On a typical weekend afternoon, Beijing's Silk Street Market buzzes with the sound of tens of thousands of tourists haggling over antiques, jewelry and knockoff Gucci handbags. Rickshaw drivers normally scoop up these marketgoers, pedal them to their hotels and return with pockets full of foreign currency--a lucrative cycle that drivers can repeat dozens of times a day. In recent months, though, the Silk Street Market's once reliable bustle has thinned dramatically. "I haven't seen a single tour bus pulling into the market this morning," says Lao Qian, a 49-year-old rickshaw driver taking a long lunch break. "And I've had a total of three customers since yesterday."
From China to the Caribbean, Thailand to Tanzania, workers in the travel industry are feeling the icy chill of the worldwide recession. From 2004 to '07, global tourism boomed, with an average growth of 3.6% a year. But as consumers tightened purse strings and canceled vacations in the second half of 2008, tourism's contribution to the world economy grew just 1%, the industry's worst performance since the bursting of the tech bubble, the outbreak of SARS in Asia and the 9/11 terrorist attacks hit international travel earlier this decade. "The last months have been increasingly challenging," says Jean-Claude Baumgarten, president of the World Travel & Tourism Council (WTTC), an organization of travel executives, "and we clearly haven't seen the end of it yet."
That's an understatement. During the first quarter of this year, China, which in 2004 overtook Italy to become the world's fourth most visited country, saw the number of international visitors drop more than 7% and its foreign-tourism revenues shrink more than 15%. In Spain, year-on-year arrivals dropped 16% in February--the country's sharpest decline in years. And in the tropical islands of the Caribbean and South Pacific, it's a case of surf, sand and empty beach chairs. In February, French Polynesia reported a 30% drop in year-on-year arrivals. Tourist numbers there are now at levels last seen in 1996. The WTTC estimates the travel industry will contract 3.5% this year and shed 10 million jobs by the end of 2010.
You might think the last thing we should be worrying about is taking a vacation. Aren't we all meant to be saving and paying off mortgages? But that's underestimating the size of the global tourism industry and its potential to energize the world economy. By most accounts, tourism is one of the world's biggest industries, employing 7.6% of the world's workers (220 million) and generating a staggering 9.4% of global income ($5.5 trillion). "If you look at its linkages with other sectors, you see how deeply it cuts into the economy," says Geoffrey Lipman, assistant secretary general of the U.N. World Tourism Organization (UNWTO). "Construction jobs, manufacturing jobs, restaurant jobs--they can all flow out of tourism."
Industry officials now want governments to start looking at the sector as a way to get economies back on track. "What are governments trying to do in a recession? They're trying to create jobs," Lipman says. "They say, 'Let's bail out the car manufacturers. Let's do something about the banks.' And they forget about the major opportunity they have with the travel sector."
A few governments are already moving. In March, Madrid pledged $1.3 billion to modernize Spain's tourism infrastructure to fight off competition from sunshine destinations like Turkey and Egypt, which have become more competitive as the euro has appreciated. In Spain's Canary Islands, where tourism represents upwards of 60% of the local economy, the municipal tourism board recently began a series of seminars to help tourism workers cast off their perceived grumpiness. Course materials advise cabbies to "ensure your taxis smell nice, and don't drive too fast" and remind hotel staff that "a smile costs nothing."
Italy has taken a more traditional route by boosting advertising. In April, the national tourism board launched a $13 million initiative called "Italia Much More" to lure tourists from the U.S., Canada and the rest of Europe. "The crisis is tangible for everyone, and Italy will suffer," says Matteo Marzotto, head of the National Tourism Board. "We're in the middle of a war." That may sound dramatic, but consider this: in 2008, Italy's tourism revenues fell 5%, the first drop in seven years. The slump has already translated into a loss of $5.2 billion and at least 150,000 jobs.
The battle for the shrinking pool of tourists, naturally, is good news for anyone touring. Cambodia, Malaysia, Thailand and Vietnam have cut visa fees and worked with airlines, hotels and tourist sites to slash prices. Caribbean operators say deep price cuts have been essential to keeping the region in people's minds during the turmoil. Some Caribbean resorts have cut prices in half. "We're hoping that these deals will never have to see the light of day again," says Hugh Riley, secretary general of the Caribbean Tourism Organization, the body representing the travel interests of 32 nations in the region.
Once prohibitively expensive, places such as South Korea and Iceland have been transformed into bargain getaways. The weakening of South Korea's won helped the country attract 7% more tourists last year--a faster rise than that of any other Asian destination--and so far this year, 50% more Japanese tourists have visited. In Iceland, where the krona has fallen sharply, the nation is betting on increased arrivals: this summer Icelandair will open up new routes to nine cities in Europe and North America. And VisitBritain, the official U.K. tourism body, is running a $2.6 million ad campaign urging foreigners to "see more of Britain for less." "The pound isn't going to be this weak forever," says spokeswoman Hayley Senior.
Boosting tourism, however, isn't merely about attracting foreigners: governments are also courting their own citizens. In China, local authorities have distributed domestic-travel coupons nationwide. In Wuhan, a city along the Yangtze River in central China, $146,000 worth of coupons was snatched up within 10 minutes at a promotional event, and the city has pledged more vouchers, totaling $73 million. In Britain, it's estimated that 5 million more citizens will choose a staycation this year rather than venture to the pricey euro zone.
The sense of urgency is most pronounced in the developing world, where a job in tourism can be the difference between poverty and prosperity. In Kenya, a single employee at a hotel or restaurant supports four other people, according to Gerson Misumi, managing director of Tamarind Management, a hospitality firm in Kenya and South Africa: "There's a chain of services that depend on our industry." Adds Lipman of the UNWTO: "Tourism is a good development agent because poor countries don't have to manufacture it." Developing nations already have their product--nature, culture, tradition--and all that's required to profit is a bit of investment in infrastructure and marketing. "The market comes to these countries then wanders around depositing foreign-exchange income wherever it's directed, including poor rural areas," Lipman adds. That's a handsome return on investment for any country, developing or otherwise.
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