The Death of Tourism is Upon Us

We could witness the death of tourism. To explain, fear of coronavirus is closing borders and attractions and forcing travelers to stay home.

Governments all over the world are blocking travelers. For example, the European Union (EU) plans to bar most U.S. travelers when its borders reopen on 1 July 2020, The New York Times reports. The EU will ban Americans because the United States has reported more coronavirus infections than any other country.

America is not alone, the EU is banning travel from dozens of countries including Brazil. I think the EU’s action is groundbreaking because Europe is the world’s most popular tourist destination.

America is not alone, the EU is banning travel from dozens of countries including Brazil. I think the EU’s action is groundbreaking because Europe is the world’s most popular tourist destination.

The World is Rejecting Tourism

Two of the world’s largest economies; the United States and the European Union are suppressing tourism by blocking international travel.

President Donald J. Trump (R-Florida) has closed US borders and banned travel between the United States and Brazil. Ironically, Trump himself is a tourism entrepreneur whose businesses include hotels, golf resorts, and casinos. Yet the President will kill tourism to keep coronavirus out of the United States.

Moreover, governments are targeting specific industries. For instance, the U.S. Centers for Disease Control and Prevention (CDC) issued a No Sail Order for cruise ships. Under the order, cruise ships have to stay in port until the pandemic ends. Additionally Cruise ships need US Coast Guard Permission to embark or disembark passengers.

Cruise ships have the object of popular hysteria because of the SS Diamond Princess’s voyage between China and Yokohama in early 2020. The New York Times estimates coronavirus infected 634 Diamond Princess passengers and killed two of them.

The infection rate on the Diamond Princess was so great the World Health Organization (WHO) gave the ship its own statistical category. The Diamond Princess carried 2,666 passengers.

Coronavirus Hysteria Spreads

A similar hysteria now infects US tourism meccas such as Florida. Authorities will close Miami’s beaches because of 9,585 fresh coronavirus cases in the Sunshine State reported on 27 June 2020.

Consequently, Florida Governor Ron DeSantis (R) has banned the sale of alcohol in bars to limit coronavirus’s spread, the BBC reports. Meanwhile, New York tabloids are running hysterical headlines about returning travelers spreading the coronavirus.  

This hysteria is only the latest round in a growing anti-tourism sentiment In March, governors in Florida and Hawaii, two tourist meccas told visitors to stay away. Significantly, Alaska, another popular tourist destination imposed a 14 day quarantine on all traveler, The New York Times reports.

Is it the End of Tourism?

I think coronavirus hysteria could be the end of tourism. For instance, I predict some politicians will soon try to end tax credits and government subsidies for tourism-related businesses and tourist attractions.

Additionally, I predict there will be efforts to close or demolish infrastructure that facilitates tourism. For instance, some cities could try to close airports, cruise ship docks, and train stations.

A related development could be violence or civil disobedience designed to block tourism. Activists could try to block runways or prevent cruise ships from docking. Last year’s delay of flights at London’s City Airport by Extinction Rebellion activists could be the template for such actions.  Frightened residents could also turn to bombs or guns to keep infection carriers away.

Will Anti-Tourist Politics Triumph?

Thus I believe the end of tourism or official support for tourism is a probable outcome of coronavirus. In particular, I expect the election of a politician on an anti-tourism platform soon.

A winning political strategy could be to combine coronavirus hysteria with long-held complaints about tourism. Those complaints include charges tourists increase rents, drive out authentic people, damage the environment, and that tourism businesses cannot pay a living wage.

Anger at tourism is common but rarely expressed because politicians fear being seen as anti-worker or anti-job. Fear of coronavirus could make such views easy to express or even fashionable, however. In particular, anti-tourism activists can now point to tourists as a threat to voters’ lives and families.

I suspect anti-tourism could start in the United Kingdom, where the popularity of both Brexit and Extinction Rebellion exposes popular sympathy for closed borders. Notably, Prime Minister Boris Johnson’s Conservative Party won an impressive General Election victory in 2019 by capitalizing on such sentiments.

I think countering anti-tourism politics will be difficult. In particular, the charge “you’re putting my children’s or parents’ lives at risk so some guy can earn a few tips serving drinks to tourists” will be hard to counter.

Will Tourism Businesses Die?

Mr. Market shares my belief that coronavirus is killing tourism. Delta Air Lines (NYSE: DAL) stock price fell from $59.04 on 2 January 2020 to $26.91 on 26 June 2020, but rose to $27.27 on 2 July 2020.

Tellingly, Mr. Market paid $134.65 for a share of Royal Caribbean Cruises Ltd. (NYSE: RCL) on 2 January 2020 and $49.51 for the same stock on 2 July 2020. In contrast, casino operator Caesars Entertainment (NASDAQ: CZR) retained most of its value.

In detail, Mr. Market paid $13.47 for the operator of Caesars Palace on $13.47 on 2 January 2020; $11.75 on 26 June 2020, and $12.30 on 2 July 2020. Finally, Mr. Market paid $151.49 for hotel operator Marriott International (NASDAQ: MAR) on 2 January 2020 and $80.94 for the MAR on 26 June 2020. Yet Mr. Market offered $87.80 for Marriott on 2 July 2020.

Therefore, tourism businesses are already losing their value. I expect the total collapse of tourism-dependent companies and stocks such as Caesars, Royal Caribbean, and Marriott. In particular, I expect most casinos and cruise ship operators to be junk stocks by 2021.

However, companies such as Delta could receive government bailouts or survive by converting their airliners to cargo planes. Unfortunately, such moves could destroy investors’ faith in those companies and many market capitalizations.

Tourism Businesses will Collapse

Under those circumstances, I expect the collapse of tourism-related businesses. Moreover, many companies will try to divest themselves from tourism.

Disney (NYSE: DIS); for instance, could spin its theme parks off into a separate privately held company. To elaborate, Disney could spin the parks off to deflect popular anger at plans to close such beloved attractions as Disneyland.

Similarly, Marriott and Delta could redirect their companies to focus on business travel. However, I cannot seehow companies such as Caesar’s or Royal Caribbean can survive without tourism.

For instance, there is little you can do with cruises ships beyond cruising. Moreover, converting casinos to other uses will probably be impossible. Hence, Las Vegas could become the New Atlantic City.

A huge problem that Caesar’s faces is that its principal attraction; gambling, is available online everywhere.  Thus, cruise ships will soon face the breakers’ yard while they demolish the casinos.

What is the Future of Tourism?

The ultimate future of tourism is hard to discern. However, I will take a few guesses at it.

A probable outcome is that tourism could return to what it was in the 1930s, an activity of the rich. To explain, wealthy people and diehard adventurers will travel, but ordinary individuals will stay put.

Instead, the average people will experience new places through virtual reality or holiday closer to home. Meanwhile, the rich will pay more to travel but confine their travels to select and safe locations.

Another outcome is that governments could confine tourism to specific areas or sacrifice zones. The UK government could restrict tourism to a few sites in London, and limit the number of tourists allowed, for instance. Likewise, the Swiss government could bar tourists from leaving the ski resorts.

The Post Tourism World

A probable result of this is that they will convert many tourist areas into permanent residences. With telecommuting and work from home, people who enjoy skiing, surfing, or fly-fishing will move to homes close to the stream, the beach, or the slopes.

They could convert ski condos into permanent housing for professionals and build new subdivisions near the beaches. Additionally, many older neighborhoods in cities that cater to tourists, such as Denver’s LoDo, could revert to housing for local people.\

Finally, many activities people now travel for will occur at home. For instance, people will gamble online and shop for luxury goods on Amazon (NASDAQ: AMZN). Meanwhile, people who want to see the Taj Mahal or Buckingham Palace will visit those places through VR from the comfort of their living rooms.

In the final analysis, I think investors need to avoid tourist-dependent business. I think tourism will either die or change beyond recognition in the next decade. Hence, it could be impossible for anybody to make money from tourism for a long time.