Exploring COVID's Impact on Travel and Tourism Sectors | Airlines, Hotels, and Cruise Lines

02 July 2021


Learn more about our Travel Industry ETF

Part 1: The Impact of COVID-19 on the Airline, Hotel and Cruise Line Sectors

Part 2: Exploring COVID's Impact on Travel and Tourism Sectors

Part 3: Factors Driving the Recovery of the Travel Industry


This article focuses on the COVID-19 pandemic’s impact on the three key sectors of the travel and tourism industry (i.e., airlines, hotels, and cruise lines) that have been particularly hard-hit by the pandemic and are the underlying sub-themes of our Travel Industry ETF.  As the rest of this section shows, all three of these sectors have managed to weather the worst crisis in their history, thanks to a combination of cost-cutting, borrowing and government financial assistance.  Large cruise operators have also been able to draw on extraordinarily large cash cushions to sustain them after their business dried up almost overnight.



The average number of commercial airline flights per day fell from more than 100,000 in January and February 2000 to around 78,500 in March and 29,400 in April, according to data by Flightradar24, a website that tracks flights globally. By early May 2021, the daily number of flights was still only 78,100, or 22% below pre-pandemic levels. [1] 

According to the International Air Transport Association (IATA), the global air transport sector’s total revenues fell 50%, from $838 billion in 2019 to $419 billion in 2020. The revenue decline would have been even greater, if air cargo revenues not held up better than passenger revenues.  According to IATA, cargo accounted for 36% of airlines’ total revenues in 2020, up from 12% the year before.  IATA expects total airline revenues to increase by 23% in 2021, i.e., to $515 billion or still only 61% of pre-pandemic levels.[2] 

Increase in Global Airline Debt, 2019-2020 (Billion USD)

Source: IATA, Outlook for the Global Airline Industry, April 2021 Update https://www.iata.org/en/iata-repository/publications/economic-reports/airline-industry-economic-performance---april-2021---report/



The bottom-line impacts have been similarly dismal.  Airlines lost $126.4 billion after taxes in 2020, compared with a profit of $26.4 billion in 2019.[3]  Losses are still projected to be $47.4 billion in 2021.  In normal times, these results would have caused widespread airline bankruptcies.  In this financial environment, the cost of survival for most airlines has been a huge increase in debt.  Governments have provided almost $227 billion in aid, about half of which has been in the form of debt that has to be repaid.[4]  Airlines have also been raising cash from issuing debt and equity on capital markets, bringing the increase in airline debt to $221 billion by the end of 2020.[5] 

The next challenge will be preventing airlines from sinking under the burden of all this debt.  Paying off airlines’ debt to governments and private lenders means that the crisis will last longer than it takes for passenger demand to recover.[6] 



Hotel occupancy rates around the globe also plummeted with the onset of the pandemic.  In March 2020, occupancy rates were down by 96% from the same period a year earlier in Italy, 68% in China, 67% in the United Kingdom, 59% the United States and 48% in Singapore, according to research firm STR.[7]  Occupancy rates have improved modestly in the last year, led by Asia Pacific, but hotels in most regions are expected to take 3-4 years to regain their pre-pandemic levels. 

In 2019, the global hotel sector had $550 billion in room revenues, which was a record and up 2.5% on the prior year.[8]  This figure does not include food and beverages and other hotel services revenues, which account for 32% of average hotel’s revenues.  On a proportional basis, total global hotel revenues were an estimated $810 million in 2019.[9]

According to a Statista survey, the global hotel sector’s revenues plunged 46% in 2020, which would have placed total revenues at some $437 million.[10]  Revenues are projected to increase to $504 million in 2021, which is still 38% below 2019 levels.[11] 

Average GOPPAR for Hotels in Selected Countries, 2020 (USD)

Source: Hotstats, Profit Matters: Global Hotel Performance Review 2020 https://www.hotstats.com/hotel-industry-resources/profit-matters-global-hotel-performance-review-2020


The shortfall in revenues in 2020 was too large to overcome through cost-cutting, but operating expense reductions cushioned many hotels’ bottom line.  Government assistance programs such as the U.S. CARES Act Payroll Protection Plan also helped to lower the occupancy rate at which the average hotel can break even.  As a result, hotels in the U.S. and major Asia-Pacific markets managed to maintain a positive GOPPAR (gross operating profit per available room) for all of 2020, while their counterparts in most Western European countries lost money.  Looking forward, the new, leaner operating models that many hotels have implemented during the pandemic could pave the way to greater profitability in 2021 and subsequent years.


Cruise Lines

The cruise line sector fared even worse than the airlines.  In March 2020, members of the Cruise Lines International Association (CLIA) voluntarily suspended passenger cruise sailings worldwide.  Cruise sailings resumed in parts of Europe, Asia and the South Pacific beginning in July 2020.  Nearly a year later, most cruises remain on hold, with the U.S. and several other countries still totally shut to cruises.

The global cruise line sector’s revenues hit $27.4 billion in 2019, a 15% jump in three years.[12]  However, COVID-19 triggered the worst market contraction in history, with cruise line revenues plummeting by almost $20 billion in a single year.  In 2021, cruise line revenues are projected to increase to $16.8 billion.[13] 

Major Cruise Ship Operators' Cash Reserves, mid-2020 (Million USD)

Source: Company press reports.


Major cruise ship operators such as Royal Caribbean, Carnival Cruise Line, and Norwegian Cruise Line entered the pandemic-induced shutdown with enough cash reserves to sustain them at least into the second half of 2021, even under a zero-revenue scenario.  All of these companies have continued to augment their cash reserves, through capital markets transactions or asset (i.e., ship) sales.

However, some smaller cruise ship operators, such as the UK’s  Cruise and Maritime Voyages, have filed for bankruptcy or shut down completely.



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