April 6, 2021
A.J.P. TAYLOR, a British 20th-century historian, once wistfully noted that the only agents of state a Victorian Briton was likely to meet were the postman and the local policeman. How times have changed. The pandemic has brought with it sweeping restrictions on what the state allows individuals to do.
One of the latest restrictions is that, from March 29th, modern-day Britons will be fined £5,000 ($6,900) if they go abroad without reasonable excuse—a rule that in effect makes a foreign holiday a criminal offence. No wonder that this year’s big vacation trend is the “staycation”—to go on holiday in one’s own country. That will have an uneven economic impact around the world.
Britain is not the only country to impose draconian restrictions on cross-border travel. America still bans virtually all Europeans from entering the country. Quarantine rules also have a chilling effect on leisure travellers. Hong Kong’s system—among the harshest in the world—locks inbound passengers in hotels for 21 days to try and stop holidaymakers importing new variants of the disease. Such measures, understandably, put a squeeze on leisure travel. Those with just two or three weeks’ paid leave a year have better things to do with their time than wait around in a quarantine hotel.
At the start of the pandemic, both foreign and domestic travel were destroyed by border closures and travel restrictions. So low was demand during the first lockdown that Ryanair, Europe’s largest airline by some reckonings, almost shut down completely. Even so, since last spring domestic travel has been steadily recovering, particularly in America, where lockdown rules have been loosened faster than elsewhere. According to OAG, a data firm, capacity on American domestic flights at the end of March—measured by the number of seats on all aircraft—was 23% below where it was in January of last year; in Australia it was down by 19%. Meanwhile, cross-border travel remains in the doldrums. In China, where domestic-passenger traffic has fully recovered, international travel is 93% below where it was before the pandemic (see chart). With a third wave of covid-19 cases sweeping through continental Europe, Latin America and India, the trend this summer could well be towards more border restrictions, not fewer.
The trend for more holidays nearer home will affect tourist spots in different ways. Islands are likely to suffer in favour of places that can be reached by car. Insular paradises such as Cozumel in Mexico, which used to earn 70% of its GDP from passing cruise ships, and the Bahamas, which formerly generated a similar share of its income from tourism, will take a long time to recover. Meanwhile, unfashionable seaside resorts within driving distance of urban centres may make a surprise comeback in popularity. Atlantic City, near New York and Philadelphia, and Margate, east of London, may once again outshine the foreign, sunnier beaches that long ago eclipsed them.
The staycation trend may fuel the growth of economies already doing relatively well after covid-19, while setting back those doing badly. This was the conclusion of a recent report by Bernstein, a research firm, which estimated the economic impact of 60% of outbound tourism spending being used at home instead. Their result: China, whose economy is already larger than before the pandemic began, would be the biggest winner. And the biggest losers? Greece, Iceland and Portugal, whose economies have already suffered dreadfully over the past year.