ways that benefit communities as well as the environment, including the blue economy.
“At this critical time, we have the possibility to help communities that depend on tourism for their livelihoods to rebuild their businesses in a more resilient and sustainable way,” she said.
“It’s vital to make the connection between government economic recovery packages, private sector investments and philanthropic funding, so as to collectively provide the resources and skills that coastal communities need to shift to a regenerative blue economy,” Bertarelli added.
Regaining hope, building resilience
Patel is slowly resuming operations – he has rehired six staff members, only half of them full-time, and is offering staycation packages to encourage Barbadians to holiday internally. But it is no longer business as usual.
To make the sector resilient, he and other IHB members have presented a white paper to the government of Barbados, advocating for a more sustainable tourism model, including a cooperative that will capitalize on economies of scale, use disruptive technologies and promote food security.
“Our market share is going down, so we have to look at reinventing the tourism plan in Barbados. Yes, COVID-19 has been catastrophic, but we can use this opportunity to reinvent ourselves,” Patel said. “We must not waste it.”
Policy pathway to a sustainable restart
The UN report says the COVID-19 crisis is a watershed moment to align the effort of sustaining livelihoods dependent on tourism to the Sustainable Development Goals (SDGs) to ensure a more resilient, inclusive, carbon neutral, and resource-efficient future.
It calls for a five-point roadmap to transform tourism in the following priority areas:
1. Mitigate socio-economic impacts on livelihoods, particularly women’s employment and economic security.
2. Boost competitiveness and build resilience, including through economic diversification, with promotion of domestic and regional tourism where possible, and facilitation of conducive business environment for micro, small and medium-sized enterprises.
3. Advance innovation and digital transformation of tourism, including promotion of innovation and investment in digital skills, particularly for workers temporarily without jobs and for job seekers.
4. Foster sustainability and green growth to shift towards a resilient, competitive, resource efficient and carbon-neutral tourism sector. Green investments for recovery could target protected areas, renewable energy, smart buildings and the circular economy, among other opportunities.
5. Coordination and partnerships to restart and transform sector towards achieving SDGs, ensuring tourism’s restart and recovery puts people first and work together to ease and lift travel restrictions in a responsible and coordinated manner.