Decline in Russian outbound tourism will cut $7 billion from global tourism
Travel and tourism were poised for a recovery in 2022 as they hoped to put the pandemic behind them. However, new threats have recently emerged that will delay recovery if necessary.
Soaring inflation aggravated by war in Ukraine
At the start of 2022, there were early signs of a spike in inflation, with rising energy and food prices, mainly caused by disruptions and disconnections in the supply chain world. Travel players from airlines to cruise lines to online travel agents have reported that the impact of rising costs is translating into higher prices for consumers. Rising prices could have been the perfect stimulus lever to meet strong pent-up demand now that the pandemic is better contained, thanks to mass vaccinations leading to the removal of travel restrictions in most regions.
However, on February 24, 2022, Russia invaded Ukraine and the price of oil rose above the warning level of USD 100 per barrel as economic sanctions grew and countries began to look for alternatives. to Russian oil and gas.
Europe’s tourism recovery has been halted, as efforts shift to helping the millions of Ukrainian refugees fleeing war and conflict, heading west to neighboring countries such as Poland in one of the greatest humanitarian crises that Europe has known since the Second World War.
According to Euromonitor International’s travel forecasting model, Russia accounts for 1% of outbound tourism spending, or USD 9.1 billion in 2021. The loss of high-spending Russian visitors will not derail the recovery; however, it will be keenly felt in destinations around the world, from Europe and the Caribbean to Turkey and Thailand. Lower Russian tourism spending abroad could bring it up to 50% below 2021 levels as economic sanctions, airspace closures and flight bans take effect.
The outlook for global tourism spending is 92% growth in 2022; however, reaching 45% of pre-pandemic 2019 levels, operating well below capacity. Given the collapse of Russian and Ukrainian tourism in the near term, global inbound tourism will be impacted by USD 6.9 billion in 2022, leading to a potential loss of 0.9%, which will weigh on tourism potential by up to in 2026, although it all depends on how long it takes to negotiate a peaceful solution.
Travelers from long-haul markets such as North America are already postponing trips to Europe due to the conflict in Ukraine, with the need for a strong communication campaign to reassure visitors that Europe is safe and open for business.
Source: Euromonitor International – Travel Forecast Model
The pandemic still poses real risks
Although the war has overshadowed the recovery of tourism in Europe, it is the pandemic that continues to hit regions such as Asia-Pacific, the Middle East and Africa. The new variant of Omicron that appeared at the end of November 2021 caused major disturbances and concerns; however, the impact proved to be short-lived. Countries like the UK have already reopened to double-vaccinated travelers and removed all restrictions, becoming endemic and learning to live with the virus.
However, with vaccination rates exceeding 63% of the global population, there is still a long way to go before achieving herd immunity, given the low vaccination rates in emerging countries.
In the short term, Asia is the latest region to reopen its tourism sector, erring on the side of caution when it comes to opening borders and welcoming international visitors back, coupled with the complexity of travel regimes. interoperable healthcare, or lack thereof.
Countries like China continue to follow a strict zero COVID-19 policy, hampering the recovery of destinations such as Thailand, which has rolled out its sandbox approach in popular locations such as Phuket and Koh Samui to enable a recovery strategy. safe and controlled reopening. Yet it is likely to remain deprived of its number one, big spender Chinese source market until at least early 2023.
In addition, vaccine inequality is a major obstacle to reopening in regions such as Asia-Pacific, where 14.1% of low-income economies, according to Our World in Data, have received a vaccine, leading to a two-tier recovery for the haves and have-nots. As the World Health Organization states, no one is safe until everyone is safe from COVID-19. The gross inequity of vaccine delivery is a thorn in the side of the sustained recovery of tourism.
Source: Euromonitor International – Travel Forecast Model, February 2022
Note: Impact of the war in Ukraine counted in Eastern Europe
For more information, see our article The war in Ukraine raises inflation risks and challenges the global economy