In March 2020, the World Health Organization (WHO) declared Covid-19 a global pandemic. The virus originated in Wuhan, China late 2019 – thus the name Covid-19. This corona virus became the first global pandemic in our lifetime as the one previous to this was the 1918 influenza pandemic which was estimated to have infected approximately 500 million persons and caused at least 50 million deaths.
As of mid-September, in excess of 606.5 million persons have been infected by Covid-19 and there have been almost 6.5 million deaths. Having been declared a global pandemic in March 2020, the impact on hospitality and tourism was immediate. By the Summer of 2020, the industry had ground to a halt. Airlines parked planes, cruise companies docked ships, hotels, restaurants and attractions closed and numerous countries implemented lockdowns and strict border controls where travel in and out was severely restricted.
In order to understand the impact of the pandemic, a review of the industry from the declaration of this global phenomena up to now, is necessary. From a global pandemic in March 2020 to a perfect storm in the Summer 2022.
First, the pre-covid performance of tourism globally has to be looked at and that entails a review of international tourist arrivals for 2019.
The United Nations World Tourism Organization (UNWTO), World Tourism Barometer of January 2020 (Volume 18) indicated:
- Based on data reported by destinations around the world, international tourist arrivals (overnight visitors) worldwide grew four percent (4%) in 2019 to 1.5 billion. - 2019 was a year of strong growth, although slower in comparison to the exceptional rates of 2017 (+7%) and 2018 (+6%). Of note was the fact that demand was slower primarily in advanced economies and particularly in Europe.
- All regions enjoyed an increase in arrivals. The Middle East (+8%) led growth, followed by Asia and the Pacific (+5%). International arrivals in Europe and Africa (both +4%) increased in line with the world average, while the Americas saw growth of 2%.
By sub-regions, North Africa (+9%), South East Asia and South Asia (+8%) showed the highest growth in 2019 followed by Southern and Mediterranean Europe and the Caribbean (both +5%).
The UNWTO characterized 2020, as “the worst year in Tourism’s history” with 1 billion fewer international arrivals. According to the World Tourism Barometer, the collapse in international travel represented an estimated loss of US$1.3 trillion in export revenues. The collapse in international travel in 2020 was global. Asia and the Pacific were the first regions to suffer the impact of the pandemic and had the greatest decline (-84%) which equated to 300 million fewer arrivals. The Middle East and Africa both recorded a 75% decline. Europe recorded a 70% decrease in arrivals. In absolute terms the European region had the biggest drop with over 500 million fewer international arrivals.
The Americas saw a 69% decrease in international arrivals. Within the Americas, the Caribbean region - one of the most tourism dependent regions in the world, saw a 65.5% decline in arrivals for 2020. There were just over 11 million arrivals compared to 32 million arrivals in 2019.
UNWTO reported in January 2022 that tourism grew 4% in 2021 but remained below pre pandemic levels. There were 415 million international tourist arrivals in 2021 compared to 400 million in 2020. The pace of recovery during 2021 was slow and uneven worldwide, due to varying degrees of: (i) border controls and travel restrictions; (ii) rates of vaccination and (iii) travellers’ confidence.
The strongest results in 2021 were recorded in Europe (+19%), and the Americas (+17%). Despite the strong growth, both regions were still some 63% below pre-pandemic levels. By sub-region, the Caribbean saw the best performance in 2021 growing +63% but still well below 2019. There are a few destinations in the Caribbean region that actually came close to, or exceeded pre-pandemic levels. Southern Mediterranean Europe and Central America were two other regions that showed strong growth in 2021… 57% and 54% respectively. The increase in international tourist arrivals in 2021, was 4% over the worst year in tourism ever – 2020, and this was still approximately 72% below pre-pandemic levels.
At the start of 2022, indications were that the rate of vaccination was improving as well as the easing of travel restrictions all of which would help to release the pent-up demand from 2020/2021, thus making for strong growth performance in 2022. However, it was also at the start of 2022, that the Omicron variant threatened to disrupt the positive growth prospects forecasted for 2022.
As it turns out, tourism recovery did gain some momentum in the first quarter (January – March 2022) with year over year growth of 182%. Globally, there were 117 million arrivals compared to 41 million in first quarter 2021. It is important to note that approximately 47 million of the 76 million increase year over year, were recorded in the month of March. Therefore, the negative impact of the Omicron variant was more pronounced in January and February 2022; by March, the recovery had begun to really build momentum.
While the recovery was getting stronger in March, economic and geopolitical challenges also began to intensify. The invasion of Ukraine by Russia impacted global distribution of wheat and other commodities. It also seriously impacted oil and gas supplies to Europe. Major western economics were all seeing the highest rates of inflation in 40 – 50 years. In the USA, which is the single largest tourism source market for the Caribbean, travel demand was increasing but so was inflation with gas prices and food prices leading the charge. There were lingering supply chain issues and specifically for travel, the airline industry was having a difficult time because of numerous delays and cancellations every day.
The airline issues were exacerbated by personnel issues (in-flight crew and ground staff) plus there were major disruptions because of severe summer weather. In the United Kingdom, there were similar issues this summer which resulted in London Heathrow “capping” the number of flights allowed into the airport on a daily basis, thus resulting in cancellations across the board. On one hand, tourism recovery was gaining momentum as things moved to second quarter but, at the same time, there were escalating economic and geopolitical challenges… which was like driving into a perfect storm.
With tourism playing such an important role in economies of the Caribbean, how did the Caribbean fare in this “perfect storm”? It has been reported that the Caribbean led the
recovery in the Americas this year so, let’s see which destinations have weathered the storm and have made good progress viz-a-vis the pre-pandemic benchmark of 2019.
As can be seen from the chart above, four (4) destinations in the region, US Virgin Islands, Puerto Rico, Dominican Republic and Curacao have already achieved the pre-pandemic 2019 benchmark in Year-to-Date (YTD) arrivals this year. Another four (4) destinations – Aruba, Jamaica, Antigua/Barbuda and St Lucia are at 80% or more of 2019 YTD arrivals.
It's worth noting that Cancun has already surpassed the 2019 YTD arrivals while Cuba on the other hand has only achieved 29% of 2019 arrivals YTD. As at the end of July, the Caribbean region has achieved 78% of the 2019 YTD arrival. In this regard, the Caribbean is managing to weather the storm despite the mounting challenges in the main tourism markets.
As restrictions have continued to ease, cases of Covid-related infections, hospitalizations and deaths have all declined significantly. In the USA, the Caribbean’s largest source market, inflationary pressures are beginning to ease, gas prices and airfares are coming down while there is still substantial pent-up demand. It all augurs well for a much-needed, hugely positive upcoming Winter tourist season in the warm-weather destinations of the Caribbean.