Summer in the era of the COVID pandemic is unchartered territory for many in the travel and tourism-related industries. In days gone by, this was the high season where people go on summer holidays with their families. However, the pandemic, travel restrictions, and economic slowdowns are set to change that.
Internationally, many countries have closed their borders or put in place restrictions targeting travelers from “high-risk” countries. Current limits in Canada mean that the Toronto Blue Jays will have to play their entire season in the U.S. as those crossing the border will have to undergo a 14-day quarantine. This would make it impossible for the Blue Jays to play home games during the abbreviated season, which is scheduled to start in late-July.
While airlines in the U.K. and elsewhere have fought to undo the restrictions, they have had little success – at least so far – countries are also putting in place testing and insurance requirements for visitors. These moves have kept international travel from rebounding since most countries went into lockdown model in April.
But the obstacles to the travel and tourism industry are not limited to international travelers. Connecticut, New Jersey, and New York just announced quarantine requirements for visitors from Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Utah, and Texas. While some have questioned the legality of this move on Constitutional grounds, Florida and Rhode Island enacted similar requirements for visitors from New York earlier this year.
Given these measures, the summer travel season is set to be completely different from what we have seen in recent memory. According to reports, interest in R.V. rentals is at an all-time high, and with gas prices the lowest they’ve been in years, some observers think that the saving grace for the summer vacation season might be millions of Americans taking road trips.
However, this does not bode well for airlines. Already walloped by the lockdowns, companies have cut back on routes, canceled purchases, and airplane leases, and mothballed a large percentage of their fleet. With the recent growth of cases in the U.S., industry analysts are becoming increasingly concern that the hoped-for bounce back in air travel might now happen any time soon.
Then there is the cruise industry. In many ways, the industry has become the poster child for the pandemic, and hundreds of cases were tied to infections on cruise ships. The reputational damage from these cases is almost impossible to quantify as even cruise lines whose ships did not have outbreaks have been caught up in the storm.
Like airlines, analysts have no idea when it will become safe to sail again. In May, Norwegian Cruise Lines sought to reorganize nearly $2 billion in debt, and this bankruptcy is seen as a harbinger of things to come for the broader industry.
One company with exposure to the cruise industry is Disney. One of the fastest-growing cruise operators in the U.S., the company has also been forced to close all its theme parks around the world and has even seen the suspension of production on many of its movies and T.V. shows. While it is still early, the company has already said that it expects to report close to $1 billion in COVID-related losses.
Besides the impact on hotels, tourism operators, and airlines, the economic slowdown is also having a tremendous impact on households who were playing to take a vacation this year. The lockdowns and travel bans have forced many to cancel their plans this year, and the round of massive job losses reported in March and April have caused millions to rethink their summer plans.
While there are some bright spots, short-term rentals have seen increased demand as local travellers seek a vacation closer to home this summer, there is potential for households to cut spending going forward. Many small businesses that rely on the summer travel season are already cutting back staff to make sure they are financially protected. Some governments are pushing local tourism to make up for the lack of international travel to help the struggling industry. Tourism Australia is pushing a “Holiday Here This Year” campaign to help local businesses, like Sailing Whitsundays – Wings, that charters boat tours to the Whitsundays and Great Barrier Reef and heavily relies on tourism. This is the beginning of the ‘local travel’ trend that we will see until boarders begin to open to and international travel becomes affordable once again.
For households worried about money, COVID could not have come at a worse time. According to Qapital, “early planning is key when it comes to saving money for a vacation,” and the lost months of work have made it harder for many to save up enough money to afford their summer trip. As such, it is expected that many will forego their plans this year, or if they do travel, they will spend much less than they used to.
Even if the COVID is to decrease in the coming months, the impact on the travel and tourism industry could be felt for years to come as households are forced to cut back on spending, operators are forced out of business, and governments seek to balance public health concerns.
