Tourism, broadly defined, refers to travel for business or leisure. It is beneficial to an economy because it generates jobs and has income multiplier effects. In light of this pandemic, perhaps, it would be good to review the current state and outlook of global and Philippine tourism.
So, where is tourism now? Global data from the World Travel and Tourism Council (WTTC) web site reveal declines in both income and jobs from 2019 to 2020. In 2019, global tourism generated about $9.170 trillion in income (10.4 percent of global income); however, in 2020, it generated just $4.671 trillion (5.5 percent of global income)—a 49.1-percent decline from the previous year. This contraction was much deeper than the 3.7-percent decline in global income.
In 2019, global tourism jobs numbered at 334 million, but this figure decreased by 18.6 percent to 272 million in 2020. From 2014 to 2019, on average, tourism accounted for 1 out of 4 net new jobs created. In 2020, however, the 272 million jobs registered by tourism accounted for just 1 out of 11 jobs globally.
For the Philippines, data from the WTTC web site reveal the same trends. In 2019, Philippine tourism generated about P4.468 trillion in income (22.5 percent of national income); however, in 2020, it generated just P2.619 trillion (14.6 percent of national income)—a 41.4-percent decline from the previous year. This contraction was much deeper than the 9.5-percent decline in national income.
Regarding employment, in 2019, Philippine tourism jobs numbered at about 9.571 million (22.8 percent of total employment). This figure decreased by 21.1 percent to 7.551 million (19.2 percent of total employment) in 2020.
The dampening effect of travel restrictions was also evident in tourist spending statistics. In 2019, total tourist spending in the Philippines was at P3.798 trillion, with P0.600 trillion (15.8 percent of total tourist spending and 10.7 percent of total exports) coming from international tourists and P3.198 trillion (84.2 percent of total tourist spending) coming from domestic tourists. In 2020, total tourist spending declined by 42.4 percent to P2.189 trillion, with P0.127 trillion (5.8 percent of total tourist spending and 2.8 percent of total exports) coming from international tourists and P2.062 trillion (94.2 percent of total tourist spending) coming from domestic tourists.
Nevertheless, more recent quarterly data from Cebu Pacific suggest a tentative recovery, as the number of passengers increased slowly from 61 in Q2-2020 (when strict lockdowns were first imposed) to 604 in Q2-2021. Prior to the lockdowns, in Q1-2020, the number of passengers was 4,391. The same pattern can also be seen in the number of flights, which slowly increased from 597 in Q2-2020 to 5,313 in Q2-2021. In Q1-2020, the number of flights was 29,695.
In a survey covering Indonesia, Malaysia, Philippines, Thailand, and Vietnam, as of May 2021, for domestic flights, the Philippines was still at 24 percent capacity—way behind Indonesia (64 percent) and Vietnam (114 percent). For international flights, though, the Philippines ranked first in restored capacity (17 percent) and second in passenger seats (298,000).
So, where is tourism likely to go? According to the WTTC, global tourism will likely exhibit four broad trends. One, there will be demand evolution, as traveler preferences and behaviors shift toward the familiar, predictable, and trusted. Domestic and regional vacations and the outdoors will reign in the short term, with tourism businesses and destinations already adapting.
Two, health and hygiene will become paramount in this new era. Personal experiences, advice from experts, and concerns for physical distancing will guide consumer behavior.
Three, amid stay-at-home orders, digital adoption and consumption will be on the rise, with consumers now expecting contactless technologies, including biometrics, as basic prerequisites for a safe and seamless travel experience.
Four, the world will be reinvigorated to tackle social, environmental, and institutional sustainability. In particular, heightened public awareness of the environment, wildlife markets, and poaching will boost advocacy for wildlife protection and ocean preservation.
Here in the Philippines, as reported by Colliers Market Intelligence, the tourism industry will not likely return to pre-pandemic levels until 2023 or 2024. The successful vaccine rollout should bolster travel confidence among foreign and domestic tourists and aid in the recovery of the tourism sector.
The same view is given by McKinsey & Company, which says that countries that have restored confidence—or are close to doing so—have seen economic activity return, or begin to return, to pre-crisis levels. McKinsey & Company also notes that uncertainty due to Covid-19 and related health risks has made many individuals, households, and businesses alter their behavior, even without formal restrictions from government.
Indeed, it all boils down to confidence, and this should not surprise anyone.
Dr. Ser Percival K. Peña-Reyes is the Associate Director of the Ateneo Center for Economic Research and Development.