The crash in international tourism due to the coronavirus pandemic could cause a loss of more than $4 trillion to the global gross domestic product (GDP) for the years 2020 and 2021, according to the  UNCTAD report published on June 30.

The report, jointly presented with the UN World Tourism Organization (UNWTO), says international tourism and its closely linked sectors suffered an estimated loss of $2.4 trillion in 2020 due to direct and indirect impacts of a steep drop in international tourist arrivals.

A similar loss may occur this year, the report warns, noting that the tourism sector’s recovery will largely depend on the uptake of Covid-19 vaccines globally.

"The world needs a global vaccination effort that will protect workers, mitigate adverse social effects and make strategic decisions regarding tourism, taking potential structural changes into account,” UNCTAD Acting Secretary-General, Isabelle Durant, said.

The UNWTO Secretary-General, Zurab Pololikashvili, said: "Tourism is a lifeline for millions, and advancing vaccination to protect communities and support tourism’s safe restart is critical to the recovery of jobs and generation of much-needed resources, especially in developing countries, many of which are highly dependent on international tourism.”

According to the report, the asymmetric roll-out of vaccines magnifies the economic blow tourism has suffered in developing countries, as they could account for up to 60 per cent of the global GDP losses.

The tourism sector is expected to recover faster in countries with high vaccination rates, the report says.

Experts don’t expect a return to pre-Covid-19 international tourist arrival levels until 2023 or later, according to UNWTO, the main barriers being travel restrictions, slow containment of the virus, low traveller confidence and a poor economic environment.

Enhancing Rwanda's strategy

To drive recovery of the tourism sector, Rwanda has an eight strategy approach that, among others, is looking to capitalise on the Black American market which is showing interest in discovering the African continent.

According to Teddy Kaberuka, a Rwandan economist, the country's tourism sector was designed and shaped in a way that targeted high-end tourism, "targeting few people bringing a lot of money."

"But at this time of Covid-19, with all the related travel restrictions, even if in the West things are opening up slowly, tourists are not open for travel and we shall be so much affected by their absence," Kaberuka observed.

"I think what the Rwandan strategy should be focusing on should be: one, not continue to focus on high-end tourism but massive tourism where affordable tourism products can be developed. This is an approach many countries, especially those with big populations like China have embraced."

"The second would also be in line with the aspect of declining international tourists. Develop many packages on domestic and regional tourism. Even if we still face challenges of regional travel, hopefully, when things normalise, regional tourism will pull up much faster than international tourism."

According to UNCTAD's report, the reduction in tourism causes a 5.5 per cent rise in unemployment of unskilled labour on average, with a high variance of 0 per cent to 15%, depending on the importance of tourism for the economy.

Policy implications

In the report, three important policy dimensions are highlighted.

First is bringing tourism back on track including in developing countries. As noted, much needs to be done to restore the confidence of travellers, who are concerned about health, and the risk of cancelled travel plans and becoming stranded overseas.

"Vaccinations seem the most important element. So far, the vaccine rollout has varied greatly between countries, from almost complete to hardly started. Rolling out the vaccine globally as soon as possible is an economic priority."

Second, the report notes, it is important to mitigate the socio-economic impacts on livelihoods.

"Developed countries have used fiscal measures to support tourism businesses and workers. This is essentially borrowing from the future, and while helpful as a transitionary measure, incurs a debt that will need to be repaid at some stage. Where the support is for otherwise healthy businesses, it is likely to pay off."

This strategy, as noted, is a challenge for most developing countries in particular where tourism is large. Social security nets often do not exist, and informality is high.

Third, countries need to make strategic decisions regarding the future of tourism in their countries.

"Some tourism businesses will not survive even once travel restrictions are removed. Governments need to decide which to support and for how long. Long term implications of the pandemic need to be considered. Some structural adjustment is likely to be necessary."