Tourism in a post-pandemic world

Tourist arrivals in Thailand – a top tourist destination – have dropped dramatically. In addition to providing moderate funding to tour operators, the country promotes domestic tourism and long-term stays. (photo: Preto Perola by Getty Images)

Tourism in a post-pandemic world

By Aleksandra Babii and Sanaa Nadeem

February 26, 2021

Tourism continues to be one of the sectors hardest hit by the COVID-19 pandemic, especially for countries in the Asia-Pacific region and the Western Hemisphere. Governments in these regions, and elsewhere, have taken steps to ease the economic shock to households and businesses, but in the longer term, the industry will need to adjust to a post-pandemic “new normal”.

If you’re hesitant to get on a plane these days, you’re not alone. According to the United Nations World Tourism Organization (UNWTO), tourist arrivals have fallen by 74% in 2020 compared to 2019.

For many developing countries in Asia-Pacific and the Western Hemisphere – small island states in particular – the effects have been severe. Before the pandemic hit, tourism was big business, representing more than 10% of world GDP. The share was even greater in countries dependent on tourism.

Towards recovery

To recover, vaccines will need to be widely distributed and policy solutions implemented.

Some governments have provided financial support, either directly or through concessional loans and guarantees to industry. Thailand allocated $ 700 million to boost domestic tourism, while Vanuatu offered grants to small and medium-sized businesses. Countries have also helped companies adapt their business models and retrain their staff. In Jamaica, the government offered free online certification courses to 10,000 tourism workers to help them upgrade their skills.

However, many tourism dependent economies are hampered by limited fiscal space. Perhaps new initiatives to revive the sector could help. In Costa Rica, for example, national holidays have been temporarily moved to Monday to boost domestic tourism by extending weekends. Barbados has introduced a “Welcome Stamp” visa – a one-year residence permit that allows remote employees to live and work from the country. Likewise, Fiji has launched a Blue Lanes initiative that allows yachts to dock at its marinas after meeting strict quarantine and testing requirements.

Following the pandemic, a continued shift towards ecotourism – a fast-growing industry focused on conservation and local job creation – could give the industry a further boost. It is already a key element of Costa Rica’s tourism strategy. Thailand is also trying to move into niche markets, including adventure travel and health and wellness tours.

Technology can also play an important role. With social distancing and health and hygiene protocols likely to remain in place for the foreseeable future, contactless service delivery and investments in digital technology could be a bridge to recovery.

Finally, if the travel reduction were to last longer, due to changes in tourism preferences or economic scars, some tourism-dependent countries might have to take a long and difficult journey to diversify their economies. Investment in non-tourism sectors is a long-term goal but could be facilitated by strengthening the links between tourism and locally produced agriculture, manufacturing and entertainment. In Jamaica, for example, an online platform has been launched that allows hotel buyers to purchase products directly from local farmers. Exports, including services, could also be developed, using regional agreements to cope with constraints imposed by limited economies of scale.

Solutions will vary from country to country, and the pace and extent of the recovery will of course depend on global developments. But there is an important opportunity to be seized. Beyond the immediate priority of mitigating the impact of the pandemic, countries will need to create a “new normal” for the tourism industry. Diversification, shifting to more sustainable tourism models and investing in new technologies could help shape the recovery.

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