As governments race to contain new and more contagious variants of Covid-19, health passports will not be enough to revive tourism. According to Euler Hermes, the tourism industry could only see a recovery only in 2024.
As governments race to contain new and more contagious variants of Covid-19, health passports will not be enough to revive tourism. According to Euler Hermes, the tourism industry could only see a recovery only in 2024.
European sanitary certificates
The health certificates currently under discussion in Europe will not be enough to put the sector heavily impacted by Covid-19 back on track, believes Euler Hermes. The European Commission is working on the idea of sanitary passports to ease travel restrictions by next summer. However, two factors will be decisive: firstly, the effectiveness of vaccines in preventing the transmission of the virus and secondly, a common approach by the member states of the European Union.
Which factors to look out for?
To determine the pace of recovery after the Covid-19 shock, our experts looked at two dimensions:
1. How long it could take countries to achieve herd immunity
While the United States and the United Kingdom are on track to vaccinate their population at risk by the summer and all their population by the end of the year, Euler Hermes predicts a delay of six months before the EU, Japan and South America vaccinate all of their population at risk. This is an additional brake on the rapid recovery of global tourism activities.
2. Lessons from past economic slumps
After the two last crisis (9/11 attacks and the 2009 Global Financial Crisis), travel expenditures (leisure and business) returned to their 2 to even 3 years pre-crisis level . However, the Covid-19 pandemic has triggered an unprecedented economic crisis with major confinement measures, very strict travel restrictions and curfews, which still affect many people and industries.
Tourism recovery first in Europe
Euler Hermes predicts that European countries could experience a faster tourism recovery than the United States and the Asia-Pacific region. We can expect a timid recovery in the tourism industry from 2022. While Europe will experience a strong recovery in tourism from 2023, the US and APAC will have to wait until 2024.
Europe will return to a pre-crisis level in 2024 with 771 million expected international tourist arrivals, more than triple than the all-time low of 2020 (227 mn compared to 744 mn in 2019). Europe will strengthen its leading position with 55% market shares in 2024, +4% than before the crisis.
New business models
When looking at the different sub-sectors, Euler Hermes finds that only domestic leisure could return to a pre-crisis level by 2022. The expected rise of global unemployment will also worsen the difficult situation of the tourism sector, with consumers likely to curtail expenditures on tourism-related activities.
The Covid-19 pandemic could put an end to globalised tourism and travel for quite a long time, forcing tourism and travel-related players to transform their business models.
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