Investing in Destination Recovery: A Catalyst for Broader Economic Growth

Adam opens by explaining that right at this moment in time, we are seeing the light at the end of the tunnel.

Whilst we see record falls ranging from drops of nearly 80% in North America to 70% in Asia when it comes to international arrivals, we have already seen an improvement around the world, with global international flights still just below 50% to the same time last year and domestic travel a little higher.

Adam Sacks from Tourism Economics opens by explaining that right at this moment in time, we are seeing the light at the end of the tunnel, whilst we see record falls ranging from drops of nearly 80% in North America to 70% in Asia when it comes to international arrivals.

We have already seen an improvement around the world, with global international flights still just below 50% to the same time last year and domestic travel a little higher. One of the biggest concerns is how people feel and the truth is that people do not feel safe right now and this feeling is widespread throughout society and the world.

At Tourism Economics, they are talking about a V-Shaped Recovery moving into an L-Shaped recovery. China and Asia are still expected to lead economic growth and be a driver for incremental travel around the world. If we turn to politics, we see the impact of Biden's election in the US, being 'pro-growth' with investments in the US economy, stimulus, jobs and growth is a very positive thing because whilst it will mean higher taxes, it also means more travellers.

Recovery today is defined by market exposure. Understanding this is critical to understanding where different markets are exposed. In North America for example, the domestic market will allow them to recover quickly, the same is the case of Europe where 34% is short-haul cross-border recovery, which is also going to help growth if confidence.

At Tourism Economics, they expect domestic travel to recover a year earlier than international travel, the same pattern applies to inter-regional travel, for example, travel between Asian destinations and markets: these key insights are going to be crucial to building strategies as we look to 2021.

To be prepared, we need to think about exposure to risk from markets vs. resilience boosted by domestic and interregional travel. Countries like Germany and Sweden are all above average in terms of short-haul, whilst countries like Greece are much more exposed and therefore facing greater challenges for the coming years.

Another interesting statistic is that the larger the countries outbound market are, the better it is to overcome the storm. Outbound travel can easily be converted to inbound travel making it prime for domestic tourism, whereas countries like Turkey which have a huge inbound travel market find themselves massively exposed to risk.

Also, countries like Australia and China have huge outbound markets, they have an opportunity to convert these outbound visitors into the domestic market. Whereas countries like the Philippines have such large inbound markets, that there is no way to offset through the conversion of outbound visitors.

So, when will travel recover? This is the question everyone is asking.

  • Initial Phase in summer 2020
  • The second phase in 2021 with essential meetings, regional and international travel
  • Final phase 2021 with larger events and long haul travel


Key Takeaways

1. Analyse inbound and outbound and see if how you can convert your effort to lead the recovery.

2. Confidence and trust are key: work on the message of keeping people safe and let them feel comfortable about the idea of travelling.

3. Recover won't happen overnight and in one shot: there will be different phases, according to the type of travel and the level of essentiality.

Published on:
December 2020
About the contributor

Adam Sacks


Adam Sacks is the founder and President of Tourism Economics, an Oxford Economics company dedicated to understanding the relationship between travel and the economy.