New York – Decreased travel due to the coronavirus outbreak could equate to an $809 billion economic hit to the U.S. economy and the loss of 4.6 million travel-related jobs in this country by the end of April, according to an analysis prepared by Tourism Economics and released by the U.S. Travel Association. Yesterday’s initial report projected the loss of 4.6 million jobs this year; today’s update projects the elimination of those jobs, and a loss of $202 billion in travel spending, before May.

These estimated losses are severe enough to push the United States into a protracted recession, lasting at least three quarters, with a low point occurring in the second quarter of 2020. This is assuming that day-to-day business begins a return to normalcy in June, which would follow a pattern roughly similar to the course COVID-19 has taken in China.
 
According to the analysis, total travel spending is forecast to drop by $355 billion this year, which would represent a drop of 31 percent — more than six times the impact of 9/11. The effects already felt by the hotel industry alone are staggering — the outbreak “has already had a more severe impact on the hotel industry than 9/11 and the 2008 recession combined,” according to Chip Rogers, president and CEO of the American Hotel and Lodging Association. Rogers, together with U.S. Travel Association president and CEO Roger Dow and a number of hotel company CEOs, held a media briefing yesterday following White House meetings in which they requested federal relief.
 
“The health crisis has rightly occupied the public’s and government’s attention, but a resulting catastrophe for employers and employees is already here and going to get worse,” said Dow. “Travel-related businesses employ 15.8 million Americans, and if they can’t afford to keep their lights on, they can’t afford to keep paying their employees. Without aggressive and immediate disaster relief steps, the recovery phase is going to be much longer and more difficult, and the lower rungs of the economic ladder are going to feel the worst of it.”
 
The estimated 4.6 million travel-related job losses would nearly double the current U.S. unemployment rate on their own, pushing the rate from 3.5 percent up to 6.3 percent. Dow and Rogers also pointed out that the vast majority of the people paying front-line travel-industry employees — 83 percent — are small-business owners themselves.

“We have to make sure that hotel owners who right now have zero occupancy can make their mortgage payments,” Rogers said, in addition to ensuring they can retain as many employees as is feasible.

Industry leaders have requested $150 billion in immediate federal relief for the hotel industry and an additional $100 billion for travel-related businesses like retail shops, attractions and restaurants. U.S. airlines are looking for $58 billion in relief.

“It sounds like a big number,” said Dow, “but in contrast to what can be lost and what’s a stake in the U.S. economy, it’s a necessary number.”

Based on the updated information, fast action is even more crucial. “The news we have for policymakers and the public is very challenging,” said Dow. “The 15.8 million American jobs supported by travel are directly in the crosshairs of the health crisis, and the only thing that’s going to protect them is aggressive financial relief right now.”

According to Dow and Rogers, the relief funds would most importantly serve two purposes: to cover wages, or at least some percentage of them, for front-line workers, who otherwise would be collecting unemployment; and to provide enough liquidity for travel business owners to stay afloat.

“This situation is completely without precedent,” Dow said. “For the sake of the economy’s long-term health, employers and employees need relief now from this disaster that was created by circumstances completely out of their control.

“We’re witnessing the shutdown of travel,” Dow continued. “The economic effects of that are already disastrous, but could become worse and permanent unless the government acts now.”