[News] 120 million tourism-related jobs globally are at risk

[HiTLeR]

 

The consulting firm, McKinsey and Company, said that about 120 million jobs related to the tourism sector are at risk, due to the repercussions of the new Corona virus, amid expectations that inbound tourist travel will decrease by 60-80% during 2020.

In a recent report, the Foundation predicted that tourism spending is unlikely to return to pre-crisis levels until 2024.

She stated that tourism accounted for 10% of global GDP in 2019, and was worth nearly $ 9 trillion, which is three times greater than the agricultural sector.

The report stated that the tourism value chain of suppliers and intermediaries has always been fragmented, with limited coordination between small and medium-sized companies that make up a large part of the sector, while governments in general have played a limited role in the industry, with partial supervision and light management.

Coordination required

The report added that the reopening of tourism-related businesses, and managing their recovery in a safe, attractive and economically viable way for tourists, will require coordination at a level not seen before.

The corporation believes that the public sector is better positioned to oversee this process in the context of the fragmented ecosystem of small and medium-sized enterprises, large state-owned enterprises that control entry points, and the growing influence of health-related agencies.

He continued, "With the reopening of borders and interest in the revival of entertainment in some areas, governments can seize the opportunity to rethink their role in supporting tourism, and thus are likely to help in the recovery and strengthening of the sector in the long term."

The report noted the importance of promoting new regulations, stimulus programs and protocols, but tourism professionals are dealing with the uncertainty about forecasting demand.

The report stated: Coordination between the public and private sectors in the tourism field was already complicated before "Covid-19", but the matter now needs more coordination in a more effective way, such as implementing protocols, synchronizing financial aid, and reopening the assets associated with the sector.

Stimulating packages

The report pointed out that about 24 economies around the world monitored stimulus packages worth $ 100 billion to directly support the tourism sector, and nearly $ 300 billion in indirect support from joint packages for related sectors that have a great impact on the sector.

The report monitored the provision of aid to small and medium companies, in the form of grants, debt relief, and assistance to small and medium companies and airlines, for example New Zealand offered a grant of 15 thousand New Zealand dollars (10 thousand US dollars) for each small and medium-sized company to cover wages, while Singapore provided A cash grant of 8% on gross monthly wages for local employees. Japan waived small-business debt, as income decreased by more than 20%. While companies in Germany can use state-sponsored work-sharing plans for up to 6 months, the government provides an income replacement rate of 60%.

Spare capacity

McKinsey & Company expects that it will take 4 to 7 years for tourism demand to return to 2019 levels, which means that the spare capacity will be large naturally in the medium term.

She stated that this long period of reduced demand means that the way tourism is financed needs to change, and that current government policies are very expensive, and it will be difficult for governments to bear them over several years. It may also not go far enough.

A recent survey by the Organization for Economic Cooperation and Development (OECD) indicated that more than half of them will not continue in the next few months, and that the companies' failure on anything like that would put doubts about a recovery even with most expectations. Governorate.

The Foundation stressed the need for governments and the private sector to consider new and innovative financing measures. One option is to create revenue-pooling structures that can help asset owners and operators, especially small and medium-sized companies, to manage the variable costs and losses going forward.

“Hotels competing for the same sector in the same region may have an incentive to accumulate revenue and losses while operating at low capacity,” she said. Instead of operating all hotels with an occupancy rate of between 20 and 40%, a subset of hotels could operate at a higher occupancy rate and share the revenue with the rest. ”

She explained that this would allow hotels to optimize variable costs, and reduce the need for government stimulus. Non-operating hotels can direct stimulus money into renovations or other investments, enhancing the attractiveness of the destination.

Governments will also need to be a middleman between companies through auditing accounts or escrow accounts in this model.

Digital solutions

The Foundation believes that digital solutions can be an effective tool to bridge communication and create consistency on protocols between governments and the private sector.

And in China, the health QR code system, which reflects previous travel history and contact with infected people, is widely used during the reopening phase.

It stated that travelers must show a green government-issued QR code before entering airports, hotels and tourist attractions. The code is also required for pre-check-in, and at certain destination airports after landing.

She pointed to the importance of enabling digital and analytical transformation in the tourism sector, after data sources and forecasts have shifted to understand how demand has developed during the current period, and thus determine how to deal with supply.