While all sectors have had their share of economic distress, tourism has taken the brunt of the damage. Human movement has all but come to a standstill as countries attempt to stop the spread of the virus
By: Antoine Nasr – Partner, Georges Assy – Principal, Kareem Bassil – Principal and Ghida El Hassan – Consultant at Government & Economic Development, Kearney Middle East
COVID-19 is likely to be one of the worst crises to face our world in generations. It has already taken a colossal toll on human lives and the global economy, and as yet there is no clear end in sight. While all sectors have had their share of economic distress, tourism has taken the brunt of the damage. Human movement has all but come to a standstill as countries attempt to stop the spread of the virus.
In the short term, global tourist arrivals could decline by 58 to 78 percent, down to their lowest levels after eight years of steady growth. As much as $847–$1,175 billion in international tourism expenditure could be lost.
This impact is particularly significant for the GCC, where tourism has become the backbone of efforts to reduce reliance on oil and develop more diverse economies. Several major events and religious observances have already been affected, and international tourist arrivals could fall anywhere from 34 to 70 percent in each country.
However, despite the large losses that are forecast in the short term, both globally and in the GCC, we predict that recovery in the sector is inevitable— but it will be bumpy. First, tourism is integral to the economic health of all regions: it contributes more than 10 percent of the world’s GDP, and accounts for one in 10 jobs. Second, it has also proved resilient in the face of previous economic shocks, such as the 2008 financial crisis and previous outbreaks of infectious disease such as SARS, Ebola, and MERS.
Governments are already taking mitigating action to control the outbreak and assist ailing industries. But to be sure of moving out of crisis, enabling tourism to recover and regain its resilience, Kearney recommends following a comprehensive 10-step approach:
Stage one: react
— Include tourism in recovery planning
— Provide stimulus and relief packages
— Ensure tourist safety
— Communicate effectively
Stage two: recover
— Recalibrate the plan
— Restore tourist confidence
— Attract new and returning visitors
— Identify new opportunities
Stage three: rebound
— Develop contingency plans
— Resume long-term ambitions