Global tourism has rare resilience

The twin shocks of the massacre in Tunisia and the financial meltdown in Greece have sent tourism shares sharply lower. The industry has grown increasingly resilient in recent years, however, and it probably will recover relatively quickly.

That would be good news for shareholders, but also reflect a false sense of complacency.

The steep declines in travel and tourism stock prices haven’t only affected big European companies such as TUI and Thomas Cook, but even Royal Caribbean Cruises and Priceline, which are less vulnerable to trouble in southern Europe and North Africa.

The pessimism is likely to be short-lived, because the global travel industry regenerates with lightning speed. Initially, traffic to Tunisia and Greece will drop, but similar destinations will pick up the slack. For example, when the protests in Cairo’s Tahrir Square erupted in 2011 and hotel occupancy at Egypt’s seaside resorts fell by almost 40 per cent, the UAE benefited with occupancy rising 8 per cent for the year.

The data show recoveries even at destinations that have undergone a catastrophe.

According to a Deloitte study published in the World Economic Forum’s ‘2015 Travel and Tourism Competitiveness Report’: ‘Occupancy levels in New York hotels took 34 months to recover from 9/11 (2001), and the wider US market took 45 months, with the impact compounded by an economic recession. For comparison, Madrid bounced back in 12 months from the 2004 train bombings, and London recovered in nine months from the July 2005 attack.’

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