The U.S. Travel Association released a new analysis on the impact of decreased travel due to coronavirus on the U.S. economy and travel-related American jobs this year and two scenarios for recovery.
Oxford Economics, in coordination with its Tourism Economics subsidiary company, modeled the expected downturns in the US travel industry in 2020 as a result of Coronavirus.
Travel Industry Losses
A decline of 31% for the entire year is expected. This includes a 75% drop in revenue over the next two months and continued losses over the rest of the year reaching $355 billion.
Travel industry losses will result in a cumulative GDP impact of $450 billion in 2020. It is projected that the US economy to enter a protracted recession based on the expected downturn in travel alone. The recession is likely to last at least three quarters with the lowest point in the second quarter of 2020.
A decline of $55 billion in taxes will be realized as a result of travel declines in 2020.
Employment Losses
The US economy is projected to lose 4.6 million jobs as a result of travel declines in 2020. The unemployment rate of 3.5% in February will rise substantially in the coming months. Travel-related employment losses alone will push the unemployment rate up to 6.3% over the next few months.
“The health crisis has rightly occupied the public’s and government’s attention, but a resulting catastrophe for employers and employees is already here and going to get worse,” said U.S. Travel Association President and CEO Roger Dow. “Travel-related businesses employ 15.8 million Americans, and if they can’t afford to keep their lights on, they can’t afford to keep paying their employees. Without aggressive and immediate disaster relief steps, the recovery phase is going to be much longer and more difficult, and the lower rungs of the economic ladder are going to feel the worst of it.”
The Time Opportunity
The greatest opportunity to mitigate these losses is to reduce the time required for a recovery. While typical recovery times from a disease-related crisis range from 12-16 months, this can be shortened through strategic promotions and support of the travel industry. We analyzed two scenarios for shortening the duration of losses.
SCENARIO 1: FULL RECOVERY BEGINS IN JUNE
The scenario assumes full recovery is achieved in June. Each month from June-December offers a potential average gain of $17.8 billion in GDP and $2.2 billion in taxes. Total benefits would tally $100 billion in travel industry revenue, $15 billion in taxes, and 1.6 million jobs restored.
SCENARIO 2: 50% RECOVERY BEGINS IN JUNE
The scenario assumes that a recovery is accelerated by 50% (relative to expected performance) beginning in June. In this scenario, each month offers a potential gain of $8.9 billion in GDP and $1.1 billion in taxes.
Total benefits would tally $50 billion in travel industry revenue, $7.7 billion in taxes, and 823,000 jobs restored.
Click here to read the full economic impact report.
