The document discusses the significant impact of the pandemic and geopolitical risks on the tourism industry, emphasizing its importance to economic growth and job creation. It highlights the fragility of tourism in the face of human-made and natural threats, with recent geopolitical tensions and COVID-19 drastically affecting international travel and local economies. The document also suggests that recovery is underway, with calls for international cooperation and innovative solutions to rebuild confidence in the tourism sector.

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Team ProMiller May 19, 2022 5 min read
Impact of Pandemic & Geo-Political Risks on
Tourism
Tourism plays a more vital role in a country’s GDP and Economic growth than we give it credit for. Countries which
provide extra-ordinary tourism experiences attract higher Foreign Direct Investment, indirectly creating several job
opportunities, resulting in higher revenues and over-all progress of the nation through the income transfer between a
developed nation to a developing one. This is a step towards balancing out the inequality in income levels between
several countries. Several policy-makers, as well as many hotel management companies in India, have started to shift
their focus on improving the tourism sector due to its several economic benefits. It should not come as a surprise that
countries with a developed tourism sector attract a higher influx of tourists and hospitality business investors than
those countries with a weak tourism sector or prevailing risks in the said industry. The same is usually treated as a
principle by the hospitality consultants across the globe for taking big-picture decisions.
Like any other commerce, Tourism is highly sensitive to risks and can be
fragile in an imbalanced environment. Many investors research and
observe over a long duration before investing in a country’s tourism
sector to ensure that the economy is more or less economically and
politically stable.
It is to ensure that it can safe-guard itself from several risks that may adversely affect the inflow of international
tourists or alter the behavior of domestic tourists. In other words, the demand of tourism related activities greatly
depends on how vulnerable a country is towards various kinds of threats and adversities. Speaking about risks, these
can be divided into risks made by humans and naturally occurring risks. Natural-disaster like Hurricanes,Tornadoes,
Floods,Volcanic Eruptions are not usually in the hands of the people and may or may not be predictable.Those caused
by man can include wars, terrorism, political issues and pandemics can have a more intense impact on tourist behavior
and demand levels as compared to natural-risks.
In the recent years, Geo-Political Risks (GPRs) are on the rise due to several nations suffering from political tensions
causing volatility and brittle economies. Geo-Political Risks are a measure of tension between nations. This leads to a
shift in the tourist’s choice of destinations where those countries that have a history of a safe and steady economy and
prevailing strong policies with least unrest and guaranteed security are often preferred over those where wars and
riots may escalate. It can have cataclysmic impact on those nations which depend on tourism for majority of their
income since GPRs can lead to restrictions involving visas and travel. If a traveler feels unsafe, they might not consider
the nation dealing with instability as a destination, further causing a drop in the income through the tourism sector
which eventually leads to unemployment and the reduced investment from the government in developing that sector.

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The most recent example of this being the war raging between Russia and Ukraine. According to UNWTO, Outbound
Tourists from these nations contributed to approximately $14 Billion USD which accounts for 3% of global spending.
This is a substantial amount that has now been lost due to the on-going crisis which an unforeseen future. Additionally,
the travel costs have rocketed due to the inflation and increase in oil prices indirectly making these destinations
unfavorable for many. On similar lines, hotel revenue management companies in India have been dealing with these
ups & downs and coming up with new-age solutions to combat it.
However, European air travel has seen a steady growth along-side increase in flight bookings.This has been the result
of easing the travel restrictions but the military unrest has been an obstacle in reinstating confidence in international
travel.
In addition to the military and political unrest causing hesitation amongst tourists, the world also experienced the
Pandemic resulting in the strictest travel restriction and fright amongst many. COVID19 not only affected the lives of
many but had been a major factor which led to the Hospitality and Tourism industry to come to a stand-still. Each
nation shut-off their borders, air-travel was restrained and a major revenue loss was incurred. The UNWTO states
that 1 in 10 jobs in developed and developing nations could be related to the tourism industry which leads us to
understand just how much the effect of COVID19 could have been towards the livelihood of citizens of those nations.
The ramifications were also borne by the biodiversity and cultural conservation practices which relied on income via
tourists and the activities they indulged in.

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It has been indicated by the International Monetary Fund that the revenue generated by tourism may not recover to
the stage it was at in 2019 until 2023. It also mentioned that COVID19 caused a 65% reduction in tourist movement as
compared to SARS epidemic causing only a 17% fall.The current rate of inflation, the Ukraine -Russia War and labor
shortages are causing a delay in complete recovery of the industry.
However, the UNWTO has announced the removal of all international travel restrictions in 45 nations leading to a
steady upward rise in travel.The hotel occupancy rates around the globe are increasing but many struggle with the

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workforce shortages due to the number of layoffs during the pandemic. Although 31 countries in Europe have lifted
any restriction of travel, the war is causing an increase in the fuel prices and the aviation industry still struggles to
attract international tourists who may also have lost confidence due to the tension between the two nations.
It is undeniable that both the Pandemic and the GPRs have had a visible
and global impact on the Tourism Industry. Nations and their
governments are currently recovering from the ill-effects of these two
phenomena.
The circumstances that the world has encountered gives us a renewed opportunity to reconsider our priorities and start
adapting more conscious efforts, support renewable energy, encourage governments to restructure the tourism sector
and prepare policies that can be implemented during such occurrences. Artificial intelligence can play a fundamental
part in making travel easier and safer with the introduction of e-visas and a superior biometric process for identity
verification and travel eligibility (Macchiarelli, 2022). The G20 in Rome has suggested Crisis Management, green
energies and investment in better infrastructure to cope with the current situation and make the road to recovery a little
easier. International Cooperation is the key to transform the tourism sector, creating harmony amongst nations to
support each other, create employment opportunities, rejuvenate the local cultures and create harmony to build the
confidence amongst tourists once again. This is also being echoed by the top hospitality consulting firms in India and
beyond.
Written byVylaica S.