The recovery of tourism is forceful but the invasion of Ukraine already affects the sector

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The recovery of tourism is forceful but the invasion of Ukraine already affects the sector
Source: IATA
March 30, 2022

According to a report published by Euromonitor, the price of oil, inflation and the fall in the Russian issuing market have recently affected demand 

Travel and tourism was poised for a rebound in 2022 as they hoped to put the pandemic behind them. However, new threats have recently emerged that will delay the much-needed recovery.

Inflation spike exacerbated by war in Ukraine
In early 2022, there were warning signs that inflation was rising, with higher energy and food prices, mainly caused by supply chain disruptions and disconnections global. Travel agents, from airlines to cruise ships to online travel agencies, reported that the impact of rising costs was translating into higher prices for consumers. Rising prices could have been the perfect recovery lever to meet a surge in pent-up demand now that the pandemic is more under control, thanks to mass vaccinations that led to the lifting of travel restrictions in most countries. regions.

However, on February 24, 2022, Russia invaded Ukraine and the price of oil exceeded the warning level of $100 per barrel as economic sanctions took their toll and countries began looking for alternatives to Russian oil and gas.

The recovery of tourism in Europe has stalled as efforts focus on helping the millions of Ukrainian refugees fleeing war and conflict and heading west to neighboring countries like Poland in one of the biggest humanitarian crises ever. Europe has seen since World War II.

According to Euromonitor International's Travel Forecast Model, Russia accounts for 1% of outbound tourism spending, amounting to $9.1 billion in 2021. The loss of high-spending Russian visitors will not derail the recovery; however, it will be felt strongly in destinations around the world, from Europe and the Caribbean to Turkey and Thailand. Declining spending on outbound tourism from Russia could take it as much as 50% below the 2021 level, as economic sanctions, airspace closures and flight bans take effect.

The outlook for world tourism spending is a growth of 92% in 2022; however, reaching 45% of pre-2019 pandemic levels, operating well below capacity. Taking into account the collapse of Russian and Ukrainian tourism in the short term, global inbound tourism will be affected by USD 6.9 billion in 2022, representing a potential loss of 0.9%, which will weigh on tourism potential until 2026, although it all depends on how long it takes to negotiate a peaceful solution.

Travelers from long-distance markets such as North America are already postponing their trips to Europe due to the conflict in Ukraine, with the need for a strong communication campaign to reassure visitors that Europe is safe and open for business.

Pandemic still poses real risks
Even as the war overshadows Europe's tourism recovery, it is the pandemic that continues to plague regions such as Asia Pacific and the Middle East and Africa. The new Omicron variant that appeared in late November 2021 caused a lot of disruption and concern; however, the impact has proven to be short-lived. Countries like the UK have already reopened to travelers with double vaccination and lifted all restrictions, moving into the endemic stage and learning to live with the virus.

However, with vaccination rates exceeding 63% of the world's population, there is still a long way to go before herd immunity is achieved, considering low vaccination rates in emerging countries.

In the short term, Asia is the latest region to reopen its tourism sector, erring on the side of caution when it comes to opening borders and welcoming international visitors, coupled with the complexities of interoperable health schemes, or the lack of them.

Countries like China continue to follow a strict zero COVID-19 policy, making it difficult for destinations like Thailand to recover, which has implemented its sandbox approach in popular places like Phuket and Koh Samui to enable a safe and controlled reopening strategy. However, it is likely to remain deprived of its number one high-spending Chinese home market until at least early 2023.

In addition, vaccine inequity is a major barrier to reopening in regions such as Asia Pacific, where 14.1% of low-income economies, according to Our World in Data, have received a vaccine, leading to a two-tier recovery for the rich and the wealthy. the ones that don't have. As the World Health Organization states, no one is safe until everyone is safe from COVID-19. The glaring inequity in the delivery of vaccines is a thorn in the side of the recovery of sustainable tourism.

Source:  Euromonitor International


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