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COVID-19 impact: Changes in tourism

Q&A with tourism expert Simon Hudson

A year into the COVID-19 pandemic, we asked members of the university community to share their expertise about how the coronavirus has affected all facets of life and offer insights on ways to move forward.

Simon Hudson, a professor of tourism in the College of Hospitality, Retail and Sport Management, has been answering our questions about COVID-19’s economic impact on the tourism industry since the early months of the pandemic.

In summer 2020, not long into the pandemic, you published a book on travel during the coronavirus era. Now, you’re working on some new projects, including one with the United Nations. Tell us a little bit about what Simon Hudson has been up to going into spring 2021.

So I am working on a couple of grants related to COVID-19 and travel. One is for the United Nations Development Program (UNDP) called “Designing the Future of Tourism in Asia and Pacific.” The second is a $53,000 U.S. Department of Commerce grant that has more of a North American focus. But the purpose of both projects is to provide assistance and guidance to the tourism sector in terms of recovering from this pandemic and from future crises.  At the moment, I am writing 30 case studies looking at how the tourism sector has adapted to the pandemic in various countries, and the recovery progress of each destination. It is fascinating to see how different countries have dealt with the problem in different ways.

This spring I am also speaking at various online webinars and conferences about the impact of COVID-19 on travel. For example, in March I made presentations for both the University of South Carolina Alumni Association and the Alumni Community of Semester at Sea, a floating university campus that I have taught on in the past. And I am busy teaching online courses — I have just started an MBA course on entrepreneurship for the University of Aruba which I am really enjoying. Aruba is ripe for innovative new ideas. What the crisis has highlighted for many countries like Aruba is an over-dependence on tourism — in Aruba, tourism accounted for 73 percent of GDP, and 84 percent of all employment before the pandemic. 

Big picture, what kind of economic impact has the pandemic had, both domestically and internationally?

Well, in the U.S., the stats are telling us that overseas arrivals fell around 80 percent in 2020 (from 40.4 million to 7.2 million), and travel spending totaled a mere $679 billion, a 42 percent annual decline (nearly $500 billion) from 2019. International travel spending fell 76 percent (compared to 34 percent for domestic travel) while business travel spending fell 70 percent (compared to 27 percent for leisure travel). In total, 18 states and territories experienced a greater than 40 percent downturn in travel spending. Hawaii suffered the most of any state (down 60 percent year-on-year), and Mississippi suffered the least (down 26 percent). Hotel occupancy averaged just 44 percent in 2020 (33 percent lower than in 2019), and over 7 million jobs in the US have been impacted, a number that will get higher if travel restrictions continue.

Worldwide, tourism suffered its worst year on record in 2020, with international arrivals dropping by 74 percent, according to the latest data from the World Tourism Organization (UNWTO). Destinations worldwide welcomed 1 billion fewer international arrivals in 2020 than in the previous year. This compares with the 4 percent decline recorded during the 2009 global economic crisis. The crisis has put between 100 and 120 million direct tourism jobs at risk, many of them in small and medium-sized enterprises.

In South Carolina, the tourism revenue is estimated to have fallen by half — from $24 billion in 2019 to around $12 billion in 2020. As a consequence, tourism-related jobs were also halved. But there were some bright spots. Many golf courses grew their revenue, and despite being closed for all of April, the state’s parks generated $42 million in earned revenue in 2020, a 13.5 percent increase over 2019. Also, every month since the start of the pandemic, South Carolina’s hotels have filled more rooms than the national average, and while revenue per available room (REVPAR) fell 40 percent in 2020, this was not as high as the national average of 46 percent. Right now, the South Carolina’s tourism and hospitality industry is down 15 percent from where it was before the pandemic, according to economists.

Last March, we asked what indicators to watch as we tried to gauge the severity of the pandemic’s impact on the tourism industry. It’s been a year now, and we’re now starting to see a light at the end of the tunnel, so let’s flip the question: What factors should we pay attention to as we try to gauge the rebound?

I have said all along that recovery for the industry would be slow. Consumer demands and behavior have been permanently altered by the pandemic, and all stakeholders in the travel industry will need to adapt. Yes, there is a lot of pent-up demand, and there are many of us who can’t wait to travel again. However, the travelers of the future will be much more cautious, and the public health conditions of destinations, and the hygiene standards of transportations, hotels and other tourism facilities will become a top priority. People will also prefer short-haul breaks, and drive tourism will be popular. This could be good for South Carolina.

International travel will be slower to come back than domestic tourism. I just read a BBC article titled “Covid-19: International travel 'biggest impact' on deaths.” We know now that travel helped spread the pandemic — so we may not be willing to get back on a plane so quickly. And for the same reason, not all countries will be welcoming international tourists. Destinations like the Maldives have been welcoming tourists for months (even touting “vaccine tourism”), whereas New Zealand and Australia may not open their doors until 2022. What we are likely to see is an increasing number of tourism destinations creating so-called “air bridges” or “travel bubbles” — zones of exclusive travel between two or three countries.

The industry is also reliant on the worldwide economy recovering — and this may take some time. COVID-19 has caused the biggest global recession in the past century. In all, the global economy is estimated to have contracted 4.3 percent in 2020, and although economic activity is growing again, it is not likely to return to business as usual for the foreseeable future. This will obviously restrict both business and leisure travel around the world. The recovery for some tourism destinations is highly dependent on the economies around them. I was just writing about Laos, for example. They are almost completely reliant on foreign tourists from Thailand, China and Vietnam.

You mention “air bridges” and “travel bubbles.” What else do you predict might be different about travel and tourism coming out of the pandemic? What can we expect to revert back to pre-pandemic, and what changes will be more lasting, or even permanent?

It has been said many times, but I believe the tourism industry is not going back to normal — it will be a “new normal,” one characterized by an emphasis on health and safety, technology and a low-touch economy. Just take the airlines sector as an example. Strategy firm SimpliFlying identified more than 70 different areas in the passenger journey that are expected to change or to be introduced from scratch, including online check-in only, contactless payments, UV sanitation of bags, hygiene-enhanced security, and health screenings.

I also believe digital or health passports will become a requirement for international travel. The post-coronavirus cruise sector will also be radically different, embracing technology at a faster pace post-pandemic, and implementing new health protocols to win back customers. The lodging sector, too, has already started to change operations to emphasize cleanliness and safety. In the U.S., the American Hotel and Lodging Association (AHLA) have released new safety and cleaning guidelines for hotels, and major hotel brands like Marriott, Hilton and Wyndham have all pledged to abide by new protocols. Other sectors of the tourism industry, like restaurants, events and festivals, and casinos may never be the same post-pandemic. Business events in particular might never get back to pre-pandemic popularity — working from home via Zoom has transformed the way we do business.

In the near-term, it seems like we’ll have three categories of people — the vaccinated, those awaiting-vaccination and the anti-vaxxers. Does that pose challenges in the tourism industry? I’m thinking mostly about mask requirements, temperature checks and the like, and then how travelers may have different expectations, not only of businesses and service providers but also of each other.

Yes, this will certainly present challenges, and we are already seeing that. The vaccine passport is seen by some countries as a way to kickstart their tourism economies, so Greece, for example, has already struck a deal to welcome tourists from Israel if they have a vaccine passport. And Cyprus and Portugal have said they will welcome vaccinated British tourists this summer.

But it does raise ethical issues. Dividing the world into vaccinated and unvaccinated people could widen socioeconomic and racial gaps. But it is unavoidable. To be honest, I have taught three times on Semester at Sea (a floating university that circumnavigates the world) and it was a requirement to have a Yellow Fever jab — and the certificate to prove it — and I thought nothing of it. A small price to pay for the privilege of seeing the world.

As travel opens back up, do you anticipate a spike in prices for things like air travel, hotels and theme park admissions? Or a drop?

Yes, the first sector to bounce back from the pandemic will be the luxury one, so we may be paying more initially. Places like the Maldives are already repackaging themselves as private, single-group accommodation, and small-ship cruise companies are offering expensive private charters. And after initial discounts to encourage wary passengers back onto the water, cruises with lower capacity will cost more money, post-pandemic. Hotels and attractions with improved hygiene practices and a higher level of public trust will be more expensive, and tours with fewer travelers and more space will cost more money. But at the same time, the adoption of technology in the travel sector has accelerated at a rapid pace during this pandemic, and some of these innovations will bring down costs. The low-touch economy will require fewer staff, and organizations will streamline their business models. So in five years or so, we will probably be back to cheap travel for the masses.

For the industry, where do you see the biggest opportunities as we come out of the pandemic? There’s an awful lot of pent-up desire.

As I mentioned above, travelers have changed, and I think we will see an increased demand for health and wellness travel, wilderness trips, private accommodation and visiting national parks. The demand for more personalized and customized trips will also increase. And to counteract reluctance to embark upon journeys with all the hoops and hurdles of COVID testing, travelers will need to be lured and reassured by hassle-free, seamless travel. Customers have always been prepared to pay more for quality customer service — this will certainly be the case post-pandemic.

Some destinations may see an opportunity in the “halo effect” resulting from the positive media they have received in dealing the crisis and for being perceived as relatively “COVID-free.” New Zealand, the South Pacific, Vietnam, Australia, for example, may move to the top of the list of “desired destinations” for many travelers (and places to live). They may have paid a high price economically for prioritizing health over wealth, but there may be a positive long-term economic impact of this strategy. Countries like Japan could be in very marketable position, thanks to their high hygiene standards, commonplace mask use and culture of respecting other people, which has been reported globally during the pandemic.

Finally, the pandemic has also been an opportunity for some destinations to press the “pause” button and consider sustainability. The big buzz word in our sector in 2019 was “overtourism,” defined as an excessive number of visitors heading to famous locations, damaging the environment and having a detrimental impact on residents’ lives.  Places like Barcelona, Dubrovnik and Venice have an opportunity to put this right. Destinations are also beginning to recognize the need for a more diversified economy in order to weather the ups and downs of tourism. For example, a number of destinations are starting to target long-stay digital nomads to replace tourists.

Personally, what are you looking forward to as travel opens back up?

It is not just the travel itself I am missing — I just miss the freedom or ability to travel — and even the planning and anticipation process. I have probably spent two or three months of every year traveling for the last 30 years, so it has been hard for me being stuck in one place. (Champagne problems some would say but it is my job!) I am looking forward to seeing my two sons — they are in British Columbia in Canada, and I hope to get there in December. And, in the long-term, I would love to teach on another Semester at Sea voyage — it really is the best way to see the world!

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