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Introduction
The tourism industry is going through difficult times due to the COVID-19 pandemic. Many restrictions within states, closed air traffic between countries, and the economic crisis is the main reason for the decline in the tourism business. For many regions of developed countries and developing countries in general, tourism is the primary source of foreign exchange income and a significant sector of government revenue. Consequently, the suspension of tourist activities can lead to unemployment and a reduction in GDP. The economic crisis has affected many industries around the world, and therefore many tourists, even without taking into account the restrictions, did not have the funds to travel. The disastrous consequences are partly offset by government support. This paper assesses the impact of the pandemic on the supply and demand of tourism activities and consumer behavior.
Industry Features
The labor and travel services market has several unique features that are unique to this industry. Tourism is the primary source of employment worldwide (Sanabria-Díaz et al., 2021). Tourism exports account for about eight percent of all global exports (Gu et al., 2021). More than half of those employed in the industry are women, as well as many young employees, which makes the industry inclusive (Chang et al., 2020). Most of them are employed in low-paid jobs and are therefore highly vulnerable to economic shocks.
Many jobs exist in the indirect and near tourism sectors: construction in resorts, hotel services, restaurants, shopping centers, transportation land, air, water, public, and many urban landmarks-related occupations. Since the tourism sector cannot exist without direct contact between people, the specificity of the restrictions implies a complete cessation of activities. Supply and demand in this area are in shock. The losses are estimated at more than a trillion dollars in export earnings at the end of 2020 (Davahli et al., 2020). Countries that depend on the tourism industry run the risk of plunging into a prolonged crisis due to the deprivation of the opportunity to pay off public debt and pay for imports.
Tourism stimulates air travel, which also employs a mass of labor and capital. The dramatic change in global supply and demand has brought down the share price of many airlines and cruise lines (Fu, 2020). Significant losses and a downward adjustment in demand will first reduce air travel prices, but in the future, to reach the 2018-2019 level and take into account inflation, airlines will raise prices. Many airlines are escaping bankruptcy thanks to government support, but a potential decrease in the competition will also drive up prices. For now, the availability of transport systems will have a positive impact on deep, far-reaching plans for economic recovery. However, in the short term, optimistic forecasts for the tourism industry are not expected, as the virus can mutate, vaccines are not yet available worldwide, and the number of infections per day in many countries is still increasing.
Restrictions
The impact of the pandemic spread throughout the world and led to many deaths and overcrowding of medical facilities. By July 2021, more than 120 million people worldwide had had the virus (Kim et al., 2021). COVID-19 comes in waves, so if statistics decrease in one country, in others, it begins to grow relentlessly. A natural measure for many countries has been the adoption of restrictive measures, including the closure of borders to visitors and tourists. As a result, international tourism was completely closed, and domestic tourism was subject to restrictions, as mandatory isolation was introduced in many countries and cities (Arbulú et al., 2021). Although the situation has improved in some countries, government authorities are still afraid to open borders with countries where the situation is worse. In addition, many tourists can no longer afford the usual travel due to the economic crisis. The entertainment industry, which also received its primary income in tourist cities during the high season, is on the verge of bankruptcy. Isolation also contributes to the industrys decline as people stay at home, work from home whenever possible, and rarely leave their homes.
The reaction of government agencies was not long in coming, but few responded quickly and efficiently to the pandemic. First, the virus requires the creation of a vaccine, which, according to all standards, must be tested and developed for a long time. Secondly, tests for infection also did not appear immediately, and therefore it was problematic to keep actual statistics. Third, many countries have experienced other disasters, from natural to economic, such as the hurricane season in the Caribbean (Mulder, 2020). Finally, it is difficult to assess any prospects due to the unpredictable nature of the spread of the virus, the development of its strains, and not a fully understood symptomatic effect on the human body. Consequently, the tourism sector is faced with an unprecedented unique crisis, the timing of the exit from which is not known for sure, and the sector bears a negative impact and irreparable economic losses on a daily basis. However, for some countries in Latin America and the Caribbean, tourism is the primary source of exports and GDP, which affects the political, economic, and social situation in the countries.
Many tourists were closed in countries where they came on vacation. In this regard, additional activities were required from state bodies and embassies in solving such a problem. Moreover, in some countries, the influx of tourists decreased by 100%, threatening the destruction of the entire hotel business, entertainment and transportation systems. Researchers assess risks in three possible scenarios. The first involves the spread of the virus and new strains. In the second scenario, the economic recovery takes 90 days. The third involves reforms and government intervention, including support for the tourism business (Wen et al., 2021). In almost any conditions of the spread of the virus and further predictions, the third approach shows the most successful modeling results. Government agencies need to not only conduct restrictive activities but also create programs to support the industries most affected by COVID-19, especially when they make up the lions share of the countrys exports.
Changing the Supply
Due to the lack of demand, the supply has changed quite a lot in different aspects. First, in countries where travel restrictions have already been lifted, travel and travel are offered low prices. Competition in the market is still high, but not everyone is ready to take the opportunity to choose and take on the risks of getting sick and being quarantined. In this regard, the incomes of even successful hotels and travel agencies are falling, as are the prices for this type of service (Li et al., 2021). As a result of the pandemic, the authorities forced many hospitality businesses to close, due to massive losses, some small market players went bankrupt (Brinca et al., 2020). In the field of entertainment and hospitality, many human contacts are expected, and given the nature of the virus, these organizations either ceased their work or were spent on sanitary safety in case of permission from the authorities.
As a result, a vicious circle emerges, a way out of which is possible only if the pandemic ends, general vaccination, or a high level of immunity of the entire world population. Any preventive and emergency measures cannot cover losses; only support from the authorities is possible. Due to the lack of alternatives, domestic tourism has expectedly raised prices in countries where it is available with restrictions (Nofal et al., 2020). Against the background of cheaper transport, tourists who have not suffered significant financial problems have the opportunity to travel within the country, but at increased prices for such services.
The restaurant business began to develop online sales and take-out food formats. More recently, the only relaxation of restrictions has allowed this business to serve visitors by limiting its bandwidth and observing all security measures (Dube et al., 2021). Researchers in the field are looking at various methods of solving this problem, partly in the realm of technology. Online sales and delivery services have become a small lifeline for the restaurant business. The same models are offered in hospitality.
Scientists offer a variety of methods to solve the prevailing problems. For example, the Turkish industry uses the DEMATEL method to decide quarantine and other preventative security measures in this area (Altuntas & Gok, 2021). Review articles analyze the spread of the virus and the secondary analysis of statistics through the prism of the tourism industry. As one of the possible solutions, a method of automation is provided, which involves reducing a certain proportion of jobs to maintain business and reduce the number of direct contacts between people (Webster & Ivanov, 2020). Among the technologies already in use, it is possible to include contactless payments, digital menus, keyless access to rooms. Robotization stands out as one of the development vectors in the hotel business (Tussyadiah, 2020). So far, these developments are at an early stage, but the direction seems to be extremely promising for a long time.
Changing Demand and Consumer Behavior
The pandemic has heavily modified consumer decisions. Scarcity and heightened security measures have fostered a craving for high-quality services in shoppers, which now prevails over perceptions of brand quality and popularity (Li et al., 2021). In addition, contactless consumption of goods began to develop, transitioning many services to the online format. Since travel cannot be replaced by the various counterparts that have emerged in many business areas, the case of a pandemic is entirely unprecedented.
The hotel business can only count on the patronage of its regular customers who book rooms in advance and delay refunds for canceled trips. Most consumers still lack a sense of comfort when visiting hotels and restaurants in countries where they have access (Gursoy et al., 2020). Marketing in this industry is now focused on returning customers or finding those determinants that will help bring visitors back. In addition, consumers are more supportive of increased security measures and are even willing to pay extra for them. Thus, a focus on safety has become a significant factor in consumer behavior.
Many tourists, due to closed borders, focus on domestic tourism, discovering affordable destinations. Greater attention to the domestic market is beneficial from the point of view of each countrys economy, as it contributes to financial turnover and an increase in GDP (Islam & Fatema, 2020). However, there is a view that domestic tourism contributes to a decrease in growth (Ballantine, 2020). This theory is connected with the fact that domestic tourism does not contribute to the current trends in the development of multiculturalism and tolerance. Moreover, the development of culture and society is impossible without the experience of other nations and cultures. This information is actively used in the macrosocial aspects of marketing by many representatives of this field.
However, supply and demand remain closely linked in the tourism industry as well. First, the structure of the market, the supply of housing in rural areas, and now the main aspects of security are both determinants of demand and indicators of the vulnerability of this area (Duro et al., 2021). Secondly, consumer behavior and the hotels activities, restaurant, and entertainment industry are directly dependent on the decrees and restrictions of the authorities, which are guided by the picture of the disease worldwide. Despite the deplorable situation of many representatives of these spheres, the long-term perspective is still unknown, but at the same time, it requires timely and quick decisions. The unprecedentedness of the situation leaves no room for forecasting; however, in the current situation, many marketing and internal solutions are being developed to regulate tourism processes following the requirements.
It is also worth noting the great attention of customers to personal hygiene. In addition to the basic safety measures that are taken in accordance with the regulations of the authorities, consumers pay great attention to high-quality and constant disinfection of premises and the ability to treat hands with an antiseptic or wash with soap and water anywhere. Travel behavior has changed in the wake of the pandemic, but these behaviors will likely continue to accompany consumers after all restrictions are lifted and borders open. Therefore hotels, restaurants, and other entertainment establishments will need to make constant adjustments to their work processes. Greater emphasis on safety will also lead to a new cost item but has an enormously positive impact in the long term.
Conclusion
The pandemic has affected economies around the world, sending supply and demand into a shock. Given the specifics of the tourism industry, this industry has been hit hardest by the impact of COVID-19. This situation has led to many losses in the hotel and restaurant business, forcing companies to make difficult decisions and create security and compliance with all restrictions. Various technological developments are partly a solution to these problems.
Consumer behavior has also changed dramatically. The focus has shifted to domestic tourism, which also has its pros and cons. Consumers are more focused on safety than popularity in their choices, studying better reviews and appreciating and paying extra for the highly qualified employees who provide the services. Aspects of social distancing, automated processes that do not involve direct contact between people, are encouraged by consumers. However, automation can lead to significant job losses, which can lead to negative consequences for the economy, given the current difficult situation.
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