Ukraine War Adds Pressure on Tourism

International Tourism To Full Recovery By 2025

After the Covid 19 pandemic, international tourism showed recovery in January 2022, with a much better performance compared to the weak start to 2021. However, the industry now poses this question – How will the Russian invasion of Ukraine affects the tourism industry? The UN World Tourism Organisantion feels that the Russia-Ukraine war coupled with Covid-related travel restrictions still in place adds pressure to existing economic uncertainties, which could hamper recovery of tourism.

The WTO said that international tourist arrivals more than doubled (+130%) in January 2022 compared to 2021 – the 18 million more visitors recorded worldwide in the first month of this year equals the total increase for the whole of 2021. However, this pace of recovery in January was impacted by the emergences of Omicron variant and the re-introduction of travel restrictions in several destinations. And the world saw 71 per cent decline of 2021 international arrivals in January 2022 remained 67% below pre-pandemic levels.

THE GROWTH TREND

The WTO mentioned that all the regions enjoyed a significant rebound in January 2022. Europe (+199%) and the Americas (+97%) continued to post the strongest results, with international arrivals still around half pre-pandemic levels (-53% and -52%, respectively).

The Middle East (+89%) and Africa (+51%) also saw growth in January 2022 over 2021, but these regions saw a drop of 63% and 69% respectively compared to 2019. While Asia and the Pacific recorded a 44% year-on-year increase several destinations remained closed to non essential travel resulting in the largest decrease in international arrivals over 2019 (-93%).

Western Europe had the best result, registering four times more arrivals in January 2022 than in 2021. The Caribbean (-38%) and Southern and Mediterranean Europe (-41%) also showed fastest rates of recovery towards 2019 levels. Indeed, several islands in the Caribbean and Asia and the Pacific, together with some small European and Central American destinations recorded the best results compared to 2019: Seychelles (-27%). Bulgaria and Curaçao (both -20%). El Salvador (-19%), Serbia and Maldives (both -13%). Dominican Republic (-11%). Albania (-7%) and Andorra (-3%). Bosnia and Herzegovina (+2%) even exceeded pre-pandemic levels. Among major destinations, Turkey and Mexico saw declines of 16% and 24% respectively as compared to 2019.

PROSPECTS FOR RECOVERY

The tourism industry expects a gradual recovery in 2022 after the unprecedented drop of 2020 and 2021. Countries are opening its tourist spots, Covid 19 restrictions are minimised, and an increasing number of destinations en sing or lifting travel restrictions. All these increase the expectations, the WTO said

However, the Russia-Ukraine war has now come as a great challenge. The US and the Asian source markets, which have started to open up, could be particularly impacted especially regarding travel to Europe, as these markets are historically more risk averse. The shutdown of Ukrainian and Russian airspace, as well as the ban on Russian carriers by many European countries is affecting intra-European travel. It is also causing detours in long-haul flights between Europe and East Asia, which translates into longer flights and higher costs.

The WTO pointed out that Russia and Ukraine accounted for a combined three per cent of global spending on international tourism in 2020. It noted that at least US$ 14 billion in global tourism receipts could be lost if the conflict is prolonged. The importance of both markets is significant for neighbouring countries, but also for European sun and sea destinations. The Russian market also gained significant weight during the pandemic for long haul destinations such as Maldives, Seychelles or Sri Lanka. As destinations Russia and Ukraine accounted for four per cent of all international arrivals in Europe but only one per cent of Europe’s international tourism receipts in 2020.

ECONOMIC UNCERTAINTY AND PRESSURES

Though there is still hope, the WTO states that air travel searches and bookings across various channels showed a slowdown the week after the invasion but started to rebound in early March. Moreover, the economic challenges would further deteriorate travel. The recent spike in oil prices (Brent reached its highest levels in 10 years), and rising inflation are making accommodation and transport services more expensive, adding extra pressure on businesses, consumer purchasing power and savings, the WTO notes.

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