Latin America’s Tourism Industry Must Address Shortfalls to Bounce Back

New York, USA, July 22, 2020 / TRAVELINDEX / New analysis from the World Economic Forum shows that some of Latin America’s and the Caribbean’s tourism strengths are less important than before to a competitive tourism economy during COVID-19. The onset and spread of the COVID-19 pandemic has shifted the factors that make a country’s travel and tourism sector competitive. Certain factors, such as healthcare capacity and digital travel offerings, are increasing in importance during the pandemic. Other factors, like international openness – a primary strength of Latin America – are now less important.

Before the outbreak of COVID-19, the Latin America and Caribbean region was improving in terms of travel and tourism competitiveness, but most of its economies still performed below the global average. Tourism slowdowns give policy-makers and business leaders in the region a chance to reassess their tourism practice and policies, especially in infrastructure and unsustainable tourism development, which are particular risks to the region’s long-term tourism resilience.

“COVID-19 has had a severe impact on the travel and tourism sector, with some parts of the sector effectively shut down completely,” said Christoph Wolff, Head of Mobility at the World Economic Forum. “Considering that tourism accounts for nearly 10% of the world’s jobs, it’s important that countries take serious measures to ensure their tourism is competitive and ready to bounce back as COVID-19 measures are rolled back and countries begin to reopen.”

In Latin America, these changes in travel competitiveness are particularly troublesome. Europe and other countries with more ample health resources have a better chance of containing and managing COVID-19 cases than other countries with less-developed health resources, potentially speeding up a safe reopening of their travel sector. For example, Latin America’s and the Caribbean’s healthcare capacity constraints are exemplified by the particularly low levels of hospital beds there, with 42% fewer beds per 10,000 people than the global mean.

Similarly, higher ICT readiness will allow tourism companies and their supply-chain partners to provide more services digitally – a growing advantage when person-to-person interactions are constrained. Competitiveness components such as a favourable business environment and labour markets can also act as supply-side stimuli, generating relief and accelerating the recovery.

The World Travel and Tourism Council estimates that the travel and tourism industry accounts for 10.2% of GDP in the Latin America and Caribbean region. In some countries, such as Jamaica, tourism accounts for a much higher percentage of GDP. The current downturn is having a major effect on economies heavily dependent on tourism.

Despite the downturn, the region’s long-term prospects for remain encouraging, as travel and tourism growth has continually outpaced global GDP growth for the past decade. While the region benefits from rich natural resources and improving international openness, numerous obstacles remain. These include unfavourable business, safety and security conditions, gaps in health and hygiene, underdeveloped infrastructure and environmental issues.

Latin America and Caribbean countries can use this time to re-evaluate their tourism development projects and build for a better sector in the future. For example, opportunities exist within their infrastructure gap. Good air transport is critical to Latin America’s travel competitiveness, especially considering the region’s hard-to-traverse terrain. Pandemic shutdowns have further slowed infrastructure projects but also offer an opportunity for countries in the region to reassess their ongoing projects and direct attention to the most critical areas. Building infrastructure for a better balance between tourism and local demand will be particularly important.

Improving travel and tourism competitiveness requires collaboration between the public and private sectors. Moreover, stakeholders must recognize the need to consider environmental and socio-economic sustainability in their decision-making. Approaches that focus only on driving short-term tourism demand have the potential to weaken the long-term resilience of the travel and tourism industry.

By improving their travel and tourism competitiveness, countries in the Latin America and Caribbean region can help the travel and tourism industry survive, recover and “build back stronger” from the impact of COVID-19.

The Latin America and Caribbean Travel & Tourism Competitiveness Landscape Report uses competitiveness rankings and data from the World Economic Forum’s 2019 Travel and Tourism Competitiveness Ranking (TTCR), and puts them in the context of COVID-19 and the changes the pandemic has brought to the travel and tourism economies in the Latin America and Caribbean region. The TTCR is a biennial report that ranks countries on the competitiveness of their travel and tourism sectors; the most recent edition was released in September 2019.

First published at TravelCommunication.net – Global Travel News