THM: RISK

MANAGEMENT
INFACT OF COVID-19 TO THE
TOURISM INDUSTRY
 Impact of COVID-19 on the Philippine Tourism industry
July 2020

 Introduction
Without a doubt, the tourism industry is among the sectors that have been greatly affected
by the COVID-19 pandemic. The closing of borders, airports, and hotels as well as
restrictions on mass gatherings, land travel and related services across the world put
around 100 to 120 million jobs at risk, as estimated by the World Tourism Organization.
In the first quarter of 2020, the period when the travel restrictions and lockdowns in most
countries started, international tourist arrivals declined by 22% resulting in an estimated
loss of US$80bn in global tourism receipts. In such period, 97 destinations have totally or
partially closed their borders for tourists, 65 destinations have suspended international
flights totally or partially, and 39 destinations were implementing the closing of borders
(i.e., banning the arrivals from specific countries).
International tourist arrivals by region in Q1 2020
 International tourist arrivals by region in Q1 2020

 In the Philippines, the government closed the airports in Luzon on 20 March as part of the Enhanced
Community Quarantine (ECQ) that started in the island on 16 March. The tourism sector has already felt
the negative impact of the pandemic on its performance much earlier. In other countries, travel
restrictions and measures have started as early as January of this year, and have impacted the
Philippine international tourist arrivals. Domestic tourists, on the other hand, also limited their travel for
fear of contracting COVID-19. The Department of Tourism reported that international tourist receipts in
the first quarter of the year declined to PHP85bn, 36% lower than the revenues in the same period last
year.
 To understand the impact of COVID-19 on the Philippine tourism industry, PwC Philippines, together with
the Department of Tourism, surveyed 247 decision makers across the different subsectors in May 2020.
 Forty-four percent of the respondents are from the tourism services sector (i.e., travel agencies,
bookings, tours, etc.), and 34% are from the accommodations sector. According to the survey, 97% say
that COVID-19 has the potential for significant impact on their business operations, and is causing them
great concern. Such finding is not surprising given that only businesses related to essential services and
products were the only enterprises allowed to operate during the ECQ. Because of the low demand and
restrictions, majority of the respondents say that they temporarily stopped offering a service/product,
reduced their level of operations, and reduced the employee headcount.
 Tourism-related businesses have opted to temporarily stop offering their
products/services during the ECQ, either due to restrictions or low demand
 Impact of COVID-19 outbreak on the Philippine Tourism
industry

 Given the travel restrictions and closure of businesses,

88% of the respondents expect losses of over 50% of
their 2020 revenues. Sixty-three percent of the
respondents also say that they expect their businesses to
normalize within six months to over a year. Such findings
are worrying because the tourism industry contributed
12.7% of the country’s GDP in 2019, and provided 5.71
million jobs in the same year.
 Globally, the World Travel and Tourism council estimated
that it could take up to ten months for the industry to
recover.
 Nine months since the virus was first detected in China,
there is still no sign that the spread is slowing down. The
road to recovery can take longer than initially anticipated.
Fitch forecasts that tourist arrivals and tourism receipts will
not go back to pre-COVID levels even five years hence