Can tourism shield us from reality?

The twin shocks of the massacre in Tunisia and the financial meltdown in Greece have sent tourism shares sharply lower. The industry has grown increasingly resilient in recent years, however, and it probably will recover relatively quickly. That would be good news for shareholders, but it could also reflect a false sense of complacency.

The steep declines in travel and tourism stock prices haven’t only affected big European companies such as TUI and Thomas Cook, but even Royal Caribbean Cruises and Priceline, which are less vulnerable to trouble in southern Europe and North Africa.

The pessimism is likely to be short-lived, because the global travel industry regenerates with lightning speed. Initially, traffic to Tunisia and Greece will drop, but similar destinations will pick up the slack. For example, when the protests in Cairo’s Tahrir Square erupted in 2011 and hotel occupancy at Egypt’s seaside resorts fell by almost 40 percent, the United Arab Emirates benefited, with occupancy rising 8 percent for the year.

The data show recoveries even at destinations that have undergone a catastrophe. According to a Deloitte study published in the World Economic Forum’s 2015 Travel and Tourism Competitiveness Report:

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Occupancy levels in New York hotels took 34 months to recover from Sept. 11, and the wider U.S. market took 45 months, with the impact compounded by an economic recession. For comparison, Madrid bounced back in 12 months from the 2004 train bombings, and London recovered in nine months from the July 2005 attack.

The growing accessibility of travel and the increasing sophistication of the tourist industry are turning the world into a product. Going places today is less of an adventure now than it was 20, or even 10 years ago. That’s convenient, because the population of wealthier countries, which provide most of the world’s leisure travelers, is aging. Older travelers are less interested in adventure of the nerve-tickling kind, and they encourage the industry to make staying in one country a lot like staying in another.

We bet on the industry’s ability to shelter us from harsh reality. Yet other lands are not amusement parks. Sometimes reality intrudes – from the lack of cash in teller machines to a hail of bullets on a beach. •

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