We’ve been super focused on all the ways that the global health crisis is affecting The Walt Disney Company. It’s hard not to be!
But Disney really is only a piece of a much bigger problem. We’ve talked a little bit about the way that air travel has been affected, but the global tourism industry as a whole is taking a massive hit. We’re taking a look at all the ways international travel is being affected as well as what the industry is doing to fix things. Let’s dive in!
Revenue is crashing down.
Possibly the most obvious consequence of a shutdown to global travel is that revenue has dropped dramatically. According to the World Travel and Tourism Council, the global health crisis will result in a projected loss of $2.1 trillion in revenue for major global travel companies. The U.S. industry alone is facing a projected loss of 4.6 million jobs through May.
These numbers aren’t too surprising when you consider that Disney could see losses of up to $21 billion through the end of 2022. Such a drastic interruption to regular business processes is leaving its mark on not just the Disney Parks, but the tourism industry as a whole.
The director of the Commerce Department’s National Tourism Office, Isabel Hill, noted, “This is the worst time of the year for this to happen. This is the season—spring and summer—when the travel and tourism [industry] makes a significant amount of [its] revenue.”
Furloughs and job cuts are the reality for now.
Beyond revenue losses, the industry is also seeing a very real effect on its workers. Furloughs and job cuts are the norms right now for a multitude of companies and unfortunately, some of these may end up being permanent if companies can’t rebound.
According to National Geographic, approximately 75 million jobs will be lost with major travel companies internationally if the crisis continues for a few more months.
Disney itself furloughed the majority of its employees from the theme parks. Now, some of those employees are expected to be able to return to work, but some third-party businesses on Disney property may not be so lucky. We’ve seen some of these businesses lay off employees without the promise of return. These companies have to rebound financially to be ABLE to bring back their employees, which may be impossible.
Tourism industries falter, and so do the economies they drive.
Now, there are unfortunate ramifications to the tourism industry beyond those that just affect the companies and their employees. Tourism is a MAJOR component of the economy for many cities, states, and countries. If tourism suffers, it may be harder for these larger organizations to recover.
On a small scale, this is illustrated by the Orlando theme parks, which stand as a major driver of the Orange County and Florida economies. On a larger scale, the U.S. Travel Association represents the industry that generates $2.6 trillion in output and provides 15.8 million jobs for the country.
Companies are seeking government aid to stay afloat.
Now, just like the Walt Disney Company, the global travel industry is not helpless in the face of these complications. Many companies have turned to their governments for help, and some are receiving it. In the U.S., Congress passed a $25 billion airline rescue package to help to stabilize the airlines that are a vital piece of the economy.
The travel industry typically does not have to prepare for dips in the market as much as other sectors do. According to National Geographic, many international airlines like Delta and United Airlines had less than two months of extra capital. In a crisis climate, that money could have been used up quickly.
Roger Dow, CEO of the US Travel Association explained, “This [aid package] is important and we want [the recovery] to speed up. Most of the travel industry [consists of] small, mom-and-pop businesses. With small business loans we can help keep their doors open.” It isn’t only the travel giants that need help. Hotels and restaurants can benefit from small business loans too.
Travel is suffering everywhere, but there’s hope.
Travel is dealing with some seriously tough times, but there is hope. Even as travel professionals predict that the ramifications of the crisis could be six or seven times worse than they were after 9/11, things are looking up in some parts of the world.
As we’ve seen with the reopening of Shanghai Disneyland, China is beginning to recover as the crisis begins its decline in that region of the world. Perhaps a similar pattern will follow in the rest of the world over time. Even in the U.S., one of the most affected countries in the world, travel saw some expansion for the first time in nine weeks at the beginning of May, according to US Travel.
Individual companies and the industry as a whole are looking towards the future.
Just like Disney is cushioning the blow within the company, the industry is attempting to do the same. Ultimately, these companies are looking to the data to determine a return to business, but in the meantime, they’re taking action.
Luckily, that government aid we talked about should help. The companies on the receiving end of federal grants and loans have taken a big step towards stabilizing and weathering the crisis until demand returns. Plus, the industry has a plan for itself as well. They’ve launched the #traveltomorrow campaign to encourage people to come back to travel — when it is safe to do so — per the World Tourism Organization (UNWTO).
The UNWTO has even proposed a 23-step plan to help solve some of the current problems in the industry. The steps are broken up into three solid goals: managing the crisis and mitigating the impact, providing stimulus and accelerating recovery, and preparing for tomorrow. You can see the full report here.
So, it’s a tricky situation. A crisis of this kind is unprecedented. This global situation will have long-lasting impacts not just on tourism, but the world as a whole. Disney and the tourism industry are doing what they can to weather the storm and will attempt to recover as the world shows signs of improvement.
Here at DFB we’re covering the ins and outs of how Disney Parks and the Walt Disney Company as a whole are responding to this situation. Be sure to sign up for our newsletter to get the latest information in your inbox ASAP.
What do you think about the global tourism industry? Tell us in the comments!