According to Euromonitor International’s Travel Forecast Model, travel and tourism was poised for an upturn in 2022, as it hoped to put the pandemic behind it. However, new threats have recently emerged that will delay the much-needed recovery.
According to Euromonitor International’s Travel Forecast Model, Russia now accounts for 1% of outbound tourism spending. Although there are no reliable estimates of medical tourism spending, using numbers of medical travellers suggests that Russian medical tourism is far less than 1% of medical tourism spending.
But the wider effects of Russia’s invasion of Ukraine, including an increase in global inflation and fear stopping North Americans travelling to Europe, are happening while the pandemic still hits travel in many countries.
At the beginning of 2022, there were warning signs that inflation was surging, with higher energy and food prices, caused primarily by disruptions and disconnects in the global supply chain. Travel players from airlines to online travel agents reported that the impact of rising costs was feeding through into higher prices for consumers. Rising prices could have been the perfect recovery lever when meeting a surge of pent-up demand now that the pandemic is more under control, thanks to mass vaccinations leading to the removal of travel restrictions in most regions.
However, on 24 February, Russia invaded Ukraine and the price of oil breached the warning level of US$100 per barrel as economic sanctions were imposed and countries began to seek alternatives to Russian oil and gas.
Europe’s tourism recovery has now been paused, as efforts turn to helping the millions of Ukrainian refugees fleeing war and conflict, heading west to neighbouring countries such as Poland in one of the biggest humanitarian crises that Europe has seen since World War II.
The loss of high-spending Russian visitors will not derail recovery; however, it will be felt keenly in destinations across the world, from Europe and the Caribbean to Turkey and Thailand. The decline in Russian outbound tourism spending could bring it as much as 50% below the 2021 level, as economic sanctions, airspace closures and flight bans take effect.
Euromonitor’s outlook for world tourism spending is growth of 92% in 2022 although it recognises this is only 45% of pre-pandemic 2019 levels, operating well below capacity. Taking account of the collapse of Russian and Ukraine tourism in the near term, global inbound tourism will be impacted by US$6.9 billion in 2022 and will weigh down tourism potential to 2026, although everything depends on how long a peaceful solution takes to broker.
Travellers from long haul markets such as North America are already postponing their trips to Europe due to the conflict in Ukraine. A strong communications campaign will be needed to reassure visitors that Europe is safe and open for business.
Despite war overshadowing tourism recovery in Europe, it is the pandemic that continues to beset regions such as Asia Pacific and the Middle East and Africa.
With vaccination rates exceeding 63% of the global population, there is still a long way to go before herd immunity is achieved, bearing in mind the low vaccination rates in emerging countries.
Over the short term, Asia is the last region to reopen its tourism sector, erring on the side of caution when it comes to opening borders and welcoming back international visitors.
Countries such as China continue to follow a strict zero-COVID-19 policy, hampering recovery for destinations such as Thailand which is likely to remain starved of its number one, high-spending Chinese source market until at least early 2023.
In addition, vaccine inequity is a major hindrance to reopening in regions such as Asia Pacific, where 14.1% of low-income economies have received a vaccine, leading to a two-tiered recovery for the haves and have-nots. The inequity of vaccine delivery is a thorn in the side of sustainable tourism recovery.