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It’s one of the largest industries in the world, with $5.7 trillion in revenue. It is responsible for an estimated 319 million jobs, or roughly one in 10 people working on the planet. And no sector is more at risk from the novel coronavirus.
The travel industry has already taken a huge hit due to travel restrictions and canceled trips for both business and pleasure, but that’s just the beginning.
It could be the worst crisis for the industry since the September 11 terrorist attacks on the United States, according to some experts.
“It’s on the front line of the fallout,” said Mark Zandi, chief economist with Moody’s Analytics. “It’s the most directly and immediately impacted.”
Photo: A screenshot video from CNN talking about Disneyland’s shut down.
Travel industry crucial to the global economy
The hit to the travel industry has the potential to become a major drag on the global economy if the coronavirus continues to spread around the world.
“It’s vital. If you measure the entirely of the impact of travel, it is bigger than any other industry around the world. No other industry can say it supports 1 in 10 jobs,” said Adam Sacks, president of Tourism Economics, a leading research firm that follows the industry. His firm produced the data on the industry’s global revenue and employment, the latter for the World Travel and Tourism Council.
“It’s partly because it’s such a diverse industry. It includes a lot of things you don’t think of,” said Sacks. “Besides airlines and hotels, it’s part of retail, part of restaurants, parts of technology.”
The effecton travel is growing by the day.
There has been a sharp drop in travel across the Pacific, not just to and from China, the epicenter of the outbreak, but also to other Asian countries. This week United Airlines disclosed that it had seen a near total drop in demand to China and about a 75% decline in near-term demand on the rest of its trans-Pacific routes.
Chinese nationals have become the most frequent global travelers in the world, with 180 million holding passports, compared to the 147 million Americans who have passports. And travel by the Chinese has been virtually halted due to the crisis.
Sharp drop in business travel
The falloff in travel has expanded beyond the Chinese market.
Several major conferences expected to draw more than 100,000 visitors each were canceled even if their location has yet to experience an outbreak. That’s because people traveling from around the world could bring the virus to the event, and infected people are slow to show symptoms.
Canceled conferences include the Mobile World Congress in Barcelona, the leading show for the mobile phone industry, the Geneva Motor Show, Facebook’s (FB) F8 conference, and ironically enough, the ITB Berlin, the leading trade show for the travel industry itself. It was expected to draw 160,000 participants starting Wednesday.
“The fact that the largest global travel show is being canceled right now is telling,” said Sacks.
But it’s not just the big shows being canceled. All kinds of business trips are being canceled or put on hold because of companies’ concerns with exposing employees to unknown risks.
Major companies such as Amazon (AMZN) are on record discouraging non-essential travel for employees. According to a survey of 400 businesses by the Global Business Travel Association, nearly half of businesses have already canceled or postponed at least some meetings or travel. The group estimates that up to 37% of business travel is at risk of being lost.
Read the full article at CNN Business: https://edition.cnn.com/2020/02/29/business/travel-industry-coronavirus-economic-impact/index.html
