Will coronavirus push the global tourism industry into decline after decades of growth?

A lot will depend on what Chinese travellers decide to do, as they account for one-fifth of the world market, writes Hamish McRae

Many will choose not to take a holiday in the coming months (Getty)

Tourism matters. It looks as though not many Britons will be going down to the Med this year – or indeed to Europe at all. They probably won’t be going to America or Asia either. Whatever the UK does about quarantine will have some effect, but the main brakes are the global restrictions. Even if they are eased through the summer people will be wary of jetting off in case things clamp down again and they can’t get back.

Many people’s reaction to this will be to think it is fine. We will, as US treasury secretary Steven Mnuchin urged Americans, holiday in our own countries. We can always make up for those missed overseas trips next year.

Except that we can’t. A tourist bed or a restaurant meal is lost forever. Travel and tourism together are the world’s largest industry, accounting for about 11 per cent of GDP. This will be a summer of domestic tourism, rather than international, but realistically activity will at best be halved.

So this will knock at least 5 per cent off global activity. The world economy grows by about 4 per cent in a good year, so this one industry alone would push it from growth to contraction.

It is an economic disaster obviously, but it is also a disaster in social terms because tourism is a huge employer of relatively low-paid workers. And it is a particular disaster for countries and regions that are heavily dependent on tourism for their livings. So who will be hardest hit?

At an overall level, the US is the biggest tourist market, with close to $300bn (£242bn) of receipts. But it is mainly a domestic one. France and Spain are bigger internationally in numbers of people who come in on a visit. As for spenders, the Chinese are by far the largest, followed by Americans, Germans and Britons.

Indeed these top four countries account for nearly half of all global tourist revenues. China, unsurprisingly also has the largest deficit – the Chinese spend more abroad than foreigners do in China. Germany and the UK also have large deficits on tourism account, while the US is normally in surplus.

Looking at Europe, the big losers are Spain, Italy and Greece. France will lose a bit, but assuming that internal travel will have resumed by the summer it will escape the worst damage. It does have the strong domestic market to fall back on. Some parts of the US may turn out to be net gainers, in that domestic visitors will more than offset any decline in foreign ones. But of course the travel and tourism industry has to be functioning. People have to be allowed to go to restaurants and visit attractions.

From a British perspective the big question is whether people will travel anywhere for holidays at all. Presumably the established holiday destinations, such as Wales, Scotland, Cornwall, the Lake District, will reopen for visitors. Presumably there will be some switching from continental destinations. But maybe instead two or three weeks in Spain or Italy it will be one week in Cornwall and the rest day trips from home.

Or maybe the money will be saved to spend on a more lavish foreign holiday next year. Intuitively, spending looks like being sharply down. UK holiday locations may see some growth, with domestic visitors offsetting fewer (or no) foreign ones. But I would not count on it.

The biggest question of all will be what Chinese tourists do. They are one-fifth of the world market. Maybe they will be urged not to travel, even if they are allowed to do so. Maybe they will feel unwelcome or think they might feel unwelcome, though it would be monstrous to blame individual Chinese people for the havoc the virus has brought to the world.

This will hit Europe, but it will also hit the rest of southeast Asia – economies such as Thailand, South Korea and Vietnam. Most Chinese people, like the rest of us, holiday relatively near home.

More broadly, the world has to confront a troubling possibility. It is that after rising rapidly for a decade, and generally climbing since the early 1950s, that international travel and tourism will now start to decline. In other words 2019 was peak travel. So it will not be a question about whether it passes the 2019 high point in 2022 or 20023 or whenever. It will be whether it ever recovers. There will be a recovery of course, but maybe not one that gets the world back to last year’s peak.

Maybe that is too pessimistic. I hope it is. But we should worry, not just for economic reasons – though those worries are huge – but for social and cultural ones too.