The COVID-19 pandemic is the greatest challenge the modern travel industry has ever faced. It is uniquely punishing global tourism because it works against the industry on two fronts. On the purely economic front, the recession it caused would have brought a slowdown in traveler activity. But COVID-19 combines this business downturn with health and safety precautions - including lockdowns, airline capacity reductions, physical distancing, and more - that directly restrict people’s ability to travel. Under those never-before-experienced conditions, it is difficult to forecast a timeline for recovery.

Scenarios suggest global tourism recovery by 2023–2024

McKinsey Global Institute in partnership with Oxford Economics put together a framework to model how two sides of the crisis—the economic and the public-health factors— could jointly have an impact on the economy. Tourism will progress through four stages: a crisis period, a pandemic recovery, an economic recovery, and finally a new normal. While some sectors return to pre-crisis conditions in the new normal, others will remain affected by secular shifts in consumer behavior and preferences.

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The four scenarios, ordered by the share of executive respondents who selected the scenario as most likely outcome for the world economy:

  • A1 - Muted Recovery (moderate health and moderate economic response). With partially effective public-health and economic-policy interventions, the return to pre-crisis levels of GDP, income, and corporate earnings will take time. 

  • B2 - Slow Long-Term Growth (moderate health and worse economic response). Public-health interventions are partially effective but do not prevent virus recurrences, and economic-policy interventions are insufficient. This scenario sees a long-term impairment of travel’s growth potential.

  • A3 - Slow Recovery (better health and moderate economic response). The virus is effectively contained, but because economic responses are only partially effective, growth returns slowly to pre-crisis levels. 

  • A2 - Strong Rebound (moderate health and better economic response). Effective interventions will help effectuate a return to trend growth. 

Recovery back to 2019 tourism spend levels is not expected before 2023. In the scenario most executives currently expect as most likely globally (A1), the damage could be $6.4 trillion in lost spend. Even in a more optimistic scenario (A3), the top 10 countries (measured by domestic and outbound tourism spend 2019) might lose $3.7 trillion in cumulative 2020–2030 tourism spend. 

Recovery will look very different from one geography to another. Global tourism spend might recover back to 2019 levels between 2023 and 2024, depending on the effectiveness of public-health measures and economic policy interventions. Both of these factors, governments have differing levels of effectiveness in responding to the health and economic crisis, and the difference in the country's tourism economy will affect recovery patterns that will emerge.

View more at report "The travel industry turned upside down"

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