Crisis in the tourism and travel market: sector lost R$ 2.2 billion in the first half of March alone, pandemic could create an even greater crisis

Only in Brazil, more than 115 thousand jobs linked to the tourism sector are at risk, in addition, the crisis may define the future of different professionals with direct and indirect links to the travel market. Agencies, operators, hotels, food, local commerce, cooperatives and other essential services in the travel industry may be even more impacted by the new coronavirus pandemic.

In the last balance made by the National Confederation of Commerce in Goods, Services and Tourism (CNC), showed a virtually irreversible loss for the tourism in Brazil and concerns entities and professionals in the area. If no viable action is taken, the volume of revenue generated by the travel industry can be even more daunting. So far, the sector has dropped 16.7% in terms of revenue compared to the same month last year.

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Global crisis in the travel market

Bookings for travel packages closed over a year ago, which generated administrative costs, commission from agents and intermediaries, in addition to bank fees, are being reimbursed in full by hundreds of companies in the industry. While agents need to cover the costs and guarantee full reimbursement to tourists, suppliers ask for longer terms for chargebacks, without giving up the rates used in the contract.

To minimize the inconvenience to tourists, travel agencies are taking money out of their own cash to be able to reimburse travel packages booked months ago.

The hotel market, for example, has one of the most perishable products in the world. The reservation that could be made on a given day will never be recovered. Meanwhile, the cost of maintaining the structure remains intact. Even with the risk, the expenses to pay for employees, maintenance, food and bills, bring to the market a high value of fixed expenses. Some of them impossible to trade or recover.

Accor chain, one of the largest in Brazil, foresees the closing of 300 hotels of the brand in the coming weeks. the CEO of Accor Hotels, Patrick Mendes, did not make it clear which units will be permanently closed and which will be suspended for a limited time. Information has been published on the Economic value, a vehicle specialized in topics on the Brazilian economy.

how to protect yourself from corona virus flight

Pandemic for the world and retracts revenue from the travel market. Photo: Chad Davis
/ Wikimedia Commons

Don't cancel your trip, reschedule

In times of instability, all markets will be affected. Among the main ones, the world travel market is going through a moment of crisis, including on a local scale in tourism in Brazil. Campaign "Don't cancel your trip, reschedule” launched by tourism professionals suggests that trips be rescheduled, in order to guarantee jobs and companies in operation. In addition, they offer the freezing of expenses for closed packages and paid in advance.

The travel market corresponds to 8.1% of GDP in the Brazil. Even with an expressive number, the public power has not yet realized the importance of the sector for Brazil and for the world.

According to a survey carried out in 2018 by the World Travel and Tourism Council (WTTC – The World Travel & Tourism Council), the tourism industry guarantees more than 319 million jobs around the world. In Brazil, this number is still abstract, as it includes direct and indirect jobs.

The lack of a reasoned analysis also masks the size of the problem that lies ahead. Despite the market entities being well articulated internally, with numerous organizations with excellent relationships, the lack of seriousness of the public power becomes a real wall in the way of healthy development, preventing significant growth for the travel market.

tourism crisis and coronavirus

Mass cancellation could exacerbate tourism crisis. Photo: Better Travel Guide

Tourism crisis and the importance of the travel market

During a trip, tourists move the local economy in different ways. The fact of taking a taxi, an Uber or just buying a souvenir at a craft fair shows the reach of the sector. All of this goes far beyond booking travel packages, hotels or flights. Tourism brings, in its production chain, the encompassing of different segments.

When a hotel with 80 rooms needs to change its equipment, it buys, at once, 80 air conditioners, 80 refrigerators, 80 beds and so on. Injecting a large amount into the local economy, sometimes without even being noticed. Sometimes it is not clear, but all these suppliers also live, indirectly, as a result of tourism.

Culture, leisure, entertainment, consumption, food, medical and religious tourism, sports tourism, exchange trips, business trips and many other modalities are led by tourism.

As published by National Confederation of Commerce (CNC), it was estimated that the travel market would move more than R$ 8 billion during Carnival 2020 alone. That said, when will public authorities and society realize the importance of the travel market in a global crisis? A provisional average needs to be adopted in conjunction with the sector's entities.

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