Up to US$8tn could be lost in global tourism spend – report

Up to US$8 trillion in tourism spend could be lost in global tourism spend before tourism revenue reaches pre-COVID levels in 2023 or 2024, according to a recent report by industry analysts, McKinsey & Company.

The ‘COVID-19 Tourism Spend Recovery in Numbers’ report highlighted that McKinsey’s tourism recovery model forecasted a cumulative drop of $3 trillion to $8 trillion before tourism expenditure returned to pre-COVID-19 levels.

“Recovery will be slow and driven by the underlying dependencies countries had on domestic and non-air travel. Different countries, therefore, should prepare for their own recovery curves and reimagine their tourism sectors (as well as the support they provide) differently,” said Urs Binggeli, senior knowledge expert in McKinsey’s Zurich office, and one of the three authors of the report.

The authors pointed out that while post-COVID-19 tourism recovery would be primarily driven by the strength of the economic recovery, five key drivers were likely to impact the recovery trajectory.

“Managing those concerns is key to driving a turnaround in tourism,” said Binggeli.

Key findings

1. In an optimistic recovery scenario, combining rapid virus containment and rebounding economies, will see recovery to 85% of 2019 volumes by 2021 and a full recovery by 2023. Under a pessimistic recovery scenario, 2021 levels can be as low as 60% of 2019, further postponing the recovery.
2. Domestic tourism will return to pre-crisis levels around one to two years earlier than outbound travel. Multiple factors drive this: fewer restrictions for travel within own country, more substitution options for non-air-based travel (such as cars and trains), anxiety, and a larger share of business travel. In addition, domestic travel is expected to recover faster than hotels as a substitution toward vacation rentals and friends and family will increase in certain markets.
3. The impact of COVID-19 will likely vary across countries, with fast recoverees supported by robust domestic tourism sectors and high-quality networks of land transport.