Weathering a historic storm that is coming to an end

2020 was a tough year for the tourism industry. All the data that became available at year-end show that the impact of the pandemic on the sector has been devastating. After a total standstill during the months of March, April and May 2020, tourism demand failed to pick up appreciably during the rest of the year, even during the summer months when the infection rate seemed to be under control. Moreover, the waves of COVID-19 occurring at the end of 2020 and beginning of 2021, together with the various measures to restrict movement and businesses, have kept tourist numbers at a minimum, aggravating the losses suffered by the sector.

In this report we analyse in detail the impact of COVID-19 on three specific aspects of the tourism industry. First, we focus on the performance of the aviation sector, which is experiencing huge difficulties due to global border restrictions. We have also examined the price adjustments observed in the tourism industry, especially by the hotel sector, showing that the extensive price cuts carried out were relatively ineffective in boosting demand. Finally, we have also studied the performance of rural tourism in 2020, using big data methodology. In this case, rural tourism has provided some good news in the past year thanks to its more appealing features – social distance, tranquillity and nature – after the tough lockdown suffered in the second quarter of the year.

The outlook for 2021 is more optimistic. The great effectiveness of the vaccines and their roll-out over the past few months, albeit at very different rates across different countries, suggest that tourism in Europe could start to recover in the second half of the year. Nevertheless, this recovery is not without its risks, especially in the short term. After managing to contain the third COVID-19 wave in Spain, we are already seeing some neighbouring countries beginning to report a rise in the number of infections. It is important for the virus to be kept under control in Spain and, if possible, also in Europe to enable the sector to embark on its recovery as soon as possible, preventing losses from continuing throughout the spring and the start of the summer season.

The key rolling target for the sector's recovery is the vaccination of the population aged over 60, which we refer to as the population at risk. This group accounts for only 20% of the infections but for two thirds of hospitalisations and 95% of the deaths caused by the virus. We expect the vaccination rate to continue accelerating week by week and, by the end of May, almost 90% of the population at risk should have been immunised. This would significantly contain the pressure on hospitals and open up the possibility of easing restrictions on mobility.

In this scenario, we expect spending by international and domestic tourists in Spain to improve considerably compared with 2020, albeit still considerably below the 2019 level. We therefore predict tourism GDP will increase by around 80% in 2021; a good figure but still 40% below its pre-COVID level. In the medium term, vaccines should provide a definitive way out of the situation experienced by the sector, consolidating its recovery and its role as one of the driving forces for the Spanish economy.