The silver lining of staycations
When the pandemic hobbled Saudi Arabia’s plans to become a global tourism hub just months after opening its borders for the first time, officials looked for the bright side.
There won’t be any foreign vacationers sunning on the kingdom’s beaches this summer. But there’s a new market to woo: Saudis trapped at home. Along with countries around the world that are trying to recoup some of their tourism losses through domestic travel, the government leaned into the disruption, stoking patriotic sentiment with calls for a “Saudi summer.”
“The amount of constraint that people are feeling, the suffocation — this is a chance,” Fahd Hamidaddin, chief executive of the Saudi Tourism Authority, said during a video conference to announce the summer strategy.
The coronavirus has hurt tourism, putting a giant dent into the 10th of global economic output that the industry accounts for. International tourist arrivals fell 97 per cent in April and the World Travel & Tourism Council foresees about 100 million job losses — in a best-case scenario — as border closures, health fears, bankrupt hotels and airlines, and income constraints keep travellers at home.
But tourism hot spots won’t be hit equally and some larger economies — such as Saudi Arabia, Russia, the U.K. and Germany — are hopeful they can reduce the pain by capturing domestic spending that normally goes abroad.
“There is a clear opportunity for some countries to soften the blow of lost inbound demand by encouraging residents to holiday at home,” said David Goodger, Europe and Middle East managing director at Tourism Economics, a unit of Oxford Economics.
“Countries with large outbound travel markets and which typically run a tourism deficit are best placed to benefit from this trend,” he said, though he cautioned that any advantage will be relative.
Take Russia, whose citizens typically spend about $20 billion more abroad each year than Russia earns from incoming travel. In the Krasnodar region, on the Black Sea coast, hotel reservations are flooding in, according to Delfin, one of the biggest tour operators there.
“June was almost a total disaster, but July will be even better than last year,” said Delfin’s head, Sergei Romashkin.
Moscow office worker Anastasiya Kulagina planned to spend her summer holiday in Tuscany, dropping about $6,000 for a threeweek stay. Instead the 36-year-old is considering Yalta in the Crimea, which Russian President Vladimir Putin annexed from Ukraine in 2014. Despite a freshwater shortage there and the fact that the Black Sea city’s hospitality infrastructure dates largely to the Cold War era, Kulagina was disappointed to see prices were about the same as Tuscany. But she has few other options.
In Australia, sealed borders are enabling some regional operators to tap a wealthy and previously unattainable market.
“It’s just been incredible,” said Steve Hinks, who directs Taronga Western Plains Zoo in Dubbo, a five-hour drive from Sydney. He reckoned that the zoo, which provides luxury camping among animals from around the globe, has never fielded so many inquires in such a short space of time.
“If we seize this opportunity and ‘wow’ these visitors then we have the chance to keep them again into the future,” he said.
For much of the world though, tourists staying closer to home will create a loss of revenue that domestic travellers couldn’t possibly make up — especially in places dependent on foreign-exchange income that have limited domestic spending power. Countries such as the Maldives, where tourism accounts for more than half of gross domestic product, or island nations in the Caribbean, where beaches have gone empty, will suffer.
In Turkey, it could take as long as three years for the industry to recover, according to Emre Narin, chief executive of Marti Hotels & Marinas, which is listed on the Istanbul stock exchange and operates six hotels and a marina.
About eight million Turks travelled within the country last year, compared with 50 million foreign visitors the country was expecting this year. “Domestic tourism cannot possibly replace that kind of a market,” Narin said.
Destinations that rely more on domestic and short-haul tourism — such as Japan, China and Mexico — will be more resilient to the downturn, Goodger said. As to countries that have a new “domestic opportunity,” the U.K. tops his list.
But overall, COVID-19 means that global tourism spending — both domestic and international — will be significantly lower in 2020, and he doesn’t expect it to recover to 2019 levels until 2023. As government support and job retention schemes come to an end, the world may see further spikes in job losses, he said.
Gloria Guevara Manzo, president of the World Travel & Tourism Council, said she sees no real winners.
“The reality is you don’t spend the same amount travelling in your country as you do abroad,” she said.