Coronavirus (Covid-19) Executive Briefing
Understanding the economic impact of the Covid-19 pandemic and the implications for the travel and tourism sector
- ECONOMIC IMPACT -
Economists and institutions have cut their forecasts and experts are predicting the potential onset of recessionary environments.
In the short-term, unemployment rates will rise in all major economies. The International Labour Organization estimates there will be around 25 million job losses worldwide.
UNCTAD forecasts a $2tn-$3tn reduction in investments in commodity-rich exporting nations.
IMF forecasts the global economy to contract by 3% in 2020 as ‘Great Lockdown’ causes a dramatic drop in economic activity.
Impact of Covid-19 on asset prices
- SECTOR IMPACT: TRAVEL AND TOURISM -
As of 14 May 2020
Airlines industry impact
IATA forecasts that the airline industry will see revenues fall by $315bn this year, a number that is subject to regular re-assessment. This number assumes a good level of government intervention. In some markets, such as the US, such support has been forthcoming. In others, most notably the UK, it has not.
Travel and tourism job losses
The World Travel and Tourism Council (WTTC) estimates job losses of 100.8 million in the travel and tourism industry due to the economic damage caused by the Covid-19 outbreak.
impact on transport infrastructure
GlobalData predicts that global construction output will contract by 2.2% in 2020. Governments and public authorities will advance spending on infrastructure projects as soon as normality returns to reinvigorate the industry.
Cruise industry developments
Suspending future voyages
Carnival subsidiary Carnival Cruise Line has extended its sailing suspension to 27 June, Norwegian Cruises has suspended all voyages until 30 June, Royal Caribbean until 11 June, and Norwegian and Viking until 30 June and MSC until 10 July. Saga is considering “prudent planning scenarios” for the extended suspension of all cruise and tour operations for six months due to the impact of Covid-19. Another Carnival subsidiary, Princess Cruises, is suspending sailings until 30 June, as well as pairing back its presence in Alaska this summer and delaying the launch of new ship Enchanted Princess.
Extension of the US's travel cruise ban
The US Centers for Disease Control and Prevention (CDC) has extended its ‘no sail order’ for cruise ships. The CDC has implemented the no sail order for at least 100 days or until US health bodies declare the pandemic over. The CDC also criticised the cruise industry for not doing a sufficient job to prevent the spread of Covid-19 on its ships.
Postponing ship launches
Virgin Voyages announced it would postpone the launch of its first ship, Scarlet Lady, from March to July. The cruise line has also announced a number of shore-side redundancies within its US team. Hundreds of Stena Line staff in the UK and Ireland are being furloughed or made redundant due to the impact of coronavirus. The Swedish-owned ferry company plans to furlough 600 employees and make 150 redundancies across the UK and Ireland. It will not be a surprise to see more redundancies across the sector in the days ahead.
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