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Research Study: Coronavirus will hit Travel Industry by 50% in 2020-From Overtourism to Undertourism

Updated: Mar 15

by Cihan Cobanoglu, Faizan Ali, Dr. Valentina della Corte, Dr Giovanna del Gaudio, Dr. Ayse Collins, and Ms. Luana Nanu


As the name suggests, ‘Overtourism’ refers to an excessive number of tourists at a destination. While overtourism is a polarizing subject, it is mostly associated with negative impacts of overabundant visitation at a destination. For instance, the number of visitors to

Figure 1: Visitor Numbers for Amsterdam [1]

Amsterdam have doubled in 20 years, reaching to around 20.3 million in year 2018. What’s interesting here is that the population of Amsterdam is 854,000, making only around 4% of the number of travelers, visiting the City. Of course, it results in a negative experience for the not only the guests, but the ripple effect is felt by the hosts and the local people.



Tourists at the Trevi Fountain in Rome

Some examples of the destinations that are often cited with overtourism are Venice, Italy, Barcelona, Spain, Amsterdam, Paris, Bangkok, Cape Town, Ho Chi Minh City, Istanbul, Jakarta, Mexico City and New Delhi [1]. In Venice locals are often found in activities to protest overtourism [2].


Figure 2: International Tourist Arrivals [3]

International tourism arrivals increased over the last 50 years. From 25 million international travelers in 1950, the number has grown enormously to 1.4 billion in 2018 and 1.5 billion in 2019 [3, 4].


The main reasons for the overtourism and its impact on increasing number of destinations are obviously the rise of disposable income around the world, increasing numbers of discount airlines, cruise ships and the travel offerings by shared economies such as Airbnb and Uber.


The massive influx of travelers can disrupt day-to-day local lives, resources such as housing, and negatively affect the environment. Cities like Rome, Paris, Venice, Barcelona, Angkor Wat, Santorini and Bali are having issues of overpriced properties, where rent prices are pushing out local tenants to make way for vacation rentals. The strain of higher pricing is not limited to rentals but is observed in food prices, transportation and gas prices etc. I This follows the basic economic principle of high demand, high prices. n fact, a recent report named “Destination 2030” by the World Travel & Tourism Council (WTTC) warned 20 more cities i.e., Bangkok, Cape Town, Istanbul, Jakarta, New Mexico etc., to be facing the problem of overtourism. Tourism practitioners and academics were discussing the negative impacts of overtourism and how to tackle this issue.


Despite the consistent reminders of the impacts of overtourism, we have a new phenomena on our hands, that have tipped the scales – Covid19 Coronavirus. What started in Wuhan City, China has now spread to 136 countries with around 150,000 confirmed cases and 5393 deaths as of today.


Impacts of coronavirus have been enormous for many industries, specifically for travel industry. The ripple effect of Corona started with some countries implementing travel bans to/from certain countries. The United States was the first country that implemented travel ban to/from China [5] followed by many countries. The travel ban is now implemented towards many countries such as Italy, Iran, South Korea and Japan. Numerous European nations have quarantined entire countries with a complete halt all inbound and outbound travel. As a result, the discussion of overtourism has been replaced with undertourism or no-tourism.



ITB Berlin is the world's largest travel trade show. More than 160,000 people were expected to attend the trade show this year. About one week before the show, it was canceled (not postponed)[6]. This is only one example of many others. Natural product expo west [7], Asian American Hotel Owners Association Conference, RIMS2020 Conference [8] , C2, countless county fairs, music festivals have been cancelled or postponed. Many theme parks in the US including Disneyland, Disneyworld, Busch Gardens and SeaWorld etc are closed. The economic impact of cancelling these conferences, shows and events is severe in the travel industry because of missed flights, hotel nights, restaurant meals and other expenses that travelers make. However, the real impact will follow because of the missed business opportunities that were to be made in these events. For example, ITB Berlin is the heart of travel industry. Destinations are bought in this show. Now, all that will have to go to off-line which is never the same with the face to face negotiations. Moreover, as per WTTC, coronavirus pandemic may result in loss of 50 million jobs, leading to travel sector being shrunk by 25% in 2020. Another report on BBC.co.uk reports a loss of 2 million airline seats because of the travel ban.


M3 Center for Hospitality Technology and Innovation at the University of South Florida has predicted that the travel industry will shrink about 35-40% in 2020 compared to the last year. This will mean that the number of international travelers will shrink to less than 1 billion people, pre 2015 level. The demand for travel dropped by 50% [9]. The same ratio will apply to all other travel sectors including air travel, hotel industry. The restaurant industry will be impacted by about 20%.

National Restaurant Association (NRA) predicted that restaurant sales would reach $863 billion in 2019 [10]. M3 Center predicts that this number will go back to about $700 billion in 2020. This difference in loss of revenue between the travel industry and restaurant industry is because people still eat at restaurants and order online and take out despite the fear of Coronavirus.


M3 Center has conducted a study about the impact of Coronavirus on travelers’ behaviors. More than 2000 travelers took the survey from more than 20 countries. The global study showed that the perceived image of China among travelers dropped to less than 50% (100%=very positive) while Italy's image was damaged severely. This is expected, however, after the virus threat is over, these indications recover much faster, reason being travelers’ short term memory about the negative aspects of these destinations. Majority of the survey respondents (57.55%) will not travel until Coronavirus threat is over. On average, this translated about $10,293 less money spent on travel per person per year. This percentage is in line with the travel cancellations.


Perceived Image of Italy
Perceived Image of China

The fear that Coronavirus brought to consumers' minds is something hard to make sense. According to M3 Center's study, 22.83% of the travelers drink less or do not drink Corona Beer because of the brand name. Corona means crown in Spanish and Italian language, hence the beer name comes from. The Coronavirus looks like crown too, hence the name. This unfortunate similarity cost the Corona Beer company millions of dollars.


The travel industry has faced many challenges in the past including the 9/11 attacks and financial crisis of 2008-2010, although none of them were similar in magnitude as that of Coronavirus It is our hope that similar to the track record, travel industry will survive this and resurface. Having said that, we believe that the social impacts of coronavirus will be difficult to overcome. Many travel organizations started to lay off staff members and this will likely continue. The biggest role in these tough times lay on governments. They should be supporting all affected industries and the people that are working in these industries. Even though Coronavirus will be over soon (hopefully), the impacts will be here for years to come. With the smart intervention of government incentives, the industry and many jobs may be saved. This crisis will be solved with resilience, perseverance and faith that it will be over.


References

1: https://www.scmp.com/lifestyle/travel-leisure/article/3015505/overtourism-20-cities-could-be-next-suffer-will-they-cope

2: https://www.cnn.com/travel/article/venice-tourism-overcrowding-intl/index.html

3: https://ourworldindata.org/tourism

4: https://www.e-unwto.org/doi/abs/10.18111/wtobarometereng.2020.18.1.1

5: https://qz.com/1795615/coronavirus-travel-bans-on-china-imposed-by-growing-list-of-nations/

6: https://www.itb-berlin.com/

7: https://www.ocregister.com/2020/03/12/coronavirus-cancellations-pile-up-for-trade-show-businesses/

8: https://www.northstarmeetingsgroup.com/News/Industry/coronavirus-meetings-Postponements-Cancellations-COVID-19

9: https://techcrunch.com/2020/03/13/three-travel-startups-tell-us-how-theyre-responding-to-the-coronavirus-crisis/

10: https://www.nrn.com/sales-trends/us-restaurant-sales-reach-record-863b-2019-nra-says


This article is written by Dr. Cihan Cobanoglu (University of South Florida), Dr. Faizan Ali (University of South Florida) , Dr. Valentina della Corte (University of Naples Federico II), Dr Giovanna del Gaudio (University of Naples Federico II), Dr. Ayse Collins (Bilkent University), and Ms. Luana Nanu (Auburn University).

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