ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Impact of COVID-19 on the Tourism Sector

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The COVID-19 global pandemic has created havoc and an unprecedented economic bearing on global economics, demand and supply disruption, etc. The virulence and the severity of the spread of the virus is so acute that it has caused a lot of job loss, unemployment, temporary shutdown of manufacturing output, and reduction in the consumption expenditure by people.

The COVID-19 outbreak has also brought a hard effect on the travel and tourism industry due to the temporary travel ban imposed by most of the countries. Tourism food services, transportation, entertainment, and hotel business are the main industries that would face the heat of the crisis. The economic costs in terms of tourism revenue out of this pandemic outbreak will continue to mount if the further spread of the virus is not taken care of. Methods like complete lockdown of the city and hard quarantine measures adopted by various countries are mostly a difficult affair for a third-world country like India. As per the Organisation for Economic Cooperation and Development’s (OECD) interim economic assessment, if the number of visitors would decline due to the coronavirus outbreak, it would impose sizeable economic costs in OECD countries, as tourism comprises of 4.25% of the gross domestic product (GDP) and 7% of employment share.

Tourism in India is remarkably affected due to the outbreak of COVID-19. The World Travel and Tourism Council (WTTC), in its 2018 report, said that the tourism sector in India generated 9.2% of India’s GDP in 2018 and contributed 8.1% of the total employment opportunities generated in the country. The WTTC has also ranked India 34th out of 140 countries in terms of contribution to tourism. The foreign exchange earnings of India during January 2020 were `20,282 crore as compared to `18,079 crore in January 2019. Among the top destination states, Maharashtra ranks highest, followed by Tamil Nadu, Uttar Pradesh and Andhra Pradesh. The tourism sector’s contribution to the GDP is mainly by domestic travel, which is 88%, and the remaining 12% is due to international visitors.

The Asian Development Bank (ADB) data set, 2020 has explored the impact of this epidemic on the world economy. The best case scenario is one when the tourism and travel ban will last for two months, for a moderate case scenario, three months, and worse case scenarios, for six months. As the number of months of the travel ban is increasing, the economic condition would become more critical.

In the worse case, decline in tourism revenues by the percentage of the highest decline in GDP would be Maldives (5.5%), Cambodia (3.5%), Thailand (2.4%), Mongolia (1.6%), Singapore (1.5%), China (0.26%), and India (0.009%). In most of these countries, revenue generated from tourism comprises a major share of the GDP. This virus outbreak would result in the GDP of the tourism sector declining by around 3% in the best baseline period. There is already ample evidence pointing out that tourists’ arrivals in most of developing Asian countries have been dropped by 50%–90% in February 2020 in comparison to the previous year. Overall, it is estimated that there will be a loss of $15 billion to $35 billion in tourism revenue for China and $19 billion to $45 billion in tourism revenue for the rest of developing Asia. The outbreak caused a temporary decline in consumption demand. For economies like India, with weak health systems, containment, prevention, and the response would be more difficult. The tourism sector will be much affected, as the potentiality of employment generation of the tourism sector is relatively good.

We can say that the ability to respond, detect and prevent such a pandemic on part of India is quite challenging. Due to the ban on travel, there is a temporary drop of all businesses in the tourism industry; this outbreak will also cause a long-term jolt. The substantial decline in business and recreation travel are likely to constrain consumption demand for some time. The government in India has taken a significant step to contain its impact and to save human resources at a huge economic cost. With proper policy formulation, this economic shock may subsequently fade away by early 2021, and “catch up” in tourism may be initiated.

Balkrushna Padhi

Bhubaneswar

T Triveni

New Delhi

 

Updated On : 27th Jul, 2020

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