Abstract
The purpose of this chapter is to examine the economic impacts of the COVID-19 pandemic on the tourism global value chain (GVC). Theoretical analysis revealed that being triggered by health factors, the coronavirus pandemic exerted an unprecedented shock on both the supply and demand sides of the tourism sector and the global economy. This resulted in implications that are more severe and less predictable than earlier crises that the world had witnessed. Analysis of the economic impact on various components of the tourism GVC revealed that measures adopted by world governments to protect their citizens resulted in massive damage to tourism related industries and to the global economy. The chapter concludes by predicting that the consequences of the current pandemic will inevitably give rise to new, more innovate tourism models, responding to the changing global economic and tourism landscape and to the change in consumers' characteristics and expectations.
TopBackground
Tourism is the largest branch of service trade. Through its value chain, tourism has a significant contribution to the global economy. According to The United Nations World Tourism Organisation (UNWTO), there were 1.4 billion international tourist arrivals in 2018 (up 5% from the same time in 2017), with a total spending of $1.7 trillion (up 4% from the same period 2017) (UNWTO, 2019). Moreover, the tourism sector accounted for 7% of total world trade in 2019. It is the world’s third largest export after fuels and chemicals. This size is attributed to consumers from the emerging economies’ middle class, namely China, new businesses, technological advancements and competitive travel costs. The tourism sector also acts as a significant sector of job and wealth creation. It assists in raising standards of living and transforming poor economies. Supporting one in ten jobs, the tourism sector is labour-intensive and demands skills from the lower to the upper spectrum of expertise. Workers in multiple sectors work together to build the tourism industry and participate in the (global) tourism chain, contributing to up to 20% of the world’s GDP. The outbreak of the corona virus led to the fall in tourist arrivals, costing the world approximately $80 billion in export revenue in the first three months of 2020 (UNWTO). Data from UNWTO revealed that most global touristic regions have been severely affected by the pandemic, albeit variations in impacts were observed across different regions with the least being noted in the Middle East and Africa.
Key Terms in this Chapter
Tourist: The World trade organization (WTO) and the OECD Tourism committee established that international tourists should be classified by the purpose of their visit under one of the following groups, the first is pleasure, recreation or holiday, and the second is business, visiting friends and relatives, health or religion.
Vaccine Passport: Is an e-vaccination certificate that proves an individual has been vaccinated against COVID-19.
Economics of Tourism: Examines the various economic aspects derived from the activity of a tourist. Although Tourism economics has developed over time as a distinct subject, it remains, more interdisciplinary in character than mainstream economics.
Global Crises: A crisis that affects many countries at the same time. Crises are usually caused by a triggering event that happens in one country and causes spillovers to countries around the world causing or threatening of severe consequences that has a global impact.
Pandemic: The “worldwide spread” of a new disease, it is defined as epidemic occurring on a scale which crosses international boundaries, usually affecting many people.
Global Value Chain (GVC): A sequence of complex interactions in the production process. An industry is involved in a GVC by supplying incremental value-added at any stage from conception to end-use. A firm integrates in a GVC if it is involved in at least one stage in global industries production vertically or horizontally.
Corona Viruses: Are a family of viruses known for containing strains that cause potentially deadly diseases in mammals and birds.
Tourism Product: Is a complex product that is composed of a bundle of various goods and services demanded and consumed by visitors throughout their holiday at the destination.