Effects of the Virus on the Economic Cycle
Odds are you and most other people aren't planning your next vacation in the middle of a pandemic. Our time and efforts are spent on staying healthy, keeping things going as well as possible at work, and making sure we have enough supplies to get us through self-isolation. Schools are shut down, and bars and restaurants are closed. In moments like this, it's easy to think that travel and leisure just aren't that important. However, tourism plays a substantial global economic role. Some countries rely on tourism as their primary source of revenue. Here are some of the economic impacts as tourism shuts down during Coronavirus.
Hospitality - Thousands of hotels across the world are empty right now. That means no room service, no laundry services, and no restaurant bills. Housekeepers, valets, and waiters who rely on tips for a large part of their incomes, suddenly have nothing. The hotels, restaurants, and other employers in the hospitality business run cash-intensive businesses. Without revenue, they can't meet payroll or debt obligations. As a result, when hotels are empty, employers have to lay off staff to reduce costs.
The Service Industry - When you plan and book a vacation, the money you spend gets spread across airlines, tour booking agents, and other service industry players. When no one's going on vacation, all of these service providers have no revenue for payroll, investment, advertising, and other key business expenses.
Suppliers and Contractors - The tourism industry runs with support from thousands of small contractors, vendors, and suppliers who maintain hotels, deliver food to restaurants, and build resorts. During a tourism slowdown, most of that activity stops. These small businesses, already operating on a small scale, have less flexibility to deal with economic hardship than large multinational hotel chains.
What Recovery Will Look Like
Hardship in the tourism industry that's caused by Coronavirus will ripple down into each employee's family. It will likely take years for tourism to recover. Even when the pandemic is over, and most of us start to get back to normal life, vacation is not going to be a priority. Most people will take some time to recover from lost income. They'll have a ton of work to catch up on, and their main focus will be on returning to day to day normalcy before planning their next cruise. Like most economic recoveries, some sectors will trail in terms of activity levels. After Coronavirus, tourism could experience a slower recovery due to the speed and severity of this slowdown.