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COVID-19 tourism spend recovery in numbers

By Urs Binggeli, Margaux Constantin, and Eliav Pollack

October 20, 2020

Global tourism has been one of the most affected sectors during the COVID-19 crisis. Our tourism recovery model forecasts a cumulative drop of $3 trillion to $8 trillion before tourism expenditure returns to pre-COVID-19 levels. Recovery will be slow and driven by the underlying dependencies countries had on domestic and nonair travel. Different countries, therefore, should prepare for their own recovery curves and reimagine their tourism sectors (as well as the support they provide) differently.

1. Address traveler concerns

While post-COVID-19 tourism recovery will be primarily driven by the strength of the economic recovery, five key drivers are likely to impact the recovery trajectory (Exhibit 1). Managing those concerns is key to driving a turnaround in tourism.

2. The recovery could be slow

An optimistic recovery scenario, combining rapid virus containment and rebounding economies, will see recovery to 85 percent of 2019 volumes in by 2021 and a full recovery by 2023 (Exhibit 2). Under a pessimistic recovery scenario, 2021 levels can be as low as 60 percent of 2019, further postponing the recovery.

3. Domestic tourism will likely recover faster

Domestic tourism will return to precrisis levels around one to two years earlier than outbound travel. Multiple factors drive this: fewer restrictions for travel within own country, more substitution options for nonair-based travel (such as cars and trains), anxiety, and a larger share of business travel. In addition, domestic travel is expected to recover faster than hotel as we see a substitution toward vacation rentals and friends and family in certain markets.

4. Recovery speeds will vary across markets

Impact will likely vary across countries, with fast recoverees supported by robust domestic0tourism sectors and high-quality networks of land transport (Exhibit 3).

5. Dependence on domestic travel and nonair travel will likely determine recovery

Before the crisis, different markets had different dependencies on domestic tourism and air traffic (Exhibit 4). This structure drives the recovery speeds as cross-country restrictions and safety concerns are determining air traffic.

Structural and macroeconomic factors will continue to determine tourism recovery. Meanwhile, industry leaders can seek to improve their rate of recovery through a variety of measures including improving perception of air-travel safety, actively promoting domestic destinations, and ensuring government and insurance policies guarantee access to healthcare—even away from home.


Urs Binggeli is a senior knowledge expert in McKinsey’s Zurich office, Margaux Constantin is an associate partner in the Dubai office, and Eliav Pollack is a consultant in the Amsterdam office.

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