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V-Shaped Hospitality Industry Recovery to be Short-Lived
From:
Albert Goldson --  Indo-Brazilian Associates LLC Albert Goldson -- Indo-Brazilian Associates LLC
For Immediate Release:
Dateline: New York , NY
Monday, July 06, 2020

 

 

The leisure and hospitality industry (hospitality industry) has briefly rebounded with a V-shaped recovery just in time for the summer season. According to the Bureau of Labor Statistics (BLS) the industry lost 4.86 million jobs in a April 2020 as a result of global lockdowns due to Covid-19.

 With the progressive re-openings throughout the US, the industry has rebounded sharply employing 2 million jobs according to the June 2020 BLS. Though it represents only 50% of the jobs lost in April 2020 it’s a significant turnaround.

 The projection of this turnaround specific for this industry was articulated in my published article entitled Economic Micro-Burst During the Viral Ceasefire, 20 May 2020 under the section Hospitality and Travel Industry Ready For Take-Off. The figures are impressive considering that the US is not open for business to foreign travelers. And because of the strong second wave outbreaks many Europeans may prefer staying within Europe.

 THE BEFORE & AFTER

The following are the before & after charts (lockdown vs re-openings) on the hospitality industry’s position furnished by the Bureau of Labor Statistics and provided by Statista, an online German statistical firm.

 Before

According to the following chart The Industries Worst Affected by the Covid19 Job Crisis the hospitality industry has hit rock bottom with an unemployment rate of 39%.

 

 

After

The following chart entitled Hospitality Sector Leads June Job Gains shows the stark turnaround in the industry.

 

 

With respect to tourism’s global impact and which countries’ depend more heavily on the hospitality industry, the following chart entitled Who’s Most Vulnerable to Covid-19’s Impact on Tourism?, provided by the World Travel and Tourism Council (WTTC) and presented 14 April 2020 by Statista.

With respect to tourism role in the US economy, the article explained further, “In the United States for example, the total impact of travel and tourism was considerably smaller at 8.6 percent of GDP. Even at that lower rate, travel and tourism directly support more than 6 million jobs in the United States, with the total contribution to employment amounting to 16.8 million jobs in the U.S. according to World Travel and Tourism Council (WTTC).”

 

TROIKA OF TROUBLE

The hospitality and tourism industry’s V-shaped economy recovery will be short-lived, barely airborne in fact, because of the following three reasons:

Covid-19 Resurgence

Firstly the most immediate is the Covid-19 resurgence whose effects are decimating the three most populous states: California (39.5 million), Texas (29.0 million) and Florida (21.5 million) for a total of 90 million. Their populations account for 27% of the total US population and are prime internal and external vacation destinations.

More importantly is the annual tourism revenue generated by these states plus Nevada. Below are the top 4 generating states in 2018 for tourism revenue all of which are suffering most severely from the Covid-19 resurgence:

State

2018 Tourism Revenue

Texas

$164 billion

California

$141 billion

Florida

$112 billion

Nevada

$60 billion

Total

$477 billion


Although tourism impacts only 8.6% of the US economy, the resurgence in these critical hospitality & tourism behemoths will be outsized and flatten the economic curve well before the population flattens the Covid-19 curve.

Lockdown Part II

Secondly, the explosive resurgence itself is discouraging out-of-state visitors. Should the resurgence continue unabated then these states may institute another lockdown which would snuff out any and all economic progress and effectively ‘cancel’ the hospitality & tourism industry for the summer, its most lucrative season.

Hurricane Season

Thirdly, hurricanes are always capricious in a season lasting from June to November. The trend these past several years has been, whether caused by climate change or not, is increasingly more frequent and powerful hurricanes. For this reason, with Florida and Texas as the most vulnerable of the four states aforementioned states for hurricanes, the arrival of even a modest one could scuttle any economic recovery.

Below is an overview on the status each state with respect to their re-openings is indicated in the following chart entitled State Re-openings Stall Amid Covid-19 Resurgence provided by The New York Times 30 June 2020 and presented by Statista.