21/10/2020
Attention please! New post📣
Covid-19 and Tourism Industry
🔵In the past decades, the world has experienced a number of different challenges and crises, but yet, probably none had similar implications for the global economy as the COVID-19 pandemic. While nowadays, physical distancing seems to be the only way to fight the virus, the Covid-19 pandemic not only affects human life, health, and economic statehood, but it also effectively alters human behavior. Changed behavior and introduced restrictions on global travel hit the tourism and hospitality industry the hardest.
🔵Georgia is the country where the tourism industry holds a sufficient part of the economy. Namely, as of 2019, tourism share in GDP amounted to 11.5%. The official number of employees in the tourism industry in the pre-crisis period was 150 000 persons. However, it is evident that the number is much higher, given the shadow economy's shares and unofficial employment in the tourism industry. Moreover, we all know that hospitality has strong spillover effects on other sectors, particularly retail, construction, agriculture, etc.
🔵During recent years, Georgia was proud of the growing number of international visitors. Indeed, for the country with 3.7 mln. local population, the number of international visitors reached 9.4 mln. in 2019 (and that is despite the "travel ban" from the Russian Federation since summer, 2019).
🔵As for the structure of international visitors, as of 2019, around 60% of all international visitors came from neighboring countries (Armenia, Azerbaijan, Russian Federation, Turkey). Despite an absolute increase in the number of other international visitors (e.g., Israel, Saudi Arabia, some European countries), neighbors still dominate in Georgia's tourism industry.
🔎Let's discuss what Covid-19 pandemic in general and the existing structure of international visitors to Georgia, in particular, tell us about the future of the tourism industry globally and in Georgia.
For the analysis, we take the evidence from previous crises. Evidence from situations like the SARS outbreak in 2003 and the MERS outbreak in 2012, and the global financial crisis shows that no significant long-term decline was observed in global tourism despite some short-term disruptions. However, none of the pandemics of the previous years was that widespread, affecting the entire world.
🔵As already mentioned above, probably the specificity of Covid-19 pandemics would be that it might affect human behavior for a relatively long period. It is not envisaged to fully restore the tourism industry to its pre-pandemic levels in the medium-term period.
🔵In Georgia's case, the situation is a bit worse due to a lack of diversification of international arrivals. As discussed above, most tourists to Georgia come from the neighboring countries, which in addition to the problematic situation related to the recent pandemic (high infection and death rates), experienced severe economic decline. Moreover, we witness ongoing military escalation between Azerbaijan and Armenia. All these events will definitely affect the willingness and ability of people to travel.
🔵All these challenges are subject to a thorough analysis and rethinking of the development of Georgia's tourism industry. During the recent years, Georgia was more oriented towards "quantity" rather than "quality". Georgia remains attractive to the neighboring countries due to historical sentiments. However, the country should start more active work to attract "high-spender" tourists from Europe and the Middle East. This requires a specific strategy and precise identification of goals, including improving quality in the hospitality industry, better qualifications, and better services.
✅The above mentioned is a long-term process, but maybe it is the best time to start!
