The $1.5 Trillion Global Tourism Industry Faces $450 Billion Collapse in Revenues, Based on Optimistic Assumptions

“We are temporarily a company with no product and no revenue.”

By Nick Corbishley, for WOLF STREET:

TUI, the global travel and vacation giant that owns six European airlines, 1,600 travel agencies, over 300 hotels and 14 cruise ships, desperately needs help. And it appears to have got it. On Friday, the company announced that the German government had approved a €1.8 billion loan to help keep the group afloat as COVID-19 brings the global travel sector to a literal standstill. The bridge loan, which still needs to be approved by TUI’s creditors, would be one of the biggest ever issued through German state-owned lender KfW.

“We are currently facing unprecedented international travel restrictions. As a result, we are temporarily a company with no product and no revenue. This situation must be bridged,” TUI CEO Fritz Joussen said in a statement. The same could be said for millions of companies around the world. But unlike TUI, many of them don’t have the ear of their national government.

Even as giant travel companies like TUI line up with airlines and cruise owners for multi-billion dollar bailouts, huge question marks loom over the global travel industry’s future.

The World Tourism Organization (UNWTO), in its updated assessment of the potential impact of COVID-19 — based on the optimistic assumption that the tourism industry will experience a swift recovery over the next 3-4 months — projects that for the whole year 2020, tourist arrivals will have fallen 20-30% from 2019, and international tourism revenues will have plunged by $300 billion to 450 billion, almost one third of the $1.5 trillion generated in 2019.

Taking into account past market trends, this would mean that between five and seven years’ worth of accumulated industry growth will have been wiped out in one fell swoop.

By contrast, the global financial crisis of 2008-09 resulted in a 5.4% fall in international tourism revenues, while the September 11 attacks in 2001 and the SARS outbreak of 2002-3 led to declines of just 2% and 0.4%. These were just momentary blips for an industry that has experienced two decades of almost uninterrupted growth, resulting in a three-fold surge in international tourism receipts, from $496 billion in 2000 to $1.5 trillion in 2019. Even during the worst year, 2009, the 5.4% fall in tourism receipts was cancelled out by a 5.7% resurgence in 2010.

What is happening now — the total collapse of global travel and tourism — has not happened before. As the UNTWO itself concedes, its own estimates “should be interpreted with caution in view of the magnitude, volatility and unprecedented nature of this crisis. SARS and the 2009 global economic crisis are the existing references, but this crisis is like no other.”

Even the scenario of a 20-30% fall in receipts — four to six times more than in 2009 — assumes that the virus will be contained within the next 2-3 months; and once it is, that everything will return to exactly how it was before. It assumes that the virus will be contained globally to such an extent that it allows for unlimited international mass travel and tourism for leisure and business to resume within the next 2-3 months. And it assumes that this large number of people are actually willing to travel within a few months.

But this is hard to imagine. And once things do end up at some sort of new “normal,” the global economy may be in the throes of a recession deeper and more enduring than the one suffered in 2009.

In the meantime, everything stands still. And the economic pain grows. Airlines have already taken a battering, having seen their passenger numbers virtually vanish, most of their planes grounded, and their share prices slump by anywhere between 50% and 70% over the past six weeks. The pain has barely just begun.

By the end of the year, the International Air Transport Association (IATA) expects “revenue passenger kilometers” (RPKS) — an airline industry metric that shows the number of kilometers traveled by paying passengers — to have slumped by approximately 27% in North America, 32% in Africa, 37% in Asia Pacific, 39% in the Middle East, 41% in Latin America, and 46% in Europe. In terms of passenger revenues, the impact is expected to range from just 4% in Africa to 50% in North America, 76% in Europe, and an eye-watering 88% in the Asia Pacific region.

On the ground, things look just as bad. The ten countries with the most reported cases of COVID-19 as of three days ago (China, the United States, Italy, Spain, Germany, Iran, the Republic of Korea, France, Switzerland and the United Kingdom ) account for 34% of world tourist arrivals and 53% of world tourism expenditure. Between them, China and the U.S. alone contribute 29% of total expenditure.

Some of these countries’ economies are massively dependent on the income and jobs provided by the tourism industry. In the case of the U.S., inbound tourism provides 10% of total exports. In France and Italy it’s 8% while in Spain it’s a stunning 16%. In some places such as the Canary Islands and the Balearics, tourism represents over a third of the local economy. For years WOLF STREET has been warning about Spain’s excessive dependence on tourism and the huge risk that dependence could pose in the event of a sudden fall in demand. We never thought the fall could be this dramatic.

In February, even before the restrictions on movement were put in place in Europe, Spain had already registered a 15% year-over-year fall in tourist visa applications. Easter, one of the busiest weeks for tourist arrivals in Spain, has already been ruined. If the crisis lasts as long as four months (it’s already lasted six weeks), it could end up costing the industry €45 billion in lost income, according to the industry group Exceltur. Millions of jobs are also on the line.

The same is happening all over the world, albeit to a slightly lesser degree in many places. Millions of jobs that have been created over the past ten years will be destroyed. UNWTO concludes its assessment by calling for protection of the most vulnerable segments such as SMEs, self-employed and the workers that fill the low paid, casual jobs the tourism industry specializes in creating.

Unfortunately, most of these groups don’t have armies of lawyers and lobbyists to represent them in the corridors of power. While corporations like TUI are well-practiced in the art of extracting money and other favors from government and central banks, small family-run hotels, travel agencies, restaurants and bars, drivers, guides , and the like — which make up the vast bulk of the tourism industry — have barely any practice at all. By Nick Corbishley, for WOLF STREET.

In Latin America, not even Brazil and Mexico have the fiscal and monetary leeway to offset the external and internal shocks brought on by the coronavirus. Read… Latin America Was Already Steeped in Economic Problems. Now Come the External & Internal Shocks of COVID-19

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  69 comments for “The $1.5 Trillion Global Tourism Industry Faces $450 Billion Collapse in Revenues, Based on Optimistic Assumptions

  1. Old Engineer says:

    Book it goes bust, strands travelers with unpaid resort/hotel bills overseas.

    • Thomas Roberts says:

      Just want to add,

      In the comment section of that news article, someone posted an image from glassdoor “a website that people can rate and explain working for companies” saying the company was already doomed and engaged in financial shenanigans.

  2. Thomas Roberts says:

    You had me there, when I heard

    “We are temporarily a company with no product and no revenue.”

    I thought you were talking about some genius clearly worth billions silicon valley masterpiece of a startup. With limitless potential.

    Some tourist thing pssst. That’s not getting da bailout money.

    • WES says:


      Isn’t that the very defination of a unicorn Zombie company?

      • Josh says:

        They are more like a “We are permanently a company with a crappy product, some revenue, more loss and no profit.”

  3. No Expert says:

    Terrifying. But its not so much practice SMEs dont have – its power. If you are holding 1000’s of jobs hostage you have power and access.

  4. sunny129 says:

    ‘based on the optimistic assumption that the tourism industry will experience a swift recovery over the next 3-4 months’


    Is this realistic considering that most of the lower 60% -70% of the bottom group will be on the unemployment line probably more than 6 months, if not more!

    • Thomas Roberts says:

      Not even counting the recession, because the vaccine for the CCP Coronavirus won’t be done until probably late next year at earliest. Plus time it takes to make and deploy it to everyone. At minimum most, especially more expensive tourism will take a massive hit until summer of 2022.

      Adding in recession, which will last at least some time past Coronavirus, we would be looking at probably another year or 2 at minimum for most businesses to return to normal “the new normal”. So for more expensive tourism maybe summer of 2024, cruises even longer, the bigger ocean cruises might not survive at all. Smaller, cheaper, more local tourism might do better, maybe even thrive “at expense of more expensive tourism” much sooner.

      • char says:

        Ring vaccination is probably the way it will be done so you don’t need a vaccine for the whole world. But cruises are probably doomed for a few years. And longer if they loose their image of being slightly upperclass and become more associated with Yersey shore

        • Morty Mc Mort says:

          Hmmm yes Cruises.. Get on a Giant Tin Can, and Steep in a Petri Dish with whatever other Pathogens may have come on board with you and your fellow travelers… Sounds like a GREAT idea!! Luxury Cruise… hmmmm

      • Thomas Roberts says:

        It’s pretty incredible you are acting high and mighty, while protecting the name of a regime that mass murders it’s own civilians and caused a global pandemic.

        Next time think before opening your mouth.

  5. littlebit says:

    I plan to go ahead and spend my usual $3.27.

  6. Bob Hoye says:

    Good review.
    Absolutely daunting condition.The result of over-speculation.
    In 2002, SAARS did not bring the market down it was already in a sharp cyclical decline.

    • Bob Hoye says:

      Should have included that both the private and policy sectors have been speculating.
      Central banks pushing a theory that they can keep a boom going.
      The Street relying upon that speculative tout.

  7. NotInMyName says:

    The planet very badly needed a breather anyway. Best to stay home and help our neighbors plant gardens!

    • Paul says:

      Agreed. There’s a silver clouding in this dark cloud. But if the corporates have their way (which they will) , it won’t last. They’ll be back to the raping and pillaging business asap.
      Enjoy while you can!

    • Deanna Johnston Clark says:

      I enjoy thinking of al the pimps losing big money without the giant sporting events and conventions. Maybe some of those young slaves can find their way back home.
      I anybody running a service like that, honestly? That would be so cool!! Some old church lady in Alabama with a big SUV going down to Central America singing protest songs from the 60s and packing more than sandwiches. Now that’s the.way to go!
      So long, Rick Steves…

  8. 2banana says:

    Big companies love big government.

    They will be bailed out.

    The small to medium competition will be slaughtered.

    “While corporations like TUI are well-practiced in the art of extracting money and other favors from government and central banks, small family-run hotels, travel agencies, restaurants and bars, drivers, guides , and the like — which make up the vast bulk of the tourism industry — have barely any practice at all.”

  9. JM says:

    Yes is very optimistic since in the countries of Southeast Asia many countries have blocked all flights until October

  10. roddy6667 says:

    Things will return to normal. This is not Armageddon. Here in Qingdao, a city with a huge travel business, the tourists are coming back. They are, as usual, from inside China. It’s hard to get in or out of the country now. I can see the tourism company buses coming off the G-20 highway in twos and threes. People I know in Beijing report the same thing. Nearby in South Korea, they have passed the peak. The daily numbers are going down.

    • MC01 says:

      Roddy, that’s the same I keep on hearing from colleagues who have wisely opted to stay in China instead of being evacuated back to Europe. “Life is returning to normal”.
      Chinese tourism hotspots are gearing up for what looks like a record-breaking season: all the folks who will not be able to get to Australia, France or the US will visit Dunhuang, Quingdao and Sanya this year. Local governments are preparing not merely for the extra influx of people but to monitor the healthcare situation carefully.
      As I said before 2020 will see many new multi-millionaires in China.

      In the meantime I’ve heard our government hasn’t mailed us the promised cyanide capsules yet because they shut down the factory who makes them and the Post Office has stopped deliveries “for technical reasons”.

      • same here says:

        That’s what I’m seeing the trucks are running like normal, I’m on the south china border, and back in late january to begin of march the trucks dropped off, but begin of March, they’re back to normal if not more than before.

        lockdown&self-quarantine is still in effect, but no police check-points, if your sick we have been told to call them, and they will come, they don’t want people coming to the hospitals

        the ‘fresh markets’ and everything in the morning is good, of course restaurants are to-go only, and the bars were shutdown months ago, lots of the initial sickness was wrapped around the ‘smoking-areas’ associated with bars and air-cond

        stay home more, no eating out, other than that life is abby-normal

      • Olivier says:

        @MC01, you are in Italy, right? I can’t remember.

  11. Willy2 says:

    – Also think “bankruptcy of Thomas Cook”.

  12. Paulo says:

    Unreal stats. Great article, Nick.

    Tonight watching the news I found myself looking at the two cruise ships still trying to dock in Florida. No one wants them. Both have virus patients aboard. I was interested because we see these same ships sail by our home all summer long doing back to back Alaska runs. These same ships, + dozens more. This coming summer we won’t see them, it’s as simple as that. Maybe never again.

    About 20 years ago our Province started touting tourism as the ‘new’ economy. For decades the wealth we experienced and took for granted was based on forestry, mining, and fishing. These industrial jobs were steady, high wage union jobs. Yet the govt ran tv adds promoting tourism while totally disregarding our historical economic strengths. They encouraged replacing good paying jobs with minimum wage work in tourism, just like every other third world country already was forced to do. Why drive a truck in a mine when you can make beds or wait tables?

    Now look at where we are. People can no longer afford housing and tourism is gone in a few coughing breaths. Maybe we’ll get back to reality and actually return to producing necessary goods and services for sale as opposed to offering experiences and full course buffets. People will one day again need lumber for houses, copper for wiring, NG for heat, and Hydro for electrical needs. A cruise ship experience or flight to Disneyland, not so much.

    It’s not like tourism is green. The cruise ships dump their sewage. Their stacks smoke. Flights to and fro produce GHG. Low cost workers are exploited. The docking sites are ruined for locals. Surely we can do better when this is all over and done with.

    • WES says:


      Collectively Canadians just recently killed off several $100 billions worth of wealth building projects!

      It was the wrong kind of green!

    • char says:

      Every year mining, forestry and fishing becomes more automated so fewer and fewer jobs per felt tree of caught fish. With mining you can increase production (if the market can bear it) but trees and fish are set by nature so you need to find new work for the people if you want them to stay.

      Why let a woman drive a truck in a mine when it is cheaper to let a computer drive the truck in the mine.

  13. H. Manning says:

    How long can we keep this fish out of water?

  14. Xypher2000 says:

    This situation is the equalizer among rich and poor. No one is exempt from this issue. The rich may be able to live more comfortably in this situation, but they cannot avoid contracting this virus with their money
    (within reason). So now we are all equal in this survival game. A little perspective change perhaps.

    • WES says:


      In Brazil, the poor call it the rich man’s disease!

      Only the rich could afford to visit places with the virus!

      • Happy1 says:

        This is the case initially, but it very quickly becomes a disease of the poor because they live in the densely crowded areas. Hence in the US the ski towns and NYC started it but it’s now exploding in New Orleans and Detroit.

      • Phil says:

        Unlike money, this will actually trickle down in time.

  15. Steve Anderson says:

    “We are temporarily a company with no product and no revenue.”

    Me: what makes him think this is going to be “temporary?” Maybe it depends what your idea of temporary is — I suppose it’s all relative.

    • Jonathan says:

      Because thanks to Big Economics(tm), reality has been propagandized into a four letter word.

    • Ricardo says:

      Here in the Philippines when someone adds to their house as in building something, its commonly called “temporary permanent”.

      • Steve Anderson says:

        @Ricardo: that is hilarious. My wife is from the Philippines and her family did some of that. I saw the house she grew up in. If you have a small lot and can’t make your exterior dimensions any bigger, you just build more rooms inside the existing rooms — little rooms!

    • MC01 says:

      There are still some dreamers in the West who somehow think the lockdown will perhaps end one day.
      Once they realize our governments have zero intention of ever returning to normal, whatever new or old, reality will hit them like a ton of bricks.

    • Saltcreep says:

      Yeah, Steve, I believe restrictions on international travel (e.g. mandated quarantine) will be maintained until mass vaccination gets implemented. That could take several years…

      Bailing out companies in the travel industry will quite easily turn into an exercise that needs to be repeated on a regular basis.

    • roddy6667 says:

      Life is temporary.

    • NewGuy says:

      Temporary is long enough to put a lot of people and business into bankruptcy. And you have to wonder, how long will it be before banks are in trouble ?

      • Steve Anderson says:

        @NewGuy: I agree with you, and I’ve been saying this for a while about, oh, let’s see . . . how about the airline business? My point: the bankruptcy courts are still open. A good Chapter 11 case will wipe out the equity holders — they get paid last, even behind the unsecured creditors (who themselves aren’t likely to get much in the case of a reorg like these). So if we force the airlines to reorganize, all that money they spent on stock buybacks will be essentially lost. On the other hand, the $$ billions (with a “B”) that we as a society are sending to airlines could have been saved, and a reorg always allows the debtor in possession to keep necessary employees working. My opinion: a good bankruptcy reorg strategy would have done more to get the airlines up and running again — and sooner — then simply throwing piles of money their direction. (A reorg strategy also has to be approved by the bankruptcy judge as having a likely chance to succeed, which injects a note of realism into proceedings.) If we’re all headed to bankruptcy anyway, why not just get it over with? It’s not a bad solution.

        • NewGuy says:

          Yea, that $25B bailout is just throwing good money after bad. It will be gone in about 25 days.

  16. max says:

    a business I co own and has been around for 20 years doing short term lets( even before airbnb were around).

    We will most probably be handing back the keys to 300 apartments and putting 100 cleaners and office staff out on the street.

    If the governments do not allow eviction for 6 months we could possibly exploit that as the only chance, probably at the expense of the landlords. Currently governments are giving you a nod to not pay your rent. Poor Landlords.

    • jm says:

      If landlords evict their current tenants, from where will the new tenants come?

    • Steve Anderson says:

      @max: I agree with you. I’m also a small landlord (maybe 10 buildings). So far my tenants seem to be paying, but it’s still early days. If they stop paying me, I can stop paying my mortgage lenders without fear of eviction. It may demolish my credit, but I will keep the properties. So poor banks as well? I’m not sure, but it’s not hard to imagine more helicopter money on the way (to the banks, not the small landlords).

  17. WES says:

    Trudeau’s government health officials are telling Canadians not to go to their cottages and instead stay home.

    Guess what!

    Trudeau’s wife and kids just headed to their government cottage to wait out the virus!

    • WES says:

      The only travelling I plan on doing is going to the cottage!

    • char says:

      Bit late for her as she already got the virus.It looks more to me that she was kicked out of the house

    • Deanna Johnston Clark says:

      How long before people catch on to this? Why are the poor black people here in the south so indifferent to it? Are their grandmothers having dreams from angels?
      The people I know who are most afraid are middle aged agnostics glued to the networks. Maybe Freud was right about guilt and fear being the same thing.
      Anyway, if you want to cheer up, got to Dairy Queen for a burger combo and listen to the staff make your order. Be sure to smile and take the change from their hands….

  18. Willy Winky says:

    Obviously this is not just the tourism industry that is being decimated.

    It is just about every industry from restaurants to retail. We cannot even purchase anything online and have it delivered

    Grocery stores are one of the few businesses that are doing well.

    Personally, I am in lockdown and I spend almost nothing:

    – we go to the grocery store once/10 days so 5 bucks in petrol (maybe)
    – we cannot even get takeaway so every meal is cooked at home
    – all shops are closed except for pharmacies so we are buying zero
    – we are of course using electricity and LPG (a couple of hundred bucks per month)
    – we have our telcoms – another $400 per month

    We are spending under $1000 per month.

  19. Chris says:

    These last few years I have been travelling regularly between England and Thailand. I’m sure I will go again, but I don’t expect it to be as cheap as it was. The 12,000 mile round trip, non-stop, with a decent airline cost about the same as five tanks of fuel for my car. Multi-leg flights, sometimes half as much. I suspect those days are gone forever, with reduced competition and massive debts to service. I can’t say I will be sorry to see the end of stupidly cheap flights. It needed to happen.

    • Mike says:

      Chris – I was just thinking the same thing. The days of lots of choice will disappear and the remaining airlines will demand higher fares to cover their true costs.

  20. Anthony says:

    Just to add Spain’s problems, they really are dependent on Brits and Germans for tourism (more so the Brits as the Germans are, shall we say, notoriously careful with their spending lol), the only other industry in Spain is house building. So, if they have no tourists to speak of and nobody around to buy some of the crappy appartments they build..then its goodbye Spain, (again…)

    It already has 25% youth unemployment and that is with my home city in Northern England being full of young Spanish workers (and Italians etc etc) Looks like times are going to be very tough…especially, if all the Spanish have to go home when the UK goes into a probable recession….. sad

    • MC01 says:

      Anthony: over the last few years the Spanish real estate industry has become completely detached from reality, as in “declining sales and increasing prices”. It was the true definition of runaway asset inflation: one can only imagine what prices would look like had mortgage originations been near their 2006-7 highs. Those who bought at ultra-inflated prices will soon be clamoring for a bailout: interest rates may be ultra-low but the principal… ouch, especially for those who took out the newly reborn no-money-down 100% mortgages and 110% mortgages.

      And let’s not forget about the worst real estate bubble in the world: Germany, in the specific Berlin, Frankfurt, Hamburg and especially Munich. German banks will be bailed out once again, but all the for-profit foundations (yes, they are legal in Germany, Liechtenstein and several Swiss Cantons), pension funds etc will take the proverbial savaging. As I said time and time again this time we cannot afford making everybody a winner.

      And as I said before I fear there will be nothing to stimulate if this thing will ever be over: our European governments seem pretty determined to throttle us all to death to save us.
      Oh well, I guess China will run the place far better than we had once they take over from us.

      • char says:

        Normally you have a bout of wage inflation, or deflation after an epidemic. But modern time did not really have epidemics so it is a bit of an unknown. But the rules of the ECB are slacker when Germany is in trouble so expect big government programs and deficits to create inflation

      • Anthony says:

        MC01…..My own house, here in Manchester, has gone up about five times in the last twenty years. Having no mortgage means if it does drop 90% then it drops 90%..tough. For those with mortgages, I can see negative equity approaching Japanese levels. I just hope I am serously, seriously wrong…. lol

        • stan6565 says:

          Tricky maths that, some of our properties are debt free, some under mortgage, but altogether say debt is 25% of market value. So, if all drops by 50 or 75 % then we are still not underwater as far as assets go. Then, I can only just hope that my collection of £ notes will continue to maintain the purchasing power as when I started collecting 30 years ago!

    • char says:

      A lot of under the table work in the Spanish tourism industry. Spanish unemployment numbers where never so high in reality.

    • Deanna Johnston Clark says:

      Our Mexicans send most of their pay to the grandmothers back home…are the Italians and Spaniards good family people as well….or have they joined the Me-Firsters?

  21. Extractor says:

    Hopefully this will force open the tourism market in the southern EU; to allow new entrants from the northern EU. Better able to adapt the product and service niche markets rather than mimic the samey mass tourism that can be found elsewhere. How often have we mistakenly gone into one of the fake Irish pubs, all plastic wood, almost nothing Irish except one Guinness beer pump and one or two fake posters. The legally obligatory TV blaring that nations news? Why no attempt whatsoever to deliver the authentic Irish Craic?
    How many southern EU have kept alive their old authentic adega’s, the host fetching the wine from huge wooden barrels; stacked around the room in the shadows.
    Where can you go for an authentic Bavarian or Scandinavian evening – runs by the real deal. Not impressionists.
    The developed northern EU allows authentic Italian, Spanish, French , Portuguese experiences run by their nationals – why is the southern EU so backward in allowing the same in their countries?

    • char says:

      Tui is German, not Spanish so i don’t see how the Southern European market is closed to North Europeans. A lot of the developments were done by Northern Europeans, even before Spain joined the Union.
      Ethnic cuisine is brought to new markets in two ways. Locals go to a place on travel and want to eat it at home or people from a place that eats a certain ethnic style immigrate and start a pub/restaurant. But it will never be really authentic because for an authentic Irish pub you need Irish customers and Irish ingredients. Those are lacking outside Ireland. Problem is that Southern Europeans go much less on holiday to Northern Europe than visa versa and the Northern Europeans don’t emigrate to were the Southern Europeans live. Though the Costa’s are filled with Ethnic Northern European restaurants and pubs.

  22. The Original Colorado Kid says:

    Live where you want to be. Simple advice, but hard to do economically sometimes. I’ve spent years living in my small 4×4 RV (Tiger) and wandering around all the way from my modest home in W. Colorado to the Yukon and Alaska. Cheap travel, no tourists where I go. The memories will serve me well in the coming months, though I live a half-hour’s drive from the wilds and will still get out. I feel really bad for anyone living in an urban area right now and stuck indoors. But all that expensive travel and the industries built around it won’t be missed by me, as I never had the money to use them anyway (nor would I have).

    • 91B20 1stCav (AUS) says:

      Orig. CO-check. Fortunate to live in the semi-wilds and having the long-term love of our home to embrace being ‘a colorful local’ working with my well-dispersed neighbors in not totally selling our area out to county-pushed overtourism as its main (and, as now demonstrated) unsustainable economic driver.

      Thank you again Wolf, Nick, and all commenters here doing your best to (I know it’s tired) keep it real.

      May we all find a better day.

  23. Mr. Loan says:

    I agree with char, A lot of under the table work in the Spanish tourism industry and its higher then before….

Comments are closed.