How Epidemics Threaten the Travel Industry

All it takes is 1 particularly nasty bug to upend the world as we know it. Today we’re discussing how epidemics threaten the entire travel industry. We’re admittedly living in scary times with a global pandemic being declared by the World Health Organization in early 2020. We’re forced to come to terms with how quickly life can go from business as usual to something else entirely for all our modern medicine and technology, we’re still woefully unprepared to deal with a global health crisis in a matter of days and outbreak of an infectious disease can become an epidemic in a matter of weeks.

That epidemic can become a pandemic, with effects being felt. Around the world. While such outbreaks threaten numerous industries, there are few more vulnerable to its effects than the travel industry. One pandemic can cripple the industry. Tourism is a high cost industry. Most of the moving parts within the world of travel have relatively high operational budgets that require high volume in order to be profitable. A single day off hurts the bottom line, betting extended period of inactivity can sync businesses. Budgets are made around projected revenue and when they suddenly disappear the costs and losses add up at a staggering rate. Nowhere is this more apparent during an epidemic. It’s estimated that in 2013, the H1N1 influenza last Mexico, roughly 1,000,000 visitors, representing 2.8 billion in U.S. dollars.

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SARS cost Malaysia and China $1.7 billion and $3.5 billion in lost tourism revenue respectively. Middle Eastern respiratory syndrome, also known as MERS, resulted in $2.6 billion in lost revenue for South Korea alone. Airlines, hotels and cruises bear the brunt of these losses. But such outbreaks also affect a wide variety of related industries. Restaurants and bars are arguably among those hardest hit when such an epidemic occurs, airlines respond by offering rock bottom prices even on flights scheduled for long after the crisis is expected to have passed. But when a pandemic is in effect, people tend not to look ahead cruise ships given the close quarters nature of the experience, are particularly vulnerable to sudden and massive losses of revenue, though it’s perhaps too early to be able to say with certainty. Many experts are predicting that the 2020 global pandemic has triggered a recession. We won’t know the exact numbers for some time, but it’s estimated that this crisis will cumulatively cost airlines $113 billion.

The travel industry as a whole $820 billion. Businesses fail. Employees suffer, every epidemic is different. Infection rate fatalities. It’s global spread government responses. These are just a few of the many factors that dictate. Its duration and the effect it has on the travel industry historically, despite incurring severe losses during health crises. Businesses operating within the tourism industry have largely managed to bounce back, but not all of them do. 2020 has already seen the collapse of Flybe, a passenger carrier in the United Kingdom, and analysts highly doubt that it will be the only one even major airlines like United and Delta have needed to borrow in the hundreds of millions and billions to stave off ruin during times of crisis such as this.

Even staying aloft often brings with it incredibly difficult choices. With so many flights being canceled and airline stocks in freefall, Norwegian Air has had to temporarily layoff roughly 50% of its staff. Bankruptcy is a very real threat for many budget and mild range carriers, and this market instability has a cascading effect even when the smoke clears. Post pandemic, the threat of future epidemics dissuades the entry of new businesses into the industry. The volatility of this industry.
how epidemics threaten the travel industry How Epidemics Threaten the Travel Industry

Also makes it an unappealing one for prospective employees. The more tourism centric the economy, the more devastating the effects when discussing the economic effects of epidemics, we often look at the big picture, total losses within the industry, losses to airlines, cruise lines and so on, but it’s equally crucial that we acknowledge what the revenue from tourism represents for specific countries or destinations economies, sudden loss of income is always going to hurt, but for a nation with a diversified economy, the immediate effects are likely to be less devastating. In the recovery quicker, when you look at places like the British Virgin Islands, the seashells or Aruba tourism represents over 25% of their gross domestic product. For the Maldives it’s nearly 40% take away tourism for a period of time and the outcome can be catastrophic. In 2020 some of the nations that are suffering most in this regard are in Asia. In Thailand for example, tourism makes up 12% of the GDP and roughly 30% of travelers hailed from China. This epidemic. Is expected to cost Thailand alone $3.05 billion. A country’s economic dependence on tourism is more of a predictor of the overall economic impact of an epidemic than the actual spread of said disease within that country. When an outbreak occurs and begins to cross international borders, the travel industry suffers on a global scale. The sad truth, global travel and epidemics go hand in hand. We’re living in an era of unprecedented global travel.

Never before has a higher percentage of the planet’s population. Been traveling further or more regularly and while that translates into a fantastic bridging of cultural gaps, it also means that germs travel far faster and further than ever before. It’s one of the inherent risks of our increasingly Mobile World, and as history has taught us, the more mobile, the greater the threat. The Black Death ravaged Eurasia from 1347 to 1351 and claimed the lives of somewhere between 75 and 200 million people, two of them major factors behind its spread. The Silk Road and merchant ships the legendary trading route connecting the east and West paired with shipping within the Mediterranean basin, greatly facilitated the spread and impact of the pandemic. Now, none of this is to suggest that humanity should revert back to a more isolationist approach to international relations. It just means that viral outbreaks and epidemics it’s somewhat unavoidable and that we need to take the appropriate measures to protect both ourselves and the travel industry. Fear of travel typically persists. Even after the epidemic has passed, fear is infectious and hard to shake. Once it takes hold. When a country falls victim to an epidemic, natural disaster attack or political instability, travelers understandably avoid that destination. Unfortunately, even after the actual threat has passed, the international travel community is often hesitant to return, and association has been established that typically requires substantial efforts on the part of local tourism organizations to overcome.

But when an outbreak? Reaches pandemic proportions and global travel is deemed ill advised across the board that fear spreads from specific destinations to a blanket. Distrust of travel as a concept. Given that pandemics can leave people in vulnerable positions in a foreign country, travelers are extremely hesitant to risk placing themselves in a similar situation again. As we’ve seen, epidemics can spread with shocking speed in a matter of weeks, and area can go from being a popular tourist destination to being locked down epidemics. Eventually pass, but the full extent of the effect they have on the travel industry is largely dependent upon the traveler mentality. Afterwards, people need to travel to keep the travel industry alive. The response are higher focus on preparedness, moving forward in order for the travel industry to recover, and hopefully prosper in new systematic changes need to be made to protect travelers and businesses. Epidemics are an inevitability in our modern world, but by accepting them as such, we can better prepare ourselves. And significantly diminish their impact. Airlines and cruise ships need to have contingency plans in place that include funds to pay employees during epidemics. Company policies need to be put in place that allow travelers to reschedule travel plans when an epidemic does break out, if not, the risk of losing the money they’ve spent might hamper future travel. This is something many airlines have recognized and already begun to implement in response to the 2020 pandemic, while businesses within the tourism industry need to have clear action plans for such crises. Considering the important economic role of travel governments need to learn from epidemics past and put far better strategies in place both at the national and local level. A quick and easily deployable response to a possible pandemic is the most surefire way to curb its spread and protect the economy. In doing so, governments can significantly lighten the burden on the travel industry.

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