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Impact of coronavirus on travel industry 9x worse than 9/11, data shows

Los_Angeles_International_Airport_-_Empty_International_Terminal_2 (Simeon87/WikiCommons)

The coronavirus (COVID-19) pandemic has dealt a major blow to nearly every industry, but perhaps none has been hit quite as hard as travel.

The United States is expected to lose $519 billion in travel spending this year, resulting in a total economic loss of $1.2 trillion in economic output nationwide, according to a new study by the U.S. Travel Association and analytics firm Tourism Economics.

The massive losses represent more than nine times the impact that 9/11 had on travel sector revenue.

Data shows that of the $519 billion in lost travel spending: $128 billion will be lost in food services; $112 billion will be lost in lodging; $97 billion will be lost in air transportation; $78 billion will be lost in other transportation; $54 billion will be lost in recreation and amusement; $49 billion will be lost in retail.

Travel sector revenue will be most impacted during April and May, where it is expected to be 81% lower than usual, according to the study.

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“Gradually lessening declines are expected in the summer, as travel restrictions are loosened regionally. However, losses will continue through the rest of the year,” states the study.

The reduction in travel spending will also result in $80 billion in lost tax revenue throughout 2020.

With all lost revenue accounted for, the travel industry’s losses are expected to result in a cumulative GDP impact of $651 billion in 2020, decreasing the industry’s economic value by 45% over 2019, data shows.

LOSS OF JOBS

According to the study, the precipitous drop in travel spending will result in 8 million of the country’s 24 million total anticipated job losses by the end of April, meaning travel-related job losses will account for one-third of all jobs lost.

Of the 8 million jobs lost as a result of declining travel, 6.9 million will be employees who work directly in the travel industry.

It is predicted that job losses will peak in April and May, but continue throughout the entire year, with nearly 3 million formerly employed travel workers still out of a job in December.

INTERNATIONAL IMPACT

Over 20% of the travel-related losses will be driven by a decline in international travel, with 43 million fewer travelers expected to visit the United States this year, the study says.

This drop in tourism will result in a loss of $116 billion in international spending, a 60% decrease from last year.

The decline in international visitors will span all reaches of the globe, though Europe and Asia will see the highest drops in travelers visiting the United States, with reductions of 68% and 63%, respectively.

MITIGATED DOWNTURN

The study presents a “mitigated downturn” scenario in which various efforts could be put forth to lessen the drastic impact on the travel industry.

“These include opening of travel businesses on a region-by-region basis, enhanced traveler safety measures, and a robust array of marketing campaigns to encourage travel among low-risk U.S. residents,” according to the study.

If properly implemented, the “mitigated downturn” could result in travel spending losses of just $401 billion, as opposed to the initially forecasted $519 billion, improving the outcomes for all other travel-related losses.

“Total economic benefits of mitigating the expected losses in travel would tally $147 billion in GDP, $18 billion in taxes, and 1.3 million jobs restored by the end of the year,” according to the study.

IMPACT ON NEW YORK

New York is particularly susceptible to travel-related job loss due to the city and state’s reliance on both foreign and domestic tourism as a major cog in the local economy.

James Parrott, director of economic and fiscal policies at the Center for New York City Affairs at The New School, told the New York Times that the city is likely to lose up to 500,000 travel-related jobs.

Among the industries most likely to be impacted are hotels, restaurants, for-hire vehicles, museums and other cultural institutions, according to Parrott.

Fred Grapstein, chairman of the Hotel Association of New York City, told the Times that the city’s hotels have been forced into massive layoffs due to the drastic drop in tourists and business travelers.

“What you’re seeing, unfortunately, is the layoff of all personnel — both union and management,” Grapstein said.

LOCAL TRAVEL AGENTS

“Our business is essentially in triage mode at the moment, with rightfully concerned clients contacting us around the clock to postpone their vacations, many of which have been planned for more than a year,” said Thomas Mottola, co-owner, Mottola Family Travel, Independent Agents with Glass Slipper Concierge, in Westerleigh.

Heather Pastore, owner of the Castleton Corners-based Manhattan Greeterz Walking Tours, recently said her tourism business has seen a dramatic decrease in business.

“Tourism is extremely impacted by this because all our major destinations in New York City that are tour-related are shut down because of the coronavirus. It’s impacting us because most walking tour companies are independently or family-owned and operated,” she said. “We are forced to scale back or rearrange our schedules.”

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