AT A GLANCE

COVID-19 and the tourism sector

The coronavirus outbreak has paralysed the tourism industry, leaving travellers scrambling to return home and
devastating economies that are largely dependent on tourism. The European Union (EU) has acted quickly to
help the sector, for instance, by offering financial support to businesses, among them numerous small and
medium-sized enterprises. At its 26 March extraordinary session, the European Parliament approved three initial
measures in response to the crisis, which would, inter alia, benefit businesses and workers in tourism.

State of play
The EU tourism industry, which employs around 13 million people, is estimated to be losing around
€1 billion in revenue per month as a result of the outbreak of COVID-19. In many otherwise popular tourist
destinations, hotels have been deserted and restaurants, bars, tourist attractions, theme parks and
museums closed. Trade fairs, congresses and cultural events have been cancelled or postponed. Sporting
events, such as the Euro 2020 football championship and the Olympic Games, have been postponed until
2021. Ski resorts have ended the winter season early. Major cruise companies have halted operations; cruise
ships have been stranded at sea, as more and more ports have temporarily refused them entry. Many
countries have reintroduced border controls or banned certain travellers from entering their territory,
leaving them struggling to return home. The situation is particularly difficult in several EU countries that are
key tourist destinations, such as Italy (see Figure 1), Spain and France. According to estimates by the Italian
Tourism Federation, Assoturismo, Italy
stands to lose around 60 % of its Figure 1 – Estimated impact of COVID-19 on tourism
tourists this year.
revenues in Italy for 2020 (€ billion)
Considering the evolving nature of the
14
situation, it is too early to estimate the
€ billion

Best case scenario

Hotels
full impact of COVID-19 on global 12
Worst case scenario
tourism. According to United Nations
10
World Tourism Organization estimates, Travel agencies
global international tourist arrivals and tour operators
8
could decline 20-30 % in 2020 as
compared to 2019. This could translate 6

into a loss of US$300-450 billion (€270-

4
407 billion) in spending by Non-hotel tourist facilities
international visitors (international 2
tourism receipts). In comparison, the
0
SARS outbreak of 2003 led to a decline 2019 2020
of just 0.4 % that year. The Organisation
for Economic Co-operation and Source: Statista.
Development says the implied shock
could bring a '45-70 % decline in the international tourism economy in 2020'. The World Travel and Tourism
Council (WTTC) predicts that in 2020, the travel and tourism market could lose 75 million jobs worldwide
and 6.4 million jobs in the EU. The WTTC managing director believes that 'once the outbreak is under
control, it would take up to 10 months for the tourism sector to return to its normal levels'.
Air travel has been hit particularly hard. Some airlines, such as low-cost Flybe, have ceased operations,
while others have temporarily cancelled all flights. The International Air Transport Association (IATA) says
global air travel could lose more than US$252 billion (€228 billion) in 2020. Two million passenger flights
have been cancelled until 30 June. Airlines are going through a liquidity crisis: according to the IATA, the
typical airline had no more than two months' worth of cash at the beginning of 2020. Airports Council

EPRS | European Parliamentary Research Service

Author: Maria Niestadt, Members' Research Service
PE 649.368 – April 2020
EN
EPRS COVID-19 and the tourism sector
International says that European airports would lose 700 million passengers (-28 %) and €14 billion in
revenue in 2020. Some airports – such as Brussels South Charleroi – have temporarily shut down.
Within the hospitality sector, which is also facing a severe crisis, small and medium-sized enterprises have
been particularly badly hit. Many hotels have decided to close due to the drop in demand. In France, the
hotel occupancy rate was as low as 3.3 % on 17 March (compared to 65.3 % on 26 February). By 30 March,
restaurants and bars had closed in almost all EU Member States, with the exception of Sweden. Many hotels,
restaurants and bars have laid off thousands of workers permanently or temporarily. However some hotels
and Airbnb hosts have offered medical workers free accommodation to help them avoid infecting their
families. Some hotels are also being turned into temporary hospitals.

Initial measures at EU level

The EU is working on many levels to fight the COVID-19 pandemic. For instance, the European Commission
is helping to coordinate the Member States' national responses, while also supporting national healthcare
systems, the research and development of a vaccine, and treatment. Furthermore, the Commission is
ensuring the uninterrupted cross-border flow of supplies. In addition, it is working on mobilising all
available resources under the EU budget to support Member States in handling the outbreak. This includes
advancing payments, redirecting funds and ensuring that Member States take advantage of the maximum
flexibility that the EU fiscal rules afford. Yet again, the Commission has proposed earmarking €37 billion for
addressing the crisis under its Coronavirus Response Investment Initiative aimed, among other things, at
providing liquidity for businesses and support to people who have lost their jobs. Those in the tourism
sector who have been laid off could also get support from sources such as the European Globalisation
Adjustment Fund.
The EU Treaties give the EU limited competences with regard to the tourism sector; that is, the EU can only
support, coordinate or supplement Member States' actions in this area. Applying this in practice, the
Commission has been in constant contact with ministries responsible for tourism, specialised international
organisations and the EU tourism industry. The Commission has also provided legal analysis and is setting
up a network of European tourism and travel industry associations.
As regards specific tourism-related sectors, the Commission has proposed to suspend the rules obliging
airlines to use their allocated slots at EU airports. The Commission has also given guidelines on EU passenger
rights and border checks. Those related to border checks include a recommendation to the Member States
to impose a restriction on non-essential travel to the EU for 30 days. Furthermore, the Commission has
helped to repatriate EU travellers.
The European Parliament debated the COVID-19 outbreak at its 10 and 26 March plenary sessions (the latter
an extraordinary one). Among other issues, they stressed the need for establishing common rules on
entering the Schengen area. At its plenary session of 26 March, the Parliament debated how to speed up
the implementation of measures responding to the COVID-19 outbreak. It adopted, almost unanimously,
its position on three legislative proposals: i) launching the Coronavirus Response Investment Initiative;
ii) extending the EU Solidarity Fund to cover public health emergencies; and iii) temporarily suspending
airport slot rules. Subsequently, these measures were formally adopted and put into force. In a letter dated
24 March and addressed to several European Commissioners, Parliament's Tourism Task Force called for 'a
tourism rescue action plan, with concrete short and medium term measures'.

Initial measures at Member State level

Most EU Member States have announced they are introducing economic assistance packages that would
also cover tourism sectors. Measures include tax moratoriums, extended deadlines for payments of social
charges, and wage subsidies, loans and guarantees for workers. Italy has implemented a tourism-specific
support package. Some countries have re-nationalised coronavirus-hit companies. For instance, Italy has
taken full ownership of Alitalia; the United Kingdom has partially nationalised its railways. France has
modified the conditions for cancellations of travel bookings. Sweden has offered credit guarantees for
airlines. Many of these measures are a form of State aid that usually requires the Commission's approval.
The Commission has stated that it 'will make sure that State aid can flow to companies that need it'. As of
27 March, the Commission had approved 22 State aid plans.
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parliamentary work. The content of the document is the sole responsibility of its author(s) and any opinions expressed herein should not be taken
to represent an official position of the Parliament. Reproduction and translation for non-commercial purposes are authorised, provided the source
is acknowledged and the European Parliament is given prior notice and sent a copy. © European Union, 2020.
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