UN Study Shows Int’l Travel Stuck At 1980s Levels; Recovery Forecast Suggests Long Way To Go

While the pace of recovery in the U.S. has been relatively swift as COVID-19 vaccines have reached the public quickly, the global pace of recovery has been quite a bit slower, beset by slow vaccine distribution and emerging new strains of the disease. Which means, according to a new United Nations study, global travel is going to take quite a bit longer to return than its domestic counterpart.

In 2020, international arrivals plunged by 73 percent from pre-pandemic levels in 2019, causing estimated losses of $2.4 trillion in tourism and related sectors, according to the report by UNCTAD and the U.N.’s World Tourism Organization (UNWTO). And though vaccines are now out, the outlook for this year doesn’t look much better except in certain geographies, Ralf Peters of UNCTAD’s trade analysis branch explained.

“The first three months were again bad, there was not much travelling happening. There is an expectation of a certain recovery in the second half of the year, at least for North America and Europe to a certain extent,” Peters told Reuters, crediting vaccinations with the speedier pace of recovery in Europe and the U.S.

But the rest of the world, the U.N. report notes, isn’t moving so quickly — meaning recovery on a global sale will be much slower.

The Tricky 2021 Recovery Journey

The report sets out a variety of possible scenarios for the international travel market in 2021 — all of which are fairly grim. The best outcome is a 63 percent drop from pre-pandemic levels, the worst is 75 percent drop. That would put losses off 2019 travel levels somewhere between $1.7 trillion and $2.4 trillion in 2021.

“In international tourism we are at levels of 30 years ago, so basically we are in the ‘80s … Many livelihoods are really at threat,” UNWTO’s Zoritsa Urosevic said. “What we are looking at in the long run is … meeting the 2019 numbers after 2023.”

The slowness of that pace, the U.N. notes, is a result of “diverse global recovery” from the pandemic, a somewhat euphemistic way of saying that vaccination distribution is slow in the developing world and disease variants, like the highly contagious DELTA strain, are also slowing down progress and making full global reopening impossible.

“We see for example Asia-Pacific is still one of the most closed regions in the world at this moment — most of the borders in the countries are either totally closed or with significant restrictions,” said Sandra Carvao, chief of market intelligence at UNWTO, adding those restrictions include long quarantine periods upon arrival in a new destination.

The Ripple Effects

The U.N.’s grim predictions for international travel come shortly after United Airlines announced it is expanding and upgrading its fleet to capture more consumers as they return to travel, particularly high-value business travelers. But United’s focus seems to be largely on its domestic fleet, those traveling within the U.S. for businesses.

A bullishness focused on business travel makes more sense in light of the U.N. prediction, since it is hard to imagine global business travel really recovering when traveling to certain locations could mean exposure to a more infectious form of COVID-19 at worst and a 10-day lockdown in a hotel room at best. A Zoom call, it seems, is going to look like the better option for some time to come. Because Zoom calls, Berkshire Hathaway Vice Chairman Charlie Munger recently noted during an interview with Becky Quick on CNBC, are convenient — traveling is not.

Munger, who turned 97 on his last birthday, claimed he had used Zoom three times in the last three days including one call that led to closing a deal on the other side of the world in Australia.

“I think a lot of business travel will never come back. Just corporation after corporation deciding one meeting a year, two meetings a year in person, and the rest Zoom. And I think that’s here to stay,” Munger said.

Good news for workers less on the go perhaps, and for the businesses that will no longer have to pay to send them. But for airlines and other industries that counted on the revenue those travelers brought along with them? They, it seems, face the difficult challenge of trying to build a recovery in a market that is only partially reopened on a global level when consumer interest in returning to that market appears to be diminishing by the day.