Will Travelers Begin Packing Suitcases When Sheltering Lifts?

SAN FRANCISCO—The COVID-19 pandemic has forced millions of people around the world to stay home, bringing socializing to a halt. But once the quarantine is over, will travelers be packing suitcases right away?

This is one of the top questions the commercial real estate industry is facing as it braces for the new normal. In fact, travel and tourism amounts for roughly 10% of the world economy and supports 330 million jobs.

Some countries and regions are highly dependent on tourism. Tropical paradises such as the Maldives, British Virgin Islands, Bahamas and Hawaii have all been hit especially hard by the recent reduction in tourism.

“To top things off, summer is approaching, and popular attractions like Disneyland, Universal Studios and other theme parks will likely remain closed,” Sunmeet Jolly, founder and CEO of GROTU and 101 Islands LLC, tells GlobeSt.com. “The potential impact on Paris, Greece, Thailand, Switzerland, Italy, Scotland and Alaska is set to be severe if the lockdown continues. Even more concerning is that air travel has been curtailed and domestic tourism has also come to a halt.”

One of the biggest challenges faced by society is establishing a sense of normalcy until a vaccine is available or the spread of infection subsides. Already, pharmaceutical companies and researchers are working around the clock to create possible vaccine options.

Learning from the past, Centers for Disease Control and Prevention estimated that in 2009, 12,469 died in the United States from the H1N1 virus pandemic. Notably, tourism did bounce back after H1N1 once a vaccine became available. World Bank statistics on international tourist arrivals show a dip from 950 million people in 2008 to 911 million people in 2009. By 2010, though, those figures did climb back up to 973 million and underwent consistent growth until peaking at 1.44 billion in 2018.

“Interestingly, the 2008 global financial crisis hit during the H1N1 pandemic and the travel industry still saw a decent recovery,” Jolly tells GlobeSt.com. “In comparison, in 2020, the biggest economic boom in history is only just coming to an end. Based on the H1N1 events then, the potential for the travel industry to survive after COVID-19 is high.”

As rapid testing evolves, the opportunity for people to be tested for coronavirus at airports and other travel terminals becomes more probable. This kind of mass testing is necessary as a preventative measure and also to restore confidence in travelers.

At the same time, the wide use of masks, persistent handwashing and social distancing means many people have not been exposed to the virus. When borders reopen and transport restarts, these groups can be prioritized as safe to travel without concerns of spreading infection.

“Rather than go abroad, people are re-evaluating their travel plans to focus on closer locations, namely, places in their cities or towns,” Jolly tells GlobeSt.com. “Road trips and staycations are poised to become more popular as international travel remains restricted.”

Indeed, domestic travel is a big contributor to a slowed economy. Accommodations, attractions and restaurants can all benefit from local customers kick-starting the travel business again.

Likewise in California, the shelter-in-place orders are currently imposed until the end of this month, however, it’s not known if those will be extended. Los Angeles has already imposed restrictions through July 31, so the Bay Area may follow suit.

California lost $10.9 billion in travel revenue and 554,000 jobs in April alone, according to projections from Visit California, the state’s tourism bureau. By the end of 2020, the state could lose a total of $54.5 billion in travel spending. San Francisco tourism brought in $10.2 billion in spending in 2019, which was a record amount that capped a decade of continuous growth.

Once the restrictions are lifted, 39 million Californians, as well as people driving from the neighboring states of Nevada, Washington, Arizona and Oregon are expected to make up the bulk of tourists visiting San Francisco later this year. That can lend support to local businesses, especially restaurants, hotels and attractions.

The US government’s $2 trillion stimulus package to support industries affected by COVID-19 included $60 billion being put toward helping airlines. The financial support means flights can operate even with low demand for an extended period of time, until levels of normalcy return.

“Humans take risks and are adventurous. People climb mountains, skydive from airplanes, surf ocean waves, go mountain biking and travel to far-off places when there is no pandemic. All these carry some risk,” Jolly tells GlobeSt.com. “Once government restrictions are lifted, travel and events will naturally restart. The desire for people to travel, combined with government support, can help the cycle slowly but surely return. Rebuilding confidence is an important step in the process, but it’s likely that when the first wave of tourists begin moving, the masses will follow suit.”