ATLAS Review Volume 2020-2 __________________________________________________ The impact and future implications of COVID-19 in the youth travel sector Greg Richards, Wendy Morrill Breda University of Applied Sciences The Netherlands richards.g@buas.nl As the UNWTO (2020) stated recently, “The outbreak of Coronavirus COVID-19 presents the tourism sector with a major and evolving challenge.” The fast-moving nature of the COVID-19 outbreak makes it very hard to monitor and predict the effects on the economy, society and culture. It is clear that the effects on tourism are severe, with countries closing their borders and airlines scaling back their operations, or even going out of business. As with previous crises, including SARS, Ebola and the global economic downturn, it is almost certain that recovery will follow. However, the question at the time of writing is how long will the effects last, and when will the eventual recovery begin? These kinds of questions highlight the need for research on the effects of such events, and the attitudes of those effected. The ability to relate the current crisis to previous events can also help to put the situation into perspective. Some commentators are already calling this the worst crisis in a generation. The novel coronavirus emerged in Wuhan, China in November 2019, although its existence was not confirmed until January 2020, when the number of cases began to increase rapidly and also spread beyond China. During February 2020 cases in China climbed steeply to reach 80,000 by the end of month, and cases outside China rose to 7,000. By March 18th cases in other countries (132,000) had far surpassed those in China, where the spread of the virus had been slowed by rigorous containment measures. The introduction of travel restrictions and bans had a progressively severe impact on travel, particularly after the World Health Organisation pronouncement of a pandemic on 11 March 2020. It is obviously too early to assess the full effects of a crisis that is still unfolding. Initial academic responses to the COVID-19 crisis are already emerging (Jamal and Budke, 2020), although these are based largely on news reports and general data from international organisations. It is therefore useful to assess the early impacts of the crisis on tourism businesses, particularly as reactions to earlier crises have been viewed as exaggerated (Wang, 2009). This paper presents data from the WYSE Travel Confederation research programme, which has been monitoring the performance of the youth travel industry since 2002 (UNWTO/WYSE 2007). This research programme enables us to take the pulse of the global travel industry at this crucial moment, and also to compare the current crisis with previous events that have been the subject of research. The forecast by the UNWTO (2020) on 16 March estimated that “global international tourist arrivals could decline between 1% to 3%, down from an estimated growth of 3% to 4% forecast in early January 2020”, with an estimated loss of US$ 30 to 50 billion in spending. The Asia and Pacific region was expected to be the most affected, with a decrease of 9% to 12% in international tourist arrivals. 57 ATLAS Review Volume 2020-2 __________________________________________________ This seems to be a relatively optimistic view, in the light of the current situation. By surveying travel industry representatives directly, we hope to generate a picture of the effects on the tourism industry, and how these effects are manifested in different sectors and world regions. The research questions addressed in this paper are therefore: 1) What are the current and potential future impacts of COVID19 on the travel industry? 2) How are these impacts distributed by tourism industry sector and world region? This research is based on a survey of travel industry organisations undertaken in March 2020. In order to put the results of this research into perspective, the literature review concentrates on previous comparable events in tourism in general and world health in particular. Literature review According to the UNWTO (2020) “International tourism has only experienced declines in 2003 following SARS and the Iraq war and in 2009 amid the economic and financial crisis, with strong and rapid recovery the following years.” The hope of a rapid rebound is probably behind the UNWTO expectation that global travel will only decline by a maximum of 3% in 2020. A similar rebound after a sharp decline was seen in 2003, when pent-up travel demand after the crisis ensured that the drop in international travel was only 2% in 2003, and there was a sharp increase of 10% in 2004. However, the response to COVID-19 has not only included travel restrictions and cancellations, but also extensive controls on personal movement and the closure of public services and businesses in many countries around the world. This also comes on top of a weakening global economy, and COVID-19 has already had major impacts in China, one of the powerhouses of economic and tourism growth. Analysis of previous crises shows that tourism can be severely impacted by a range of factors, including terrorist attacks (Araña and León, 2008), natural disasters such as earthquakes, tsunamis and extreme weather, financial crises (Sheldon and Dwyer, 2010) and outbreaks of disease. It can be argued that such crises are likely to increase, given the effects of climate change on extreme weather events and the increase in global travel as a conduit for the spread of infectious diseases. However, Novelli, Burgess, Jones and Ritchie (2018), analysing the effects of Ebola, argued that the effect of infectious disease on tourism was particularly under-researched. However, Wang’s (2009) review of different crises indicated that inbound tourism to Taiwan declined the most during the SARS outbreak in 2003, followed by the September 21 earthquake in 1999 and the September 11 attacks in 2001, whereas the impact of the Asian financial crisis in 1997 was relatively mild. The severe acute respiratory syndrome (SARS) outbreak in Asia in 2003 probably has the most parallels with the COVID-19 case. SARS caused ‘global panic’ in 2003, although drastic containment measures limited the spread of the disease to 8096 infections, almost exclusively in Hong Kong, China, Taiwan Province, Singapore, and Canada (Henderson and Ng, 2004; McKercher and Chon, 2004). The outbreak triggered a World Health Organisation ‘general travel advisory’, with dramatic declines in arrivals to affected countries. International tourism to China, Hong Kong, Taiwan and Vietnam declined by 58% in the first quarter of 2003 58 ATLAS Review Volume 2020-2 __________________________________________________ (Henderson and Ng, 2004). In three months, 774 people died, indicating a mortality rate of around 10%, significantly higher than the 1-2% currently indicated for COVID-19. Even so, McKercher and Chon (2004) argued that the tourism collapse was due more to government reactions to SARS than the disease itself, which they indicated “had no more impact on global tourism than any other seasonal influenza outbreak.” This is an interesting argument at a time when governments are adopting different types of measures to contain COVID-19, many of which have severe implications for travel. The eventual impact of SARS and the Iraq War on international tourism arrivals were a 2% drop relative to 2002, when an increase of around 4% might have been expected. This indicates a relatively minor impact globally, in contrast to the sharp declines in affected regions. Other disease-related crises have also had a significant impact on tourism. For example, Page, Song and Wu (2012) analysed the impact of H1N1 influenza virus—or swine flu, on international arrivals to the UK in 2009. Using econometric modelling they found that swine flu was responsible for an estimated loss of 1.6 million visitors in the second quarter of 2009 or 18% decline in international tourism arrivals. Novelli et al. (2018) in their study of the Ebola outbreak in Africa in 2013 and 2014 indicated the effect of sensational reporting by the media, so that even unaffected countries, such as the Gambia, suffered dramatic falls in tourism. The current study cannot provide an overall evaluation of the effects of the COVID19 outbreak, given the relatively early point of measurement. However, this study has the benefit of reflecting the reactions of the travel industry to the first impacts of the crisis. This in turn will provide an interesting perspective to later examine whether, as Wang suggests, the early reactions to such events tends to be exaggerated. Methodology The data for this study were collected between March 3 – 9, 2020 from a convenience sample of respondents who have links with WYSE Travel Confederation (WYSE Travel Confederation, 2020). As a global trade association WYSE is well placed to disseminate the survey to travel industry representatives in different sectors of tourism around the world. The survey was distributed as a web-based questionnaire, and because of the fast-moving nature of the crisis the aim was to collect a large number of responses in a short time period. The survey attracted responses from 73 countries, with 421 completed surveys being retained for analysis. Respondents included organisations specialised in youth travel products as well as those representing mainstream travel products. Most major sectors of the travel industry were represented among the respondents (see Table 1). Not surprisingly, a large proportion of the respondents had youth travel as their main focus of business. Youth travel is defined here as travellers aged 15 to 29, following the recommendations of the UNWTO/WYSE industry review (2007). Youth travel is estimated to account for around 23% of international tourism arrivals (WYSE Travel Confederation, 2018). 59 ATLAS Review Volume 2020-2 __________________________________________________ Table 1: Respondents by youth tourism industry sector Tourism sectors n % Accommodation 116 28 Activities, tours, attractions 91 22 Educational travel 41 10 Language travel 56 13 Volunteering, internships 47 11 Other 70 17 Total 421 100 All respondents were asked about the impact that the global COVID-19 (Coronavirus) outbreak has had on their core business. Specific questions also related to the change in business demand experienced in Q1 2020 vs the same period in 2019, the business outlook for the coming calendar year, top concerns for the immediate and long term, actions taken in response to COVID-19, and the impact of COVID-19 on group travel business. Analysis of results The survey respondents expressed a high level of concern about the effects of COVID-19 on their business. More than 80% of businesses believe that their business prospects will be worse over the coming year. On average, respondents reported a 26% drop in demand for business in Q1 2020 compared to the same period last year. There was no significant difference between business sectors, but youth travel specialists reported a slightly lower decrease in demand (24%) for Q1 2020 than non-youth travel specialists (30%). (Table 2). Looking ahead to the rest of the calendar year, on average respondents anticipated a 30% drop in total business volume. Again, there was no significant difference between businesses specialised in youth travel and other travel businesses in terms of business outlook for the rest of the calendar year. 60 ATLAS Review Volume 2020-2 __________________________________________________ Table 2: Reported actual and expected changes in business volume Actual % change in business volume Q1 2020 n Expected % change in business volume next calendar year Business sectors Accommodation 116 -27,62 -28,70 Activities, tours, attractions 91 -33,74 -32,11 Educational travel 41 -23,83 -16,51 Language travel 56 -39,32 -33,78 Volunteering, internships 47 -25,06 -20,28 Other 63 -24,89 -15,76 F 2,778 3,752 Sig. 0,018 0,002 World region Africa 21 -19,81 -11,86 Asia 34 -36,18 -34,94 Europe 222 -32,60 -30,99 North America 83 -25,06 -15,57 Central and South America 26 -21,88 -18,19 Oceania 25 -28,28 -26,72 F 3,047 3,869 Sig. 0,006 0,001 Survey period March 3-4 318 -27,91 -23,62 March 5-9 96 -34,61 -33,87 F 4,116 7,343 Sig. 0,043 0,007 -29,47 -26,00 All respondents 414 There was a significant drop in both reported change in business volume for Q1 2020 and expected business for the next calendar year between the responses recorded in the first two days of the survey (3-4 March) and the other days (5-9 March). This underlines the fast-moving nature of the crisis, as more businesses began to appreciate the scale of the outbreak and its consequences. 61 ATLAS Review Volume 2020-2 __________________________________________________ When asked about their immediate concerns regarding COVID-19, respondents ranked economic uncertainty and travel restrictions as their primary issues. Such macro-economic and political issues were ranked much higher than those that might be considered within the control of the organisation, such as pricing and marketing. There was relatively little difference in the ranking of these concerns for the short term and the long term, showing the significant impact that the respondents felt that external events were having on their business. In terms of the reaction of respondents to the crisis, the most frequently reported action was, by far, the modification of cancellation policies (36%). Reducing prices and capacity were also actions being taken by a large proportion of respondents. More strategic actions, such as improving quality, forming new partnerships and adjusting marketing and product offering seem to have lower priority for businesses right now. In particular, several respondents mentioned a shift in marketing to local or regional domestic markets. Not surprisingly, increasing prices and/or capacity were not seen as options by many respondents. Analysing the responses on different dates gives an impression of the fast-moving nature of the crisis. Respondents completing the survey in the period 3-4 March reported an average decrease in business in Q1 2020 of 28%, while those reporting from 5-9 March had significantly higher estimates, averaging almost 35% decline (Table 2). Similarly, those reporting in the first period were expecting a drop in business for the following calendar year of almost 24%, but by 5-9 March the expected reduction was almost 34%. The rise in reported cases outside China from 17,500 to 32,800 (Johns Hopkins University, 2020) over this period was no doubt a major contributor to increased pessimism. The expansion of the coronavirus quarantine zone to cover much of northern Italy on 8 March might also have increased perception of the serious implications of the outbreak for the travel industry. The responses from different world regions in general reflected the spread of the outbreak at the time of the survey. The biggest declines in business volume were reported in Asia, followed by Europe, Oceania and North America. Respondents in Africa reported smaller business decline, and the Middle East was the only region to report an increase in Q1 2020. In the following 12 months all regions expected significant declines, with Asia and Europe again being most pessimistic. Looking at specific tourism sectors, all reported drops in demand for Q1 2020 in comparison to the same period in 2019. The largest decreases were seen in the language travel sector (almost 34%), followed by activities, tours and attractions (32%) and accommodation (-28%). The language travel sector is likely to have been impacted by a dramatic drop in outbound Chinese travel, as the Chinese market is crucial for many language travel destinations, including the UK, Australia, and Canada. The effect of a reduction in travel is also likely to be keenly felt by accommodation providers and attractions, who rely on a steady flow of visitors. For the educational travel and volunteering and internship programmes the immediate effects were less obvious because of the seasonal nature of much of this business. The expected fall in business over the next 12 months in general reflected the short-term reduction in demand across the different sectors. 62 ATLAS Review Volume 2020-2 __________________________________________________ The only businesses reporting an upturn were those in the insurance sector, who reported a 2% average increase in demand during Q1 of 2020. Insurance providers were also optimistic about their prospects for the rest of the calendar year, anticipating, on average, a 5% increase in business volume. Discussion and conclusions There is no doubt that COVID-19 has already had a significant impact on global travel. The results of this initial survey indicate that businesses in almost all travel sectors and world regions have already experienced a downturn in demand, and that they are also expecting this to continue over the following 12 months. Perhaps more significant than the immediate downturn in travel caused many by travel bans, the youth travel industry faces considerable challenges in adapting to the ‘new normal’ in the post-crisis period. Youth travel accommodation in particular is likely to have to adapt radically, because hostels are characterised by the use of dormitories, which typically sleep between 4 and 12 people in one room. Hostels also have significant areas for socialising, and collective kitchens, which arguably set them apart from budget hotels. Implementing social distancing in these facilities will be challenging, particularly as the business model depends on a fairly small floor area per guest. The consequences of this could be seen in the closure of a number of hostels in the city of Lisbon, which had been re-purposed for housing migrants during the lockdown. Residents quickly became infected and the facilities had to be cleared. It seems that in the future hostels in particular will have to revisit their business model, and probably prioritise the provision of private rooms for the foreseeable future. In response to our research questions, firstly it seems that the business impacts of COVID-19 are already significant, and that the travel industry is expecting these effects to last for at least the next 12 months. Increasing pessimism during the course of the survey period also indicates that the crisis will continue to deepen, and comparisons with the effects of previous crises (such as SARS) suggests that COVID-19 will have considerably greater impact on the travel industry. Secondly, the negative impacts of COVID-19 are already being felt in all sectors of the travel industry (with the possible exception of insurance companies), and in all world regions. In addition to the immediate challenges posed by travel bans, research by WYSE Travel Confederation (2018) has already indicated a growing concern with epidemics, with the proportion of youth travel plans affected by such health issues doubling from 6% in 2007 to 12% in 2017. Optimists will point to the significant rebounds in travel to Asia following the SARS outbreak in 2003 and the global economic downturn in 2009. The presentations on the recovery of Asian tourism to the ATLAS webinar in May 2020 indicated that a number of countries that acted quickly on COVID-19 as a result of their experience with SARS are already looking to bounce back. But commentators have already warned of a possible ‘second wave’ of COVID-19, and it seems that Henderson and Ng’s (2004) warning that “Other unknown viruses are also predicted to emerge in the 21st century, and the prevailing forces of globalisation will facilitate their spread” was very prescient. As they said, such events are beyond the control of 63 ATLAS Review Volume 2020-2 __________________________________________________ the tourism industry, “which has few options beyond strict cost cutting, an exhaustive search for and exploitation of revenue-generating possibilities and calls for government aid.” It seems that even though the scale of the crisis may be greater than those experienced before, we are still in familiar territory as far as tourism industry response is concerned. References Arana, J. E., & León, C. J. (2008). The impact of terrorism on tourism demand. Annals of Tourism Research, 35(2), 299-315. Henderson, J. C., & Ng, A. (2004). Responding to crisis: severe acute respiratory syndrome (SARS) and hotels in Singapore. International Journal of Tourism Research, 6(6), 411-419. Jamal, T. and Budke, C. (2020), "Tourism in a world with pandemics: local-global responsibility and action", Journal of Tourism Futures, Vol. ahead-of-print No. ahead-ofprint. https://doi-org.proxy1.dom1.nhtv.nl/10.1108/JTF-02-2020-0014 Johns Hopkins University (2020) Johns Hopkins Coronavirus Resource Center. https://coronavirus.jhu.edu/ (Accessed 19 March 2020). McKercher, B., & Chon, K. (2004). The over-reaction to SARS and the collapse of Asian tourism. Annals of Tourism Research, 31(3), 716-719. Novelli, M., Burgess, L. G., Jones, A., & Ritchie, B. W. (2018). ‘No Ebola… still doomed’– The Ebola-induced tourism crisis. Annals of Tourism Research, 70, 76-87. Page, S., Song, H., & Wu, D. C. (2012). Assessing the impacts of the global economic crisis and swine flu on inbound tourism demand in the United Kingdom. Journal of Travel Research, 51(2), 142-153. Sheldon, P., & Dwyer, L. (2010). The global financial crisis and tourism: Perspectives of the academy. Journal of Travel Research, 49(1), 3-4. UNWTO (2020) Impact Assessment of The Covid-19 Outbreak on International Tourism. https://unwto.org/tourism-covid-19-coronavirus (accessed 19th March 2020) UNWTO/WYSE Travel Confederation (2007) Youth Travel Matters: Understanding the global phenomenon of youth travel. Madrid: World Tourism Organisation. Wang, Y. S. (2009). The impact of crisis events and macroeconomic activity on Taiwan's international inbound tourism demand. Tourism Management, 30(1), 75-82. WYSE Travel Confederation (2018) New Horizons IV: A global study of the youth and student traveller. Amsterdam: WYSE Travel Confederation. WYSE Travel Confederation (2020) COVID-19 Business travel impact survey. Amsterdam: WYSE Travel Confederation. 64