COVID could cost the tourism industry $1.6T this year, and omicron might make it worse

The return of stricter COVID-19 restrictions to fight the latest variant, omicron, has already left some travelers stranded. For many tourism businesses, it’s also threatening hopes of an upcoming holiday boost this year—especially after last year’s shutdowns emptied out popular destinations from the Colosseum in Rome to the resort island of Bali.

“There was a kind of sunrise on the horizon” earlier this year, said Tobias Warnecke, the German hotel association’s economic adviser. Now, thanks to infections and rule changes roaring back, and fears over omicron, “we have a lot of cancellations, and we’re on our way down.”

With scientists rushing to better understand the variant and its high number of mutations, governments including in the United States have started tightening masking, quarantine or travel rules. Many have closed their borders to the southern region of Africa where scientists first detected the variant, though it has since popped up in more than a dozen countries, from Canada to Japan.

The timing also has the aviation industry worried. The president of Emirates airline has noted that a hit to the peak travel season in December could cause “significant traumas in the business,” which had been seeing a recovery.

The pandemic was already projected to cost the world’s tourism sector a loss of $1.6 trillion in 2021, the U.N. tourism body said, an estimate it made shortly before the discovery of the omicron variant, which the World Health Organization warns poses a “very high” global risk.

Revenue from global tourism and arrivals rebounded this year to some extent from 2020, while remaining below 2019 levels before the pandemic battered the sector, the United Nations World Tourism Organization said in a report published this week. Last year, the direct economic loss in tourism was about $2.0 trillion.

“Uneven vaccination rates around the world and new COVID-19 strains could impact the already slow and fragile recovery,” the U.N. body also warned.

Weeks before the spread of omicron, a wave of coronavirus infections had already prompted closures and curfews in much of Europe. Warnecke, from the German hotel association, described the new variant as “another bad news,” although he added it was too early to predict its full impact on hotels before it is clear how it interacts with existing vaccines.

For Golden Tours, a London tour operator that takes visitors to the Warner Bros. Studio Tour—where fans can see the sets from the Harry Potter films—trips are still going ahead but cancellations have started streaming in, according to office supervisor Frank Jacobs.

Britain’s high vaccination rates and the lifting of restrictions—including a mask mandate that has just come back—led to a rise in bookings since the summer and an expectation of booming business for the Christmas holidays, he added. “We had December completely booked up,” he said. “But now since last week, everything is changing.”

Berlin also saw “massive cancellations” in the last two weeks, according to Thomas Lengfelder, head of the city’s hotel and restaurant association. Employees were “once again very unsettled” about the possibility of a new lockdown cutting back work, he said, and called for the ramping up of vaccinations.

Still, some businesses remain optimistic about their Christmas prospects.

For Le Meurice hotel in Paris, as well as others the Dorchester Collection oversees in Rome, London and Los Angeles, omicron has yet to hit holiday bookings beyond a “slight” uptick in cancellations. “So far, despite news of the new variant, the end of this year is still looking positive for us,” the hotel operator said in an email. “2021 has definitely been a better year than 2020 and should remain so.”

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets on
{{ count_down }}