If you examine the economy, it has evolved for very good reasons for people to come together in groups and see other people. Individually we may be relatively isolated, but when we travel and wished to be entertained, groups are what we strive for. The groups can be in a ball park, concert hall, theater, convention, movie theater, shopping and visiting other places we see or have seen on in the news or read about. To fight the COVID we have to social distance and avoid crowds. That makes it hard, because we all want to talk to or hear other people, in the bar or lunches. By staying at home or social distance when you go out, the global tourism industry is hurting.
In an article by Emma Farge of Reuters, the United Nations Conference on Trade and Development (UNCTAD) released a report which outlined 3 scenarios for the industry with lockdown meansures lasting 4 months, 8 months and 12 months.
The effect on world’s gross domestic product is between 1.5 and 4.2%, with revenue falling between $1.17 trillion or $2.22 trillion or $3.3 trillion. Because of international flights being curtailed, you can still travel but some countries isolate you for 14 days, which means you need at least a month and then when you return you will likely have to isolate yourself for 14 days. Is it worth it?
The effect of people not travelling is the jobs that came when people did are not longer coming back or they come on a much reduced number. A few weeks ago, the writer was talking to someone who works at a large convention hotel, normally the place runs at 70% plus occupancy, the last few months it has been less than 5%. How many people did the company call back to work? What should happen to them?
Linking to dividend paying stocks, as investors there are many good reasons to enjoy extra profits companies are making because of COVID, there is a society cost which someone must consider – what do you do with the people that are not needed because demand is low. A store opens, how many people did it have before and now? The store did nothing wrong, it may have even strengthened their on line sales to stay in business, but does it need the extra people? For many years, there has been an argument that companies should stick to what they do it terms of making money; what should be their voice on social concerns? If they take one, is there a backlash or what is the upside.
There are more questions than answers, till the next time – to raising questions