Page 32 - bon-dia-aruba-20200414

a32 local
Tuesday 14 april 2020

Opinion

When will Aruba’s tourism industry recover?

By James Hepple, BA, PhD, that peak infection levels The economic conse-
Assistant Professor, FHTMS, for the USA will come in quences
University of Aruba mid-April. AS of April 1, so- Social distancing has come
cial distancing policies in at an enormous economic
ORANJESTAD — In the fol- the USA will remain in place cost. The airline industry es of their lives. This could try will show a substantial
lowing editions of Aruba until April 30th and will only and cruise industry are to happen as early as May. decline in 2020 with mod-
Today we will publish an be relaxed once it is obvi- all intents and purposes no This could mean that some est recovery in 2021 and full
opinion article by James ous the rate of infections longer functioning. The ho- locations where there is lit- recovery not occurring until
Hepple, today we share has slowed. tel industry likewise. Offices, tle risk of significant person 2023 although the high end
Part II. Part I was published It is estimated that by Sep- restaurants, bars and shops to person contact could luxury market may bounce
Thursday, April 9, and is to tember 2020 that even if have been closed. Millions re-open However large back more quickly than the
be read on our website. all procedures and regula- of people in the USA are sporting events such as overall market.
tions are followed exactly now unemployed with no baseball or football games, This is a similar pattern to
What we do not know: - as required about 200,000 real sense when they will music events or crowded what happened after the
• How many people are Americans will die as a re- go back to work. beaches will continue to September 11 2001 terror-
infected? The numbers sult of this pandemic. It is thought the USA has al- be banned. ist attacks where it took
are skewed by the rate However, even if the social ready entered a recession the industry close to three
of testing. As testing distancing policies work, in and could well fall into a Travel could be allowed years before it fully recov-
gets better and more the sense that the curve depression. but, in all likelihood, it will ered. It is also thought the
widely administered has been somewhat flat- Some economists believe be by car and will avoid airline industry will be very
the number of cases will tened, the pandemic does that the GDP of the USA will places where crowds gath- different in 12 months’ time
increase but that does not go away. People will shrink by 12% in the second er such as airports, on trains from what it is today, with
not mean we know continue to get infected; quarter (Bank of America) or on planes. probably fewer airlines and
how many persons people will continue to die. while other believe it could And it may be that a sec- fewer available air seats.
overall are infected. There are three possible shrink by 30% (Morgan Stan- ond wave of infections de- The cruise industry may also
The number of infec- endgames for the pan- ley). The US Federal Reserve velops in the fall which re- shrink.
tions at the moment is demic estimates unemployment quires the reintroduction of And it should be noted that
grossly underestimated. 1. Every nation on earth in the USA could reach be- more strict social distanc- the US government may
• We do not know how bring the virus under tween 30% - 35%. ing policies. continue to keep its bor-
many deaths are as- control at the same The simple fact is the situa- Now leisure travel is discre- ders closed to foreign visi-
cribed to COVID 19 time . This is not at all tion is totally unprecedent- tionary. It is not essential. tors and returning residents
or ascribed to other likely. ed and no one can know MMGY, a leading travel and well into the second half of
causes such as pneu- 2. That the virus infects so for sure what the econom- tourism marketing agency, 2020, if not longer, to pre-
monia or some other many people that a ic impact will be although believes that demand will vent the importation of the
respiratory ailment, so “herd immunity” is es- they do know it will be rapidly increase in the lat- virus from other countries.
the mortality rates are tablished whereby the hugely significant. ter part of the second quar- This is the policy currently
inexact. majority of the popu- The long-term costs of bor- ter, that is in June, and the pursued by China. This
• We do not know if an lation is immune. This rowing huge amounts of number of trips will increase would mean that travel by
individual having test- can only come at the money to provide aid and substantially in July and Au- Americans overseas would
ed positive for the virus, cost of many millions of offset revenue losses will gust. They are of the view be severely restricted if not
and having recovered, dead. impact the economies of that domestic leisure trips completely banned.
is immune to a second 3. That governments use countries for years to come by car will the first to show And it is possible that the US
bout of infection or for the test and trace ap- resulting in lower levels of growth, with international federal and state govern-
how long they will be proach stamping out investments in necessary trips following. Airlines will ments mandate that leisure
immune. outbreaks until an ef- infrastructure and higher offer extremely low fares to trips can only be made
• We do not know if so- fective vaccine is pro- taxation levels. get people to travel again, within the USA to help re-
cial distancing works. duced. This could take while the cruise lines may vive the country’s own tour-
This should be clearer a year to 18 months. When will things get back find it much more difficult ism industry.
by the end of April. Given the above, in simple to normal for the travel in- to generate demand. Given these constraints it
• We do not know wheth- terms, the effects of the dustry? This may be too optimistic. would be reasonable to
er or not there will be a pandemic will be preva- There is a view that once It does not allow for the suggest that demand for in-
second or possibly third lent for at least another the peak infection rate is fact that many custom- ternational travel will prob-
wave of infections. 18 months, with social dis- reached and the infection ers will have been finan- ably not begin to become
• And we do not know tancing having to be rein- rate begins to diminish, so- cially harmed by the con- significant until well into the
how long it will take to troduced when there are cial distancing regulations sequences of the social third quarter of 2020 and will
develop an effective deemed to be outbreaks will be relaxed and people distancing regulations im- begin to start slow recovery
vaccine. which need such a re- will be allowed out of their posed in March and April in the fourth quarter, pro-
• sponse. homes, will go back to and Tourism Economics is vided there is no second
Recent estimates suggest work, will pick up the piec- of the view that the indus- wave of infection.q