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Introduction Swine Flu has had an impact on the tourism industry worldwide.

Apart from the originating country, Mexico, the tourism industry has also been hit in other countries of the world. Swine Flu has been identified as a pandemic with the World Health Organisation (WHO) confirming it to be in alert level Phase 5, i.e. it is spreading rapidly by way of person-to-person contact. Effects of swine flu on tourism were made worse by the travel restrictions advised by WHO and other health authorities.

Mexico and USA were the two countries most hit in their travel industry than the rest of the world. Repercussions were also felt in Australia since any bottleneck to airlines is most disadvantageous to Australia as it is far away from the most countries of the northern hemisphere. In Mexico, hotels, airlines and tourist attractions like art galleries, museums, theatres and cinemas also suffered from losses. Business travel was also affected after the outbreak of swine flu. The National Business Travel Association (NBTA) of USA published a survey which stated that 61% of business travellers cancelled their trips to Mexico as result of the pandemic.

The hotel owners, tour operators and those involved in travel industry of USA suffered due to the outbreak of swine flu in Mexico. The effect of swine flu pandemic was estimated to have an impact on 90% of the airline industry in the USA as international visitors as well as domestic travellers were apprehensive. Bear in mind that many tour operators in USA do brisk business due to several beach resorts of Mexico. Anyone who is paying careful attention to the media cannot help but note that throughout the world, scientists and doctors alike are warning us about the potential for a world pandemic. This undercurrent of media attention on what is called Swine Flu, the H1N1 virus or Influenza may have major consequences for the world s tourism and vacation industries. Certainly, if the past is a lesson for the future trends, then it behooves the tourism industry not to panic but to begin to plan now for potential current and future pandemics. It takes very little to destroy a tourism site s reputation or to panic the public. For example, during the SARS Outbreak in Toronto, Canada, hotel occupancy dropped considerably despite the fact that no visitors to Toronto were stricken with the illness and every possible precaution was taken. The same is true of last winter s Swine flu outbreak in Mexico. Visitors simply stopped coming to Mexico. World tourism faces a myriad of global challenges in the event of a world pandemic. Among these are: the possibility of location quarantines, fear to use airports and other centers of mass gatherings, fear of not knowing what to do in case of illness in a foreign land, the need for cross-border medical insurance. To add to these difficulties tourists and convention planners are acutely aware of how hard it can be to change or cancel reservations both at hotels and on airlines. The change and cancellation fees mean a higher degree of travel risk in uncertain times. Lastly should a pandemic occur during an economic turndown, the tourism and travel industry may be hit doubly hard. The fact that many potential tourists have opted for what is being called staycations or at home vacations, ought to be warning to the travel and tourism industries. To help tourism professionals prepare for a potential pandemic here are a few things to consider.

1.1. United States of America U.S. Tourism has stood at the position of World s No.1 in term of capital investment, generated revenue and number of visitors. With its natural wonders, cities, historic landmarks and entertainment venues, the U.S. attracts millions of international and domestic tourists each year. The Tourism Industry in the United States grew rapidly in the form of urban tourism during the late nineteenth and early twentieth centuries. New York, Chicago, Washington, D.C. and San Francisco, all major US cities, has already attracted a large number of tourists by the 1890s. By 1915, city touring had marked significant shifts in the way Americans perceived, organized and moved around in urban environments. Nowadays, T&T is one of the main sources of income of U.S. Economy. By 2009 the tourism industry had climbed to contribute US$1,356.9 bn (9.5%) to the country s total GPD. However, due to recent threats, particularly terrorism, financial crisis and the swine flu, there has been slower growth in travel volume, reflecting a maturing industry and a period of challenges and slowdown in the industry. In fact, according to a report of World Travel and Tourism Council (WTTC), in 2009 U.S. T&T industry is expected to see real decline of 4.2%, the largest fall since 9/11 terrorist attack. Europe By far, Europe is largely considered the top travel destination in the world, with a gigantic resource of history, cultures, and cuisines. For those with an interest in the past, there are the fabulous art galleries, museums and old buildings, while those who enjoy the great outdoor have a wide range of opportunities from the golf courses of Ireland and Scotland to the hiking trails and snowy mountains of the Alps. Moreover, Europe generally provides high quality transport, accommodation and restaurant facilities to tourists though those in Western Europe can be expensive compared to other tourist destinations. Only after the Second World War is Europe s tourism industry considered truly developed. Due to factors such as increasing personal income, lengthening life expectancy and the reduction of working hours, the tourism industry has now grown to directly contribute US$581 billion to the total GDP (which is equivalent to 3.4%). However, since Travel & Tourism touches all sectors of the economy, its real impact is even greater. EU s Travel & Tourism economy directly and indirectly accounts for 9.9% of total GPD, which equals to US$1,668 billion, as described in the graph below. 1. Impacts of the swine flu


Figure 10: Swine flu s current situation

While the world economy should in principle be able to cope with the swine flu pandemic, there is a significant risk that it might trigger a set of unfavorable behavioral changes that tip the world back into recession.

If the H1N1 virus mutates and results in a more severe outbreak in the autumn, this would hit the world economy just as it starts to recover from the credit crunch. It would interfere with economic activity, threaten already fragile businesses and put further strains on financial markets and fiscal balances. People would be reluctant to travel and would avoid public spaces. This could generate a vicious cycle that postpones the economic recovery as well as that of travel and tourism for another couple of years.

As an illustration of a bad case scenario, Oxford Economics estimates that an epidemic in the UK with a 30% infection rate and a 0.4% death rate might knock 5% off GDP, including a 60% shortfall in tourist arrivals for six months and a 30% cut in discretionary spending by UK consumers.

Such a scenario is not yet any more than a possibility which is difficult, if not impossible, to quantify. In the meantime, consumers still have to face the weak economic environment. Although Europeans have been willing to postpone or cancel their secondary holidays, the majority are expected to protect their principal summer holidays, thus suggesting that arrivals Figures over the current quarter will be only slightly lower than those in the same period of 2008. But there is general agreement that consumers will be economizing: lengths of stay will be shorter and spending lower, and domestic travel may benefit at the expense of international destinations.

The swine flu epidemic so far: The WHO s latest update (13th May) reveals 5728 confirmed cases across 33 countries, which have so far led to 61 deaths. So far the outbreak has been concentrated in NAFTA economies with Mexico (2059), the US (3009) and Canada (358) accounting for over 90% of infections. The WHO raised the pandemic alert level to phase five out of six. A phase five alert level is described as a strong signal that a pandemic is imminent and given mounting levels of infection in Europe, particularly the UK and Spain, the likelihood that the alert level will be raised to phase six is high. At present consensus within the medical community suggests that this represents a fairly mild strain, certainly in comparison with the SARS virus. This is corroborated by the very low death rate outside Mexico. Professor Neil Ferguson estimated that, in terms of death rates (around 0.4%), the epidemic may be comparable to the 1957 Asian flu epidemic. However, at this early stage, given the lack of rigorous medical testing, such findings should be treated with caution. One common theme amongst medical experts has been the strong potential for

second- and potentially third-wave outbreaks. For example Professor Neil Ferguson of the WHO warned that even if does fade away in a few weeks which it might we will get a sizeable epidemic in the autumn. More efficient transmission in cooler weather conditions should result in a more global crisis.

How could a Swine Flu Pandemic affect the Tourism Industry? The experience of SARS in 2003, followed by the Asia-wide avian flu outbreak, reminded the world of the active threat of serious global pandemics. This threat has again come to the fore following the global outbreak of swine flu which originated in Mexico in April. Apart from the potential for bioterrorism, the main route by which many believe a serious pandemic could arise today is through the appearance of a new and virulent strain of flu. WTTC/Oxford Economics have undertaken scenario analysis to assess the impact of a contagious disease outbreak. Our latest results: assume infection and death rates of 30% and 0.4% respectively calibrate the likely drops in discretionary consumption and international travel using the experience of Asia s SARS outbreak in 2003

Worldwide, visitor exports would fall 1% point vs. base forecast (or US$10.5bn)

Different transmission channels via discretionary spending During the SARS outbreak, private consumption fell sharply in the region as consumers cut back on non-essential spending in order to avoid infection. Discretionary spending other than that which is already included in the Travel & Tourism effects (e.g. on clothing, consumer durables, etc) accounts for about a third of consumption. Our latest results assume a 30% cut in discretionary spending over a 6-month pandemic which corresponds to a 10% cut in consumption. This is larger than during the SARS outbreak given the higher infection rates currently being experienced. Other transmission channels: via labour supply Death and illness dampen labour supply. The assumed mortality rate implies a 0.4% permanent shock to labour supply. If the ill stay at home for two weeks, the 30% infection rate corresponds to a 2% one-off shock to labour supply in the six month period of the pandemic.

Although significant, this supply-side impact is likely to be relatively small compared to the demand-side shocks from lower travel and other discretionary spending

Transmission of pandemic shock via Travel & Tourism varies by region

Exposure to shocks to the T&T industry

based on 2008 figures

GDP T&T economy as % total

GDP T&T industry direct as % total

Visitor Export as % total

T&T Personal Consumption as % private cons.

Caribbean Europe North America Asia/Oceania Africa Middle East Latin America

15.4 9.7 9.9 9.5 9.1 10.7 6.8 9.6

4.7 3.3 3.6 3.1 3.3 2.7 2.4 3.3

16.4 6.1 7.2 4.5 7.7 5.3 4.7 5.8

6.1 9.8 8.8 8.8 5.1 10.0 5.5 8.9


See annex for glossary of terms Source: WTTC/Oxford Economics

Some regions of the world are clearly much more vulnerable than others to a contagiousdisease shock. This most dependent on tourism high exposure to foreign visitors.

Globally, visitor exports would plummet 60% points vs. base forecast (or US$620bn)

Scenario results: Impact on Travel & Tourism sector

Global T&T Economy GDP: Impact of flu pandemic

US$ trillions 7.0



Base forecast


Pandem ic scenario

3.0 2007 2008 2009 2010 2011 2012

Source: WTTC/Oxford Economics

Implications of a Swine Flu Pandemic for the Tourism Industry A global swine flu pandemic could disrupt the Travel & Tourism industry severely for a period of at least 6 months or so around the turn of the year. It could cause direct GDP losses to T&T providers of about US$1,073bn and a higher US$2,190bn to the global tourism economy (including the supply-chain and investment impacts). This compares to a much lesser impact of a SARS-type crisis over the same period: a global value added loss of about US$15.1bn directly to the industry providers and US$25.2bn to the wider tourism economy. REFERENCES