The COVID-19 pandemic hit global travel and tourism hard, as governments closed borders and restricted mobility to slow the spread of the virus. Tourist arrivals plunged by about 1 billion people, and millions of jobs in the industry evaporated. The sector is known for its many small businesses, which employ a high share of women, youth, and other vulnerable groups. Its recovery is a chance to put in place inclusive policies that can help these groups and make the industry more resilient to future crises.
This idea motivated participants in the G20 Tourism Ministers meeting on 26 September. The meeting highlighted the importance of small businesses in transforming the industry in the wake of COVID-19. The participants adopted the G20 Bali Guidelines for Strengthening Communities and Micro, Small, and Medium-Sized Enterprises (MSMEs) as Tourism Transformation Agents. The guidelines list five pillars of a sustainable and inclusive tourist economy: climate action, women, youth empowerment, governance, and policy frameworks.
Hosted under the 2022 Indonesian Presidency, the meeting marked the finale of almost a year of efforts. As part of these efforts, the G20 Tourism Working Group developed guidelines and urged policy action for G20 members and other countries, to help tourism recover. A summary of the discussions will be submitted to G20 Leaders at their meeting in November.
ADB and G20 tourism
The Asian Development Bank (ADB) participated as a member of the working group and contributed to the preparation of the Bali Guidelines document, led by the Ministry of Tourism and Creative Economy of Indonesia and the United Nations World Tourism Organization (UNWTO). ADB also joined the ministerial meeting and shared insights on challenges, possible solutions, and the Bank’s efforts to build an enabling environment for sustainable and inclusive tourism.
The scars left by COVID-19 include a drop in international tourist arrivals from a high of 1.4 billion in 2019, to 409 million in 2020 and 446 million in 2021—a decline of about 70% for each year compared with 2019, according to the UNWTO. Tourism exports fell 60% in 2021 from $1.7 billion in 2019, while tourism’s share of gross domestic product dropped 41% in 2021 from $3.5 trillion in 2019.
Before COVID-19, tourism supported 195 million jobs directly and more than 330 million in total. The industry is largely made up of micro, small, and medium-sized businesses (MSMEs), which employ a high share of women and youth. The pandemic put some 100 million of these jobs at risk.
Tourism recovery and challenges
Tourism is expected to gradually recover in 2022, as economies continue easing travel restrictions. But this does not mean the industry is out of the woods. COVID-19 concerns will likely continue to influence travelers’ decisions, especially when it comes to their perceptions of health, connectivity, and hygiene infrastructure. The industry may not be ready to accommodate a surge in demand for tourism after the long disruptions. In fact, operational snags and workforce challenges are already affecting airlines, which are the busiest they’ve been since 2020. A global economic slowdown, rising inflation and interest rates, and geopolitical conflicts pose additional risks for the tourism sector.
The industry also needs to grapple with challenges it faced even before the pandemic, including narrow source markets, environmental damage from mass tourism, and connectivity issues. It is important for all participating countries to cooperate across borders to better monitor the footprint of tourist activities and promote decarbonization.
A UNWTO survey in 19 countries found that the top challenge for MSMEs in the tourism industry was inadequate access to finance. A changing and uncertain market, and a lack of a trained workforce, were also significant concerns. A similar survey of communities emphasized uncertainty in the market as the biggest risk, followed by a lack of infrastructure, and identified the need for greater participation of local communities in tourism activities.
Tourism policy recommendations
The G20 meeting stressed the power of tourism to help realize an inclusive and sustainable recovery, through policies tailored to MSMEs and people involved in the sector. Centered on people and sustainability, these policies can help make the sector more resilient.
The G20 Tourism Working Group recommends further discussion of skills development, including vocational education and lifelong learning; promotion of entrepreneurship, MSMEs and innovation; building relationships between the tourism sector and local communities; adoption of sustainable and environmentally friendly practices; and the systematic collection, analysis and dissemination of data to help guide policies.
We need to rebuild tourism and restore the lifeline it offers to millions of people in Asia and the Pacific. In doing so, we need to ensure equitable community participation, make the sector more resilient, and meet climate and environmental objectives. To achieve this, international cooperation will be more important than ever.
Article by Cyn-Young Park, Director, and Sanchita Basu Das, Economist, at ADB’s Economic Research and Regional Cooperation Department. The views The views expressed in this article are those of the author alone
