The COVID-19 crisis has hit the tourism economy hard, with unprecedented effects on jobs and businesses. Tourism was one of the first sectors to be deeply impacted by the pandemic, as measures introduced to contain the virus led to a near-complete cessation of tourism activities around the world. The sector also risks being among one of the last to recover, with the ongoing travel restrictions and the looming global recession. This has consequences beyond the tourism economy, with the many other sectors that support, and are supported, by tourism also significantly impacted.

The unprecedented shock to the tourism economy is being compounded by the evolving sanitary situation, with the sector potentially facing stop/start cycles for some time. This will further damage business and traveller confidence, and business survival prospects. Despite the proven resilience of the tourism economy to previous shocks, the sheer scale and combined economic and health nature of this crisis means that the road to recovery is highly uncertain and likely to take some years. While there has been some resumption of international tourism activity in recent months, this remains very limited. Domestic tourism has restarted in many countries, but can only partially compensate for the loss of inbound tourism.

OECD now estimates international tourism1 will fall by around 80% in 2020. No meaningful recovery in international tourism flows is foreseen before 2021. This is in line with recent projections by other organisations. Latest UN World Tourism Organization (UNWTO) estimates point to a 65% decline in international tourist arrivals in the first six months of the year, with the loss in receipts five times that recorded in 2009 amid the global financial crisis.2 UNWTO now foresees a decline in international arrivals close to 70% (within previous estimates of 58-78%), with recovery to pre-crisis levels expected to take up to four years.

Domestic tourism is providing a much needed boost to help sustain many tourism destinations and businesses, and will continue to be a key driver of recovery in the short to medium term. However, even while there has been some pick up in domestic tourism activities, due in part to displacement effects of international travel restrictions, it is expected to end the year significantly down on pre-COVID levels. Spain and the United Kingdom, for example, are forecasting a decrease in domestic tourism by 45-50% in 2020. Also, not all destinations or businesses have benefited, due to ongoing restrictions on movement within countries and altered demand patterns and behaviours.

This is having very tangible economic and social consequences for many people, places and businesses, and the wider economy. Tourism generates foreign exchange, drives regional development, supports jobs and businesses, and underpins local communities. Before the pandemic, the sector directly contributed 4.4% of GDP, 6.9% of employment, and 21.5% of service exports in OECD countries, on average (and 6.5% of global exports according to the World Trade Organisation3). However, these shares are much higher for several OECD countries, where tourism is a major driver of economic activities, such as France (7.4% of GDP), Greece (6.8%), Iceland (8.6%), Mexico (8.7%), Portugal (8.0%) and Spain (11.8%). The indirect impacts of tourism are also significant, exacerbating the size of the shock.

The halt in tourism is having a knock-on impact on the wider economy, given the interlinked nature of the sector. The OECD estimates that more than a third of the tourism value added generated in the domestic economy comes from indirect impacts, reflecting the breadth and depth to linkages between tourism and other sectors (e.g. food production, agriculture, transport, business services).4 UNCTAD, meanwhile, estimates that global GDP losses due to the crisis in tourism could amount to 2.8% of the world’s GDP (USD 1.2 trillion), if international tourist arrivals drop by 66%, with the consequences most marked in countries like Croatia (potential drop in GDP of 8%), Portugal (6%), Morocco (4%), Greece (4%), Ireland (3%) and Spain (3%). This could rise to a fall of 4.2% of world’s GDP (USD 3.3 trillion) if international tourism flows were at a standstill for 12 months.5

The crisis is putting millions of jobs in the tourism sector at risk. Tourism is highly labour intensive and provides a high volume of jobs for low skilled workers, together with higher skilled jobs. According to the International Labour Organisation (ILO), the accommodation and food services subsectors alone globally provides employment for 144 million workers, about 30% of whom are employed in small tourism businesses with 2–9 employees.6 Many of these jobs are customer-facing, exposing workers to the health risks from the virus (e.g. waiters, air stewards, hotel receptionists).

The scale of job losses is not yet apparent as government supports have protected workers from the full impact of the pandemic. However, the World Travel and Tourism Council (WTTC) estimates that that up to 60% of tourism jobs are at risk globally, with a potential loss of 197.5 million job losses.7 The European Commission Joint Research Centre forecasts that in 2020 between 6.6 and 11.7 million jobs in businesses operating and/or dependent on tourism-related activities could be at risk of reduction in working hours or permanent losses in the European Union, representing between 3.2% and 5.6% of the total active population.8 Women, young people, rural communities, indigenous peoples and informal workers are disproportionately affected – groups that are more likely to be employed in micro or small tourism businesses.

National level estimates similarly reflect the scale of the impact on tourism, together with the challenges in making predictions in a fast moving and uncertain situation. Quantifying the current and future impacts of the crisis on the tourism sector is challenging, with the crisis exposing shortcomings in tourism statistical information systems, including a lack of robust, comparable and timely data to inform policy and business decisions. Annex 1A presents available data from selected countries on tourism performance since the outbreak of the pandemic. It highlights the precipitous drop in international travel flows and tourism spending, as well as the decline in domestic tourism activities.

Attempts to forecast the likely impact of the pandemic on the tourism economy have been overtaken by the rapidly evolving sanitary situation, and changes to the containment measures. Traditional forecasting methods are unreliable in the current environment. Box 1 presents forecasts for domestic and international tourism performance in 2020 from selected countries. As with the OECD forecasts, scenario-based approaches provide some directions for tourism recovery, but are necessarily based on assumptions and simplifications.

The outlook for tourism is extraordinarily uncertain, and recovery will depend on the interlinked consequences of the economic and health crisis on demand and supply side factors. These include the evolution of the pandemic, availability of a vaccine (or alternative control measures), and the lifting of travel restrictions, as well as the survival and readiness of businesses throughout the tourism ecosystem to meeting demand, impacts on consumer confidence and travel behaviour, and developments in the wider economy. The global scale and extended duration of the crisis, continued uncertainty, and the interlinked economic and health nature of this crisis makes it unlike any previous shock to the tourism system.

Expectations have been repeatedly downgraded as the sector has remained in survival mode for longer than initially anticipated. Even if there is a meaningful return to tourism activity in 2021, as is currently expected, recovery will be slow and a return to pre-pandemic tourism levels may not happen before the middle of the decade. A rebound in visitor flows may not be mirrored by a rebound in visitor spending, while changes in tourism flows may also have a strong impact on product pricing. In any case, a return to business as usual is highly unlikely, and the tourism sector will be a very different in 2021 to what it was in 2019.

Beyond the tourism economy, the pandemic has triggered a global economic crisis, and this in turn has consequences for tourism recovery. OECD predicts a decline in global GDP by 4.5% in 2020 (smaller than previously expected), before picking up by 5% in 2021. However, while household spending on many durable goods has bounced back relatively quickly, spending on services remains subdued, especially those requiring close proximity between workers and consumers and international travel – both of which are vital for the delivery of tourism services.9

It is too early to say what the long term implications of the crisis are for tourism, but it is clear that the longer the crisis continues the more businesses and jobs will be lost, the greater the implications for traveller behaviour and the more challenging to rebuild the tourism economy. This brings challenges for the sector, but also opportunities to encourage innovation, drive new business models, explore new niches/markets, and open up new destinations. Box 2 presents some of the potential long term impacts which may arise, and their policy implications.

The crisis is a call for governments at all levels to take strong and co-ordinated policy action to mitigate the impacts and support the recovery. It is an opportunity to implement green recovery and a significant shift in the sustainability of tourism economies. Policy makers should leverage the opportunity to reboot the tourism economy on a stronger, fairer and more sustainable footing. The crisis, and the recovery plans that are being put in place, are a once in a lifetime opportunity to move towards more sustainable and resilient models of tourism development.

Tourism is high on the global policy agenda, and similar calls have been made by other international institutions, including the United Nations10, World Bank11 and World Trade Organisation12. Most recently, the G20 Tourism Ministers, in the Diriyah Communiqué13 on 7 October 2020, recognised that COVID-19 may result in a paradigm shift for the travel and tourism sector, and committed to continue to work together to facilitate the recovery and support those most impacted by the crisis, while reaffirming commitments previously made at an extraordinary convening of the G20 Tourism Ministers on 24 April 2020 to provide support to support a sustainable and inclusive recovery of the tourism sector14.

Tourism sector is highly fragmented and diverse, and the ongoing crisis is exposing the interdependent nature and fragilities of the tourism ecosystem. Some branches of the sector have been more impacted than others. Hotels, restaurants and visitor attractions have been able to resume operations in many countries, however new health protocols mean that these businesses are operating with restricted capacity. These health protocols and containment measures are also changing in line with the sanitary situation, sometimes at short notice. This creates challenges for the operation of these businesses (e.g. last minute booking cancellations, pre-purchased stock reserves). Other parts of the sector have yet to reopen, at least to any significant extent. The international aviation network remains largely grounded, while there is minimal (if any) activity in the meetings, incentive, conference and events sector (MICE).

The survival of tourism businesses that were viable before the pandemic is now threatened, with the many small scale businesses in the sector particularly vulnerable. Small, medium and micro-enterprises (SMEs) are generally less resilient and lack the capacity and resources to cope with the changes and costs that such shocks entail. A survey of SMEs early in the crisis found that one third of SMEs (across all sectors) feared they would be out of business without further support within one month, and there was a serious risk that up to 50% of SMEs would not survive beyond three months.15 The crisis has particularly exposed the financial fragility of many small tourism businesses, which are facing acute liquidity shortages.

Many of these small tourism businesses are heavily dependent on other businesses in the tourism ecosystem. Tourism services are often interdependent and a crisis in one part of the tourism ecosystem, such as aviation and tour operators, can have disastrous follow on effects through the tourism value chain. Large tourism businesses support many SMEs through their supply chains, and through the key role they play in the tourism ecosystem. Businesses of all sizes that are heavily reliant on international tourism, business travel and city tourism are particularly impacted.

Large tourism businesses are also facing significant challenges in weathering the crisis. IATA reports that airlines continue to operate below breakeven point, as the pace of recovery slowed and then stalled in August and September, while the outlook for the remainder of the year is weak. IATA has downgraded its air travel forecast and now expects air travel to be down 66% in 2020 (previously 63%)16. Tour operator TUI reports an almost full revenue loss during March-June 2020, with a modest summer restart following the introduction of health protocols. However, travel restrictions continue to hamper a return to meaningful operations, and the short term future remains uncertain.

Government supports have limited business failures since the start of the pandemic, but many tourism businesses are now facing existential decisions about their future. For some businesses the cost of staying open may outweigh the cost of closing. Hibernation is a possibility for some businesses, but for others the only remaining option is to cease trading. Table 1 provides the latest available evidence and forecasts on the impact of the crisis on selected industry branches, showing a dramatic situation across the ecosystem.

Some destinations are more exposed to the tourism crisis triggered by the pandemic, and just as the impacts vary from place to place, so too will the recovery. The extent of the economic impact at destination level depends on a number of factors, including the nature of the tourism offer, the impact of travel restrictions on visitor flows, the extent to which restrictions coincide with peak tourism periods, the speed which the economy picks up in main source markets, the scale and complexity of business operations, the size of the domestic tourism market and exposure to international source markets. Additionally, places where there is a lack of economic diversity and a heavy reliance on tourism to support local jobs and businesses are more vulnerable.

The easing of travel restrictions and reopening of tourism activities in recent months has benefited some destinations more than others. This is likely to continue as governments take more localised approaches to travel restrictions and containment measures. As tourism activities restarted, driven primarily by the domestic market, tourists have preferred to visit more remote and rural destinations and natural areas. This has opened up opportunities in places where tourism had not previously been well developed. It remains to be seen how much these new travel patterns and traveller behaviours will evolve. Domestic tourism is expected to sustain the sector in the short term, followed by tourism from neighbouring countries.

Destinations dependent on international markets are most exposed (particularly long haul), as are urban destinations where business and MICE tourism in particular are important. This is not surprising, given the tourism offer in cities tends to be based on indoor cultural and heritage attractions and events involving large numbers of people. Early estimates from Tourism Economics forecast the recovery of domestic city tourism in 2021, but recovery of international city tourism to take two years or more. Tourism in major cities was expected to recover first, with more widespread recovery in international tourism to cities not expected before 2024.17

This is borne out by experience on the ground this summer. In Italy, for example, it is estimated that around 70% of hotels in cities like Rome and Florence have not reopened, compared to a 20% in coastal areas.18 In Croatia, the difference in tourism performance across destinations is stark, with overnights recorded in the city of Dubrovnik around 81% lower than the previous year, compared to an average drop of 65% nationally. Similarly, in Iceland, businesses in the capital Reykjavik and the south-western part of the country where Keflavik International Airport is located have been especially hard hit due to their dependency on international visitors and corresponding lack of domestic tourism.

A recent report from the European Commission Joint Research Centre (JRC) on tourism behaviours similarly showed new preferences for low tourist density destinations and outdoor activities away from big cities and in regions with a safer image in terms of COVID-19 circulation.19 This follows on from previous JRC work highlighting the tourism hotspots most vulnerable to travel restrictions, taking into account seasonality and the scale of tourism relative to the size of the local population, with coastal regions expected to be most impacted.20

Tourism destinations often show the highest shares of jobs potentially at risk, and regions with higher specialisation in tourism are more economically exposed to the crisis (Figure 1).21 This includes European destinations such as the Ionian Islands in Greece and the Balearic and Canary Islands in Spain, as well as the Algarve region in Portugal. In North America Nevada (which includes Las Vegas), Hawaii and Florida stand out as potentially the most affected states, while in Korea Jeju-do is the region with the highest risk.22

Some destinations are using the crisis as an opportunity to rethink their tourism development model. OECD Tourism Committee work on Managing Tourism Development for Sustainable and Inclusive Recovery is focusing on destinations that have introduced initiatives supporting the green transition and sustainable tourism development as part of the COVID-19 response and recovery actions. For example, recovery efforts in Corsica, France are focusing on ecological values, while destinations in Finland are promoting and investing in sustainability to restore demand. Box 3 describes some of the destinations case studies are being developed.

The decline in tourism is not always unwelcome, and there is anecdotal evidence that some of the residents in cities previously experiencing overtourism have been reclaiming their cities (e.g. Prague23). There are also reports that the drop in demand for short-term Airbnb-style accommodations has freed up apartments to meet long-term local housing needs (e.g. Dublin24, Paris), and of visitors being less welcome by local community due to perceived the risks of contagion. But even in some of these cases, locals are also seeing the disappearance of transport, retail, food services, and other services which relied on tourism to be viable and available to meet local demand. If these destinations miss the revenues from tourism, it does provide an opportunity for the recovery to be managed to avoid to return to a pre-crisis situation which was putting pressure on infrastructure, the environment and local populations.

Getting the tourism ecosystem back up and running will require a co-ordinated and integrated approach, across government and with the private sector. Tourism’s cross-cutting nature means that the actions of different policy areas and levels of government have implications for its recovery. The private sector, which is at the forefront of this crisis, also has a key role to play in working with policy makers to ensure response measures across government are well targeted and effective. The challenge for government is to engage with a fragmented tourism sector with sometimes divergent interests and competing demands.

Tourism businesses have responded rapidly, to protect visitors and workers, ensure business survival, and be ready for the recovery. Those businesses that have reopened have also had to be responsive to changing situation, at times required significant investment of time and resources (financial and human). Peak industry bodies are playing an important role in identifying and promoting opportunities for tourism operators to manage and pivot their business, and are taking the lead in informing businesses of recent developments, providing support to access assistance, sharing accurate information, and liaising with governments. Steps taken by tourism businesses include:

  • Managing cash flow and accessing government supports to protect business: e.g. minimising operating costs, reducing business size and capacity, furloughing or laying off employees, hibernating business.

  • Promoting COVID-safe business operations: e.g. developing and implementing health and safety protocols, standards and labels, training workers, providing information to visitors, marketing and promotion campaigns.

  • Adapting business model and service offering: e.g. offering takeaway food services, flexible booking conditions, adjusted pricing, changing operating hours, closing parts of business, offering digital experiences, new products and packages, upgrading facilities, restructuring business.

  • Pivoting operations to cater to new markets: e.g. domestic tourism market, student accommodation, alternative work spaces for teleworkers.

  • Supporting the pandemic response effort: e.g. providing meals, hotel rooms and vouchers for medical staff, making hotel facilities available for COVID-19 patients and people self-isolating or in quarantine.

In Denmark, for example, some hotels are renting rooms to students, mitigating both the reduction in the normal levels of hotel guests and a student housing shortage. In the Slovak Republic, the Bratislava Hoteliers and the Bratislava Tourist Board created a joint “72-hour city” promotional campaign, under which selected hotels offer tourists staying two nights to extend their trip with a third night free. TUI Group has introduced strict health and safety guidelines for hotels, for aircraft, cruise ships, among other measures, to make sure operations can resume safely. It recognises that in the long term the travel sector will need to consider increased and accelerated digitalisation, sustainable travel and a tailored customer experience.

Tourism businesses have also taken proactive steps to raise the needs of the sector and propose solutions to government. This includes coming together through industry associations and setting up dedicated taskforces, at national and international level. In the United States, for example, the US Travel Association has mobilised a COVID Relief Coalition, and worked closely with medical experts to prepare guidance for COVID-safe operations. At international level, the WTTC COVID-19 Taskforce brings together private sector representatives and international organisations to find common solutions to ease the pressure on tourism businesses.

Private sector are also engaging in the COVID-19 response activities of international organisations. Representatives of the private sector have participated in a series of policy dialogues with the OECD Tourism Committee, bringing perspectives of businesses of all sizes and different branches of the tourism economy. Other initiatives include the UNWTO-led Global Tourism Crisis Committee, which is a public-private initiative to co-ordinate the pandemic response, including through the publication of recommendations for government action and recovery priorities. The International Civil Aviation Organisation (ICAO) Council Aviation Recovery Taskforce (CART), meanwhile, aims at providing practical, aligned guidance to governments and industry operators in order to restart the international air transport sector and recover from the impacts of COVID-19 on a co-ordinated global basis. 

These efforts go in the right direction, but more needs to be done and in a more co-ordinated and integrated way to support tourism recovery, at national and international level. Governments must approach tourism recovery in a more integrated manner – involving all levels of government, private sector and civil society in a practical and actionable plan to revive the tourism sector. There is also a need to strengthen multi-lateral co-operation, as the actions taken by one government has implications for travellers and businesses in other countries, and for the global tourism system.

Governments have been taking exceptional steps to mitigate the impact of COVID-19 on the economy, while responding to the health crisis. These measures have most often taken the form of economy-wide stimulus packages to protect workers, households and businesses. The tourism sector has benefited greatly from these supports. In some countries, tourism has also been earmarked as a target sector within these frameworks. Given the dramatic and evolving pressures facing the tourism economy, many governments are now adjusting these measures, as well as introducing sector-specific initiatives and tourism recovery packages and plans, to better address the needs of tourism businesses and prepare the recovery of the sector as a whole.

The tourism economy will be among the last sectors of the economy to fully resume service activities and recover lost demand. The sector is dependent on travel and people-to-people interactions targeted by containment measures. Much more needs to be done, and quickly, to support tourism businesses and workers, restore traveller confidence, stimulate demand and prepare for the recovery. The crisis has also accentuated the crucial need for integrated policy responses, to ensure tourism measures are well-targeted, and consistent and complementary to general economic stimulus packages.

A review of country policy responses highlights three major response categories and types of responses, which continue to evolve. Sub-national governments have also introduced similar measures, to support the local tourism sector, and to complement and extend national programmes.

Government support in the early stages of the crisis focused on protecting visitors and workers, and ensuring business survival following a near-complete cessation of tourism activities in many countries. Supports aimed at getting financial aid out to the widest possible net of workers and businesses, as quickly as possible – with tourism benefiting from general economic stimulus measures, in addition to more targeted supports. Some countries identified tourism as a priority sector for support from the outset of the crisis in some countries, reflecting the scale of the impact and importance of tourism to the economy.

Most initiatives in the emergency response and mitigation phase aimed to provide some income continuity for tourism workers, and liquidity supports to tourism businesses, to ensure they are in a position to restart operations when containment measures come to an end. The modalities and details vary by country. These supports have protected many workers and household incomes, sustained employer-employee relationships, and ensured vulnerable-but-viable businesses stay afloat, particularly SMEs. However, not every tourism business will survive, and not every tourism job can be saved, and the full scale of the impacts are not yet known.

Many countries report that these measures have generally reached the tourism sector effectively, with tourism often being one of the main beneficiaries of the different schemes and a good uptake of tourism-specific measures. However, there have also been challenges to rapidly design and roll out effective policy supports (e.g. process capacity, incomplete applications, lack of manpower and resources, poor communication, gaps in coverage, implementation delays).

Adjustments to both general economic measures and tourism-specific measures have been needed to make the measures more accessible and better address needs of the sector. Specific issues include: eligibility criteria and thresholds (e.g. inappropriate for tourism business size, particularly micro-enterprises, turnover and number of employees levels to high, self-employed not covered, risk profile), duration and terms (e.g. too short, interest rate too high, grace and repayment period too short, end too soon) and gaps in provision (e.g. tour guides, destination management organisations, some workers and businesses fall between the stools due to rules).

The crisis has also clearly exposed the financial fragility of many tourism businesses, particularly small and micro enterprises whose cash reserves were already depleted, including following the winter low season in Europe and capital outlays to prepare for the upcoming summer season. Elsewhere, tourism businesses in Australia were just emerging from the impact of the summer bushfires there, while the early end to the winter ski season in other countries also hit balance sheets. The capacity of many of these businesses to take on additional debt is limited.

The easing of containment measures has allowed the initial reopening of many tourism businesses in many countries, but this remains partial and changeable. Many governments have responded by extending and adjusting these measures, and there will be a continued need for flexible policy supports as the crisis evolves. An ongoing challenge is finding the balance between general supports and sector-specific supports, and developing and implementing these as quickly and efficiently as possible. While recognising the exception nature of the country response measures to date, it is clear that further supports will be needed to support businesses throughout the tourism value chain and rebuild destinations.

From the outset of the crisis, a key priority for governments has been to protect visitors and ensure the safe repatriation of citizens to their home countries. Tourists outside their normal environment often suffer from an information deficit, and countries have taken steps to provide timely assistance and information to visitors in their country, including the provision of multi-lingual information targeting visitors (e.g. Japan) and ensuring access to accommodation facilities. Countries also sought to provide travel advice to citizens travelling abroad through diplomatic networks and tourism agencies, and moved to make repatriation arrangements, including through chartering flights and in co-operation with other countries. As the crisis has evolved, the focus has moved to protecting consumers who have had to cancel booked and paid-for travel due to COVID-19, as well as ensuring people can engage in tourism activities safely while minimising the risk of infection.

The tourism sector has benefited massively from cross-sectoral schemes introduced by governments to retain jobs and protect individual and household incomes. Income protection, wage subsidy, job retention and employment support schemes have shielded many tourism workers from the full impact of the crisis. Countries report a high uptake of these schemes, which help tourism businesses cover wage costs, while ensuring income and social protection support for tourism workers.

Some countries designated tourism at a target sector for these supports (e.g. Korea), while others have introduced sector-specific supports, including for seasonal workers (e.g. Italy). Schemes have also introduced to support the retention of apprentices and trainees (e.g. Australia) and measures specifically aimed at the self-employed, which is particularly relevant for the many micro and small businesses in the tourism sector (e.g. Belgium-Wallonia, Czech Republic, New Zealand, United Kingdom).

As the crisis has evolved, these measures have been extended, often with adjustments, and sometimes accompanied by measures to allow for simplified furlough schemes and more flexible employment rules and ways of working (e.g. move to part-time working, spit work time between different employees) (e.g. Denmark, Hungary, Iceland, Portugal, Sweden, Switzerland, United Kingdom). Measures to support people unable to work as they are self-isolating or sick with COVID-19 have also been introduced (e.g. New Zealand, Sweden). Other supports include health measures to protect workers on the return to work, and training and skills development to help mitigate the negative impact of the crisis on workers, as well as the tourism and wider economy.

Tourism businesses face significant challenges during this extremely difficult time. Many countries have urgently deployed economy-wide measures to mitigate the impact on businesses of all sizes, with a strong focus on sustaining short-term liquidity and particular measures targeting SMEs. Sector-specific measures to provide financial relief to hard hit tourism SMEs and branches of the tourism ecosystem have also been put in place in some countries.25 Non-financial supports are also provided, including information provision and advisory services to comply with new rules. These measures have played a crucial role in sustaining tourism businesses since the outbreak of the crisis, as many businesses are in a fragile financial position and face acute liquidity shortages.

Direct financial support (non-debt) has been provided through grants and subsidies to cover fixed operating costs and acute liquidity shortages for businesses that were previously viable but which have experienced a significant contraction in demand due to the pandemic. In some cases these supports have been adapted to meet specific needs in the tourism sector (e.g. Austria, Portugal, Slovenia, United Kingdom). In Austria, for example, direct grants are available to cover up to 100% of fixed costs in tourism businesses, as part of the COVID-19 Recovery Package. In Slovenia, a dedicated Tourism Loan Fund has been established through the SID Bank of Slovenia, while a separate initiative provides support to cover the costs of cableway and ski operators.

Measures also aim to ease access to finance for businesses, particularly SMEs (debt). This includes government guarantees to facilitate access to working capital loans issued by eligible lenders. Terms and conditions vary, but include extended grace and repayment periods, with reduced security obligations and interest rates (as low as 0%) and guarantees (up to 100%) of the loan value. Loan repayment moratoriums (principle and interest), debt forgiveness and other supports have also been introduced to help tourism businesses to manage their debt until they can start to resume normal business operations (e.g. Canada, Hungary, New Zealand, Poland, Portugal, Slovak Republic).

Some countries are also temporarily relaxing or exempting responsible lending obligations and security requirements to maintain a well-functioning credit supply, as well as speeding up approvals processes and offering unsecured loans to support access to credit and guard against insolvency and (e.g. Australia, Iceland, Japan, Sweden, United Kingdom). In Iceland, for example, tour operators can liquidate substantial amounts of money tied up in securities, with safeguards in place to ensure reimbursements that have not yet been made are covered.

Deferral or suspension of tax, social contribution and other payments have helped address acute liquidity shortages in the sector (e.g. Belgium Wallonia, Greece, Hungary, Morocco, Poland, United Kingdom). This includes deferrals and exemptions from employer social security contributions and corporate taxes (e.g. Hungary, Portugal, Slovenia, Sweden), as well as schemes to help businesses meet their tax obligations (e.g. New Zealand). Rent freezes, exemptions and support benefits have also been introduced (e.g. Canada, Hungary, Japan, Poland, Portugal, Slovak Republic), together with exemptions for tourism businesses from the payment of business rates and the waiving of concession fees on public properties (e.g. New Zealand, United Kingdom).

Non-financial government assistance efforts include communication campaigns to help prevent the spread of the virus, and actions to help SMEs adopt new work processes and find new markets. In Japan, for example, the Japan National Tourism Organisation moved quickly to disseminate accurate information to travellers and tourism businesses via Twitter and other social media platforms. This has been bolstered by the issuing of notifications from the Japan Tourism Agency since February 2020. Turkey, meanwhile, has issued regular circulars and guidance on restarting tourism activities (e.g. sea, culture, art, accommodation, food and beverage, tour guides).

The scale of the relief and recovery packages introduced is extraordinary, and applies to businesses of all sizes through the tourism supply chain. Portugal, for example, has dedicated EUR 1.7 billion to support accommodation providers, restaurants and travel agencies. In the United States, the travel and tourism sector has benefited from a USD 2.2 trillion economic stimulus package open to all businesses, which includes funding pots earmarked for those hardest hit industries including airlines, airports and travel agencies, delivered through a mix of measures including cash payments, loans, grants and guarantees.

Tourism relief and recovery packages also seek to support critical tourism ecosystem infrastructure. National and international travel and transport connections are key network infrastructure for tourism. They are also strategically important to the wider economy, to keep international trade flowing and global supply chains functioning. Travel agencies and tour operators are another sector that has been heavily hit and faces acute liquidity challenges linked with consumer protection measures and refund requirements.

The aviation sector has been targeted for particular supports in a number of countries. This has included relief on airline taxes and charges, reduced excise duties, state guarantees and direct financial support (e.g. Australia, Colombia, Denmark, Finland, France, Iceland, New Zealand, Sweden, Switzerland, United States). Australia, for example, provides refunds and waives a range of Government charges through the AUD 715 million Aviation Relief Package, including aviation fuel excise, Airservices charges on domestic airline operations, and domestic and regional aviation charges. Similar supports have been implemented or are under discussion in other countries.

Some countries have strengthened and expanded the financial capacity of tourism guarantee funds in place to protect consumers and support business liquidity, while other countries have created new guarantee funds (e.g. Denmark, Iceland, Poland, United Kingdom). In Iceland, a new Travel Guarantee Fund provides subsidised loans to tour operators to finance refunds to consumers in line with their legal obligations. Both Denmark and the United Kingdom have moved to provide state guarantees to protect the credit notes for cancelled travel packages issued under these financial protection schemes.

Other targeted supports for travel agencies and tour operators have also been put in place. In New Zealand, for example, the Government has earmarked NZD 20 million in loans available to selected inbound tour operators, so they can help rebuild the sector when international travel resumes. In Switzerland, a temporary legal standstill for refund claims was introduced, during which, travel agencies could not process refund claims for consumers for travel cancellations due to COVID-19. A condition of the state guarantee offered to Swiss Air and Edelweiss is that these airlines are obliged to reimburse travel agencies and consumers, to protect travel agencies from liquidity bottlenecks.

Under the EU Directive on Package Travel, travel agencies and tour operators have been permitted to offer credit notes to consumers in place of refunds to ease liquidity. If the credit is not used by the client for a new service within an 18-month period, reimbursement may be requested. This is a temporary measure, balancing the protection of consumers while easing the liquidity constraints of tourism businesses.

The easing of containment measures has allowed tourism activities to restart and the initial re-opening of many tourism businesses in many countries in recent months. However, this has been on a gradual and partial basis, and experience varies considerably by country, destination and segments of the sector. While some tourism businesses and destinations report better than expected performance over the June-August period, this has not been the experience across the board, and expectations for the remainder of 2020 remain cautious.

There is still a significant way to go before the tourism ecosystem is fully functioning, with travellers moving, businesses back up and running and people back to work. There is also considerable uncertainty around what tourism will look like in the future, and which businesses will weather the crisis and be ready to provide the tourism services that will be demanded by visitors. The challenge for government is to take balanced, measured and co-ordinated policy action at the local, national and international level now, in order to contain the virus and protect people during the pandemic, while minimising job losses and business closures in the immediate and long term.

As the situation continues to evolve, the scale of the impact on the tourism economy, and the sectors that support and are supported by tourism, has become more apparent. Tourism will be one of the last sectors of the economy to fully reopen, as governments struggle to contain the pandemic until a vaccine is found. There is growing recognition that sector-specific supports are needed to help tourism businesses to adjust to the new operating environment and survive this transitionary phase, however long it lasts. This imperative becomes even stronger as recent experience suggests that tourism businesses face the prospect of entering into a cycle of business opening-closure-reopening in different destinations.

The challenge for policy makers is to control the sanitary situation and manage the relaxation of containment measures, to secure the survival and viability of tourism businesses and destinations, and protect tourism workers – and avoid the reintroduction of restrictions which will in turn affect the tourism sector. It is also important to avoid, to the extent possible, policy actions that further exacerbate ongoing uncertainty around the epidemiological situation and containment measures impacting tourism, during the transition period. Reopening the tourism economy is just the start, given the uncertain and dynamic environment.

The key policy priorities during this period of transition identified by countries include:

  • Restore traveller confidence and sustain domestic tourism to protect jobs and support business survival, while ensuring the health and safety of visitors, workers and the local community.

  • Support the viability of tourism businesses, especially SMEs, and help firms to implement health and safety measures, adapt to the new operating environment, and pivot to the domestic market.

  • Support the safe and progressive opening of international tourism, including through appropriate risk-based measures (e.g. reliable test/trace or similar measures, contactless traveller processing).

  • Provide information and communicate clearly to limit uncertainty (to the extent possible).

  • Maintain capacity in the sector and address gaps in supports so far (e.g. destination management organisations).

  • Already start to build toward more resilient, sustainable tourism.

A key challenge during the transition period is how to evolve the emergency mitigation measures introduced into the early stages of the pandemic to address these issues, and start to prepare longer term recovery. Businesses that were viable before the pandemic are now weakened, and their continued sustainability is threatened by social distancing and other restrictions that are changing on an ongoing basis. A specific consideration for governments will be determining which businesses to support, and for how long, as well as the adjustments needed to better address the specific needs of tourism businesses and destinations. In response to this challenging and uncertain environment, governments are taking steps to build on the measures introduced in the early stages, and supplementing these with targeted measures to address at best the needs of the tourism sector. Key government actions include:

Co-ordinated policy action at all levels of government is essential to support the tourism sector through this crisis. This includes engagement with ministries responsible for health, employment, enterprise, and transport. The private sector also has a key role to play in working with working with policy makers to ensure response measures are well targeted, and where necessary adjusted as the situation evolves. Knowledge sharing and ensuring that all actors have access to the most up-to-date information available is also important. Monitoring rapidly changing travel restrictions and other developments has been a key challenge, as has the collection of information and data to inform decision making. Co-ordination is also important to ensure health and safety considerations are integrated into the development of tourism policy beyond the crisis, to build resilience.

Committees, taskforces and other formal co-ordination mechanisms have been established to monitor the impact of the pandemic on tourism, and respond to the fast evolving situation. These take the form of tourism crisis management committees (e.g. Czech Republic, Greece), recovery taskforces and advisory groups (e.g. Belgium-Wallonia, Ireland, Slovenia), as well as inter-ministerial groups and inter-agency meetings to assist with co-ordination across government (e.g. Canada, New Zealand, Slovak Republic, United States). In other countries, this work is taking place within existing mechanisms (e.g. Finland, United Kingdom, United States), and through the regular convening of virtual meetings and roundtables, at national and regional level (e.g. Austria, Chile). These mechanisms support whole-of-government leadership and co-ordination across policy areas, and serve as a platform for industry engagement. They aim to identify where immediate assistance is required and support those sub-sectors and destinations in the greatest distress, as well as develop recovery roadmaps and action plans.

The role of national tourism administrations in bringing tourism sector concerns to inform wider government decisions has risen in importance during the crisis. The tourism system has been heavily impacted by decisions taken in other parts of government that are outside the competence of tourism policy makers. Engaging with health policy makers has been particularly important, but where many tourism policy makers are less accustomed. Tourism also has a role to play to engagement with the pandemic response, and supporting wider mitigation measures and recovery measures. However, the crisis has revealed gaps in the capacity of national tourism administrations to engage with health authorities and other parts of government, and bring evidence to inform decisions impacting the sector.

Communication and dialogue with industry has been made a priority to ensure targeted and efficient responses, through regular participation in these structures and ongoing consultation. From the onset of crisis, countries have moved to provide information to businesses, and open communication channels with various public and private sector actors as part of the immediate response measures (e.g. Austria, Colombia, Germany, Greece, Turkey, United Kingdom). Germany, for example, set up a webpage including daily updates on the mood of the sector survey, which maps the business expectations in the tourism sector each day and includes a search tool for tourism funding programmes. These measures have continued to expand and evolve as the crisis has continued, to monitor impacts, respond to needs, and share information and good practices.

Engaging closely with private sector is challenging for policy makers, given the fragmented nature of the tourism sector which itself is not always well co-ordinated and aligned on the priority policy actions needed from government. However, the increased level of constructive co-operation between the public and private sector may be one of the positive legacies to emerge from this crisis. In New Zealand, for example, a public-private COVID-19 Tourism Advisory Group was established as a mechanism to enable industry to bring the major issues impacting the sector to the government’s attention. It has facilitated communication between the public and private sectors, and strengthened co-ordination.

The crisis has also mobilised the private sector to be better co-ordinated among itself, to make more united representations to government on the needs of the sector. This has been the case in Switzerland, for example, where a new Tourism Alliance has been created bringing together 11 tourism industry associations to act as a stronger advocate for the industry. Such peak industry associations are to be encouraged, as they allow the industry to ‘speak with one voice’, and provide a means for governments to address both general tourism sector issues, and those relating to specific branches, and can help support a more rapid response in situations like the current crisis26.

The crisis has highlighted shortcomings in the availability of timely, comparable data to support policy and business decision making in quickly evolving situations. The time lag with which official data are published and the lack of granularity (e.g. monthly data) have been particularly exposed in recent months, along with the availability of robust data on the tourism economy (e.g. Finland, Germany, Japan, New Zealand, Poland). This has resulted in the search for alternative data sources, and production of quick estimates and special products which are difficult to compare (e.g. Australia, New Zealand, Poland, Portugal). Administrative data (e.g. tax office, visa applications) is also helping to provide information on the impact of the crisis on tourism businesses, employment and visitor flows (e.g. Australia, United Kingdom, United States). Countries have also implemented new market research programmes to collect information on consumer intentions and business needs (e.g. Belgium Flanders and Wallonia, United Kingdom). Information collated from a variety of sources is also being used to prepare recovery scenarios.

The pandemic is also having an impact on the collection of tourism data in some countries, with some countries reporting interruptions in data provision as the usual data sources and collection methods may not be available during the crisis (e.g. suspension of face-to-face interviews at borders, inability to collect data provided by closed accommodation providers and other tourism businesses) (e.g. Australia, Hungary, New Zealand, Peru, Slovak Republic, United States). In some countries (e.g. Latvia), data collection activities were suspended to provide relief to tourism businesses. This has implications for the continuity, coverage and reliability of official tourism statistics, once available, and will require estimates to be made, possibly by relying on alternative data sources. However, collating and synthesising data and information from different sources remains a challenge. Reduced capacity and remote working has also impacted data processing in statistical offices (e.g. Canada).

In this context, some countries have established dedicated websites and tools for sharing updated information and data with policy makers and businesses (e.g. Austria, Germany, Portugal). Turismo de Portugal, for example, has refocused its work to collect and provide market information on a weekly basis to companies, as well as using mobile and airline data to monitor tourism flows. The United States, meanwhile, has created a data dashboard with key indicators to monitor the progress of recovery, guide policy development and inform the private sector.

The lifting of travel restrictions imposed to prevent the spread of the virus is a prerequisite for the reopening, and eventual recovery, of the tourism sector. However, these decisions rely on many factors, including the number of COVID-19 cases and the availability of vaccines and other effective treatment measures. Tourism recovery depends in part on the easing of domestic travel restrictions. However, the ability of tourism to resume its important role in the services export economy and be a driver of export-led recovery depends on travel restrictions in place in other countries, and between countries. These have an impact on inbound and outbound travel, in both directions.

With the easing of domestic travel restrictions in recent months, many countries have reported a rebound in people taking part in tourism activities within their own countries (e.g. Denmark, Iceland, New Zealand). This has helped, at least in part, to sustain tourism businesses through this difficult period. However, it has been insufficient to compensate for the drop in international tourism, and the outlook for the coming months is uncertain. Challenges remain as restrictions on travel across internal borders remain in place in some large countries (e.g. Australia, United States), while a growing number of countries are also moving to introduce localised travel restrictions and containment measures as the circulation of the virus has risen again (e.g. France, Spain, United Kingdom). On 18 September 2020, Israel re-impose country-wide restrictions, in a bid to combat the resurgence of the virus, while Ireland moved from localised measures to country-wide restrictions on 22 October 2020.

At international level, the situation is more complex and confusing. A myriad of containment measures are in place as countries seek to control the epidemiological situation within their borders and prevent the importation of coronavirus cases. These include changeable travel advice, test and trace requirements, quarantine measures and border closures to arrivals from certain countries, as well as the application of different social distancing and sanitary measures. For the most part, countries have acted individually, and made adjustments to the rules and policies on international travel as the sanitary situation has evolved, and the science underlying these decisions has matured. This has resulted in considerable confusion and uncertainty for travellers, and for tour operators and other tourism businesses operating across international borders and reliant on international tourism flows.

Greater co-ordination within and across countries, and through the tourism value chain will be key in ensuring health needs are addressed while allowing a recovery of tourism. In particular, the safe and progressive reopening of international borders remains a priority, particular for destinations heavily dependent on international tourism. Some countries, like Greece, prioritised early in the pandemic the opening of international borders over the peak summer tourism period, and put in place testing, trace and isolate measures to facilitate this. However, the borders of other countries remain closed to all but essential international travel, and in the case of New Zealand, for example, only citizens and permanent residents are permitted to enter, and are required to quarantine in government-managed isolation facilitated for 14 days after arrival.

Since early in the pandemic considerable attention has focused on the opening of travel corridors and bubbles, between neighbouring countries, and air bridges between countries with a similar coronavirus profile. Reciprocity has been a key element of these measures, reflecting the fact that travel decisions are influenced not just by the rules in place in the destination country, but also those which apply on return to the country of origin. These initiatives have had some success, but the recent ‘bursting’ of the Baltic travel bubble created in May between Estonia, Latvia and Lithuania highlights the vulnerability of these solutions to the changing sanitary situation, and the challenges for policy and business planning.

As the focus in many countries moves from nationwide containment measures to more targeted regional and localised measures, more targeted travel bubbles and air bridges are under consideration. The United Kingdom, for example, recently announced that travellers arriving from the Greek islands would be exempt from quarantine measures which apply to the Greek mainland, reflecting the different sanitary conditions on the ground. The opening air bridges between key international hub cities is another option on the table, and could potentially be used as proof of concept initiatives to test different possible solutions. Australia and New Zealand have agreed a partial travel bubble, with travellers arriving from New Zealand to travel to certain Australian States exempt from mandatory quarantine rules.

In the European Union, Member States adopted a Council Recommendation on a co-ordinated approach to the restriction of free movement in response to the COVID-19 pandemic on 13 October 2020. Under the agreement, countries will take into account common criteria when considering to restrict cross-border movement: the 14-day cumulative COVID-19 case notification rate of new cases, the test positivity rate and the testing rate. This data will be provided to the European Centre for Disease Prevention and Control on a weekly basis, which will in turn produce a colour-coded weekly map, broken down by regions, in order to support decision making.

Under this common EU traffic light system, no travel restrictions will apply between ‘green areas’, while countries are free to determine what measures to take in relation to ‘red’, ‘orange’ or ‘grey’ areas i.e. quarantine/self-isolation or test after arrival. The information will be made available to travellers through the Re-open EU web platform, at least 24 hours before the restrictions come into force. This follows on from an earlier call from the European Commission for a co-ordinated re-opening of internal EU borders on 15 June 2020. While many countries responded initially, over time rising coronavirus infections rates has led to the introduction of a variety of new measures at national level. This new framework is a positive step forward, putting in place common criteria, thresholds, data sharing and timely communication, but travellers will continue to face different rules as countries may (or may not) apply certain restrictions on people travelling from risk areas.

In this context, uncertainty remains high about when international travel restrictions will be lifted, and under what conditions. The scientific evidence underlying decisions on cross-border travel restrictions continues to evolve. Governments need sound evidence to identify and put in place appropriate risk-based solutions which would enable the safe resumption of international travel. These solutions also need to be feasible to implement, with sufficient capacity available to ensure these systems can function. Work done by IATA and other organisations is helping to build this evidence base.27 While these efforts continue, including through the work of the ICAO Council Aviation Recovery Taskforce, industry is also calling for greater co-ordination and clarity on frequently changing rules and restrictions.

Collaboration and consistency of travel regulations at bilateral, regional and international levels are the stepping-stones that will allow tourism to restart safely, accelerate economic recovery and provide hope for millions of people. This includes strengthening safety and security for travellers and workers and facilitating safe cross border travel, as well as building more resilient destinations.

Business survival remains a key priority, and is critical to minimise job losses and support the recovery of the tourism economy. Tourism businesses of all sizes continue to be heavily impacted by the crisis, from the largest international airlines and tour operators to the smallest independent hotels and tour guides. Businesses that have reopened have had to implement new operating protocols and adapt to the changing environment. Many businesses are operating at constrained capacity, while other businesses remain closed. This is likely to be an ongoing challenge, with implications for the viability and survival of businesses as new restrictions are imposed to tackle resurgence of the virus and ongoing risk of new outbreaks. The massive support from government so far needs to continue for viable businesses, but needs to be more targeted and flexible enough to adapt to changing conditions (OECD, 2020).28

From the outset of the crisis, a key concern and ongoing area of uncertainty has been the conditions under which tourism businesses would be allowed to reopen (and stay open), and the viability of doing so. Countries have responded by developing protocols and guidelines to protect workers and visitors and support the safe reopening of tourism businesses (e.g. Belgium, Chile, Colombia, Greece, Mexico, Peru, Poland, Slovenia, Turkey). This includes the development of specific protocols and guidelines adapted to the needs to different tourism businesses. These protocols and guidelines have been developed in co-operation with the relevant health authorities, and in compliance with national and international sanitary guidelines. The private sector has also been actively involved, and in some cases taken a lead in preparing and implementing these protocols and guidelines, at national (e.g. Canada, Germany, Japan, Sweden, United Kingdom, United States) and international level (e.g. WTTC, CLIA).

Some countries have made financing available to support business restart and adaptation. Implementing protocols and guidelines has involved, among other things, adjustments to physical infrastructure, service delivery and work methods. In Portugal, tourism businesses have benefited from the ADAPTAR programme, providing grants to part-finance, for example, the acquisition of personal protective equipment, installation of contactless payment devices, and physical adaptation of workspaces. Other countries have allocated funds for specific restart and adaption supports for tourism businesses (e.g. Chile, Ireland, Japan). Austria, meanwhile, has introduced a programme providing free COVID-19 testing to workers in the accommodation sector.

Business advisory and support programmes have also been put in place to accompany tourism businesses and entrepreneurs through this difficult period (e.g. Ireland, Japan, New Zealand, Portugal, United Kingdom). In Ireland, the national tourism development authority, Fáilte Ireland, is providing a suite of training and advisory supports to help tourism businesses to respond to the challenges and threats facing the sector. Fáilte Ireland has also prepared detailed Guidelines for Re-opening and a Government endorsed COVID-19 Safety Charter, in consultation with the tourism industry and relevant authorities. In the United Kingdom, VisitBritain has created a centralised advice hub to support tourism businesses. Similar programmes have been introduced in other countries.

Steps have also been taken in some countries to support tourism businesses to pivot to non-tourism activities, including to support the crisis response. In Chile, for example, hotels have been made available to provide accommodation to COVID-19 patients, while in Colombia more than 9 000 rooms have been made available as part of the hospital emergency plan.

Training and skills development is a further area of support, to preserve capacity and develop human capital in the sector. This includes training and webinars on implementing new protocols and guidelines and COVID-19 safe service delivery, and to support business management responses to the crisis (e.g. Colombia, Greece, Ireland, Israel, Portugal). It also involves measures to support workers on reduced hours to upskill (e.g. Latvia), and encourage businesses to retain apprentices and trainees (e.g. Australia). In Israel, for example, the Ministry of Tourism has been operating a programme of professional webinars and web-based courses, including for hoteliers, travel agents, tour operators, tour guides and other travel professionals. The information focuses on practical expert guidance to cope with the corona crisis, and planning ahead for the post-corona period.

The adaption of training to digital formats and tools to retain engagement, expand scope and reduce the cost of delivery, as well as enhancing digital skills, has been a further area of attention (e.g. Chile, Finland, Greece, Morocco, Portugal). In Greece, for example, online courses offered via the “Greece from Home” platform provide tourism professionals with the opportunity to enhance their digital skills, and can apply for tailored online training to enhance the digital presence of their business. This initiative was developed in co-operation with Google. While in Finland, VisitFinland has launched a free online training material on the digitalisation of tourism businesses.

Restoring traveller confidence is a key priority, and will be crucial for the recovery. However, it is also viewed by many as one of the biggest challenges facing the sector. Travellers need to be reassured when it is safe to travel, and governments need to collaborate with the private sector to put in place new standards in terms of safety, hygiene, testing and procedures to ensure and communicate that this is the case, throughout the tourism value chain. Restoring confidence in the domestic market will be critical to sustain the sector in the short term. Equally, governments need to take steps to ensure that destination communities are comfortable that the benefits associated with the return of visitors outweigh any concerns over the potential health risks.

Experience in recent months suggests that demand for tourism activities has held up reasonably well considering the wider COVID-19 environment. Domestic tourism performed relatively well in some countries in recent months, coinciding with peak tourism season in Europe in particular. This has revealed the importance and potential of the domestic market, which is often overshadowed by international tourism. However, this rebound in tourism demand has been concentrated in a short period of time, and the outlook for the coming months is less rosy, with lead indicators suggesting that recovery is some way off.

There are also clear indications that the new travel environment has had an impact on traveller behaviour, preferences and patterns, including: demand for short haul travel, within own country or to neighbouring country; travelling by rail or car rather than aeroplane; staying in self-catering and private accommodation rather than hotels; visiting coastal, regional and rural areas rather than cities; participating in walking, cycling and other outdoor activities rather than in enclosed spaces; with health and safety a key consideration. What impact the pandemic will have on consumer demand and travel behaviour in the longer term is not yet clear, but is likely to be influenced by the duration and evolution of the crisis (e.g. contactless service deliver and traveller identity, stricter health and safety protocols).

In the early stages of crisis, countries and businesses moved to provide assistance and information to tourists, as well as supporting repatriation of travellers to their home country. Given the unprecedented nature of the crisis, and the disorderly way in which international borders and tourism supply chains were closed, and the aviation network in particular grounded, this was an enormously challenging task, with mixed outcomes. As attention has shifted to reopening the tourism economy, governments and the private sector have recognised the critical importance of rebuilding tourism confidence, while retaining capacity in the sector so it is ready for the recovery.

A key area of action has been around communicating the safety protocols and measures put in place by businesses and destinations. This includes the introduction of safe and clean labels and certificates to reassure visitors that tourism businesses and destinations are operating in line with national and international sanitary protocols (e.g. Colombia, Ireland, Israel, Portugal, Poland, Slovenia, Turkey, United Kingdom). Portugal, for example, was (one of) the first countries to introduce a Clean and Safe label at the end of April 2020, to highlight tourism businesses that are compliant with hygiene and COVID-19 control measures, and promote the country as a safe destination.

Some countries have gone further, taking steps to strengthen the health facilities available in destinations and provide peace of mind for visitors. In Greece, for example, accommodation facilities are required to have a designated doctor, while some regions and islands have also introduced special quarantine facilities for visitors. Other countries are considering making free COVID-19 testing available to tourists during their trip (e.g. Germany). Japan has also created a list of etiquette points for travellers, to prevent the spread of infection.

The use of digital tools is also been introduced, including apps that have the dual benefit of informing visitors of sanitary conditions and frequentation levels in tourism sites and facilities, while also helping to direct visitors to less busy places (e.g. Hungary, Portugal, United Kingdom, United States). In the United States, for example, the NowCrowd app was designed by the private sector in Las Vegas, to allow tourists to have real-time information on crowd levels at local spots. These apps complement the dedicated web platforms that have been put in place in many countries to provide up to date information to travellers.

The crisis has also led to innovations in the tourism offer to develop COVID-19 safe travel options and build consumer confidence. In Germany, for example, tour operator Dertour has introduced a Super Safe Careless Package with a health care hotline available around the clock and coverage of accommodation costs in the case of mandatory quarantine due to COVID-19 in the destination.

New marketing and promotional campaigns have been introduced by many countries, sometimes with the support of new budget allocations (e.g. Austria, Chile, Japan, Switzerland, United Kingdom). These campaigns aim to continue to promote a positive image of the country, and to position it as a safe destination. As restrictions have lifted, there has been a shift to stimulate demand and promote safe travel domestically, and in some cases (e.g. Greece and Spain) from selected nearby international markets. Efforts focus on developing domestic tourism to sustain the sector, while laying the ground work so international visitors are informed and comfortable to start planning their visit when the time comes (e.g. Australia, Greece, Israel, Italy, Japan, New Zealand, United Kingdom). In the Slovak Republic, a decision in 2016 to abolish the Slovak Tourism Board has been reversed, and it will now be re-established to support the recovery effort.

Japan reports early success from its ‘Go To Travel’ campaign to stimulate domestic tourism, in terms of balancing efforts to generate demand with containing infections. Following the introduction of the campaign which has a budget of YEN 1.7 trillion, only a few cases of travellers testing positive for COVID-19 having stayed in participating accommodation facilities have been reported, and no cases where the infection has spread to other people in those facilities. Each facility is required to take necessary measures to prevent the spread of infection, under the direction of the local public health centre. The Japan Tourism Agency is encouraging the thorough implementation of preventative measures by both tourism businesses and travellers participating in this campaign to ensure tourism does not contribute to spreading the virus.

Voucher schemes are being used to incentivise domestic demand and stimulate domestic tourism in some countries. The modalities of how these schemes to subsidise the consumption of tourism services operate vary. In some countries, benefit-in-kind voucher schemes operating through employers have been extended (e.g. Czech Republic, Hungary, France) or created (e.g. Greece). Other countries have introduced schemes providing cash value vouchers to individuals to spend for designated purposes (e.g. Belgium-Wallonia, Iceland, Israel, Russia, Slovenia), or by directly reimbursing businesses for discounts passed on to consumers (e.g. Japan, United Kingdom). In some cases, the terms and conditions of these schemes aim to stimulate consumption during the off season (e.g. Greece, Ireland), or among particular sections of the population (e.g. Poland). Similar initiatives have also been taken by local governments. The Charentes Region in France, for example, offered EUR 100 to visitors who stayed for 2 nights and visited a restaurant and a tourist attraction, on presentation of receipts (EUR 1 million budget).

Consumption tax reliefs are another approach being used to stimulate demand and support businesses. This includes the introduction of reduced Value Added Tax (VAT) rates on selected tourism services (e.g. Austria, Czech Republic, Norway, United Kingdom). In the United Kingdom, for example, the VAT rate for hospitality, holiday accommodation and attractions was reduced from 20% to 5% in July 2020, and the measure has been extended until January 2021. Austria has also reduced VAT on food (normally 10%) and drinks (normally 20%) to 5% until the end of 2020. Other measures to stimulate demand include the introduction of free transport and half-price tickets to cultural attractions for domestic visitors (e.g. Belgium, Denmark).

The outlook for the tourism economy remains extraordinarily uncertain. This has consequences for policy and business planning. The sector is still in survival mode, and the implementation of demand and supply side measures will be essential to sustain tourism businesses, and ensure that the sector as a whole is well positioned for recovery. Flexible policy supports will be needed to assist the tourism sector with ongoing changes. Limiting uncertainty (to the extent possible) and rebuilding consumer and business confidence will be important.

Looking ahead, the measures put in place today will shape tourism of tomorrow. The tourism policy has by necessity become more reactive and focused on supporting the immediate needs of the tourism sector to keep it functioning in the current difficult operating environment. However, policy makers need to already consider the longer term implications of the crisis on the sector, and the recovery actions taken. Much depends on the evolution of the crisis and how quickly the threat from COVID-19 fades. However, a return to ‘business as usual’ is unlikely to happen. The crisis is an opportunity to ensure a fairer distribution of tourism’s benefits and advance the transition towards a carbon-neutral and more resilient tourism economy. Recovery must involve transforming the tourism sector, reinventing tourism destinations, rebuilding the entire tourism ecosystem, and innovating and investing in sustainable tourism.

Recovery plans are a once in a lifetime opportunity to move toward more sustainable and resilient models of tourism development. This will require policies that address long standing structural issues, and encourage the digital, low carbon transitions needed to rebuild stronger, more sustainable and resilient destinations that deliver benefits to local communities and economies. The pandemic response has overtaken other tourism policy priorities in the short term, but in the longer term tourism strategies will need to adapt, and recovery measures will need to support the necessary structural changes. Governments need to be alert to these issues as they design and put in place comprehensive tourism recovery strategies and action plans.

The key policy priorities for the long term identified by countries when the sector transitions out of crisis mode include: supporting the sustainable recovery and development of tourism; promoting the digital transition and move to a greener tourism system; ensuring safe and seamless transport connectivity29; maintaining investment in tourism infrastructure; and adapting tourism policy to support the necessary and appropriate structural changes to achieve this and build a more resilient tourism economy.

The crisis is an opportunity to rethink the tourism system, and move to more sustainable and resilient models of tourism development. The shock has exposed long standing structural weaknesses in the tourism economy (e.g. fragmented sector, mainly SMEs, seasonality, overdependence, productivity), as well as gaps in government and industry preparedness and response capacity. Policy interventions will be necessary to address these challenges that have impeded the sector in the past, and avoid a return to the tourism management and unbalanced development issues facing the sector before the crisis (e.g. overtourism). The pandemic has also accelerated digitalisation and other trends shaping tourism.

Sustainability should be a core guiding principle in the recovery. Before the crisis, OECD had highlighted the need for policy makers to work with industry and communities to strike a balance between the economic, environmental and social benefits and costs associated with tourism development, and implement a long-term and sustainable vision for the future.30 This imperative remains, with health and safety considerations more prominent, together with the added need to limit tourism as a vector of the pandemic. Countries were already moving in this direction before the crisis, developing national tourism strategies and policies based on sustainable tourism development principles (e.g. Austria, Belgium Flanders, Colombia, Czech Republic, Finland, Hungary, Iceland, Ireland, Mexico, New Zealand, Sweden).

Countries report that sustainability remains at the centre of the long term vision and strategies for the sector, but adjustments will likely be needed to reflect the changed policy context. Austria and Finland, for example, are developing new action plans to revive tourism within the frame of the existing national tourism strategy, while the Czech Republic is developing a Crisis Action Plan for 2020-21 as preparations are underway on a new tourism strategy 2021-30, with the priority now to restart tourism in a sustainable way. In Sweden, work to prepare the national tourism strategy has been put on hold, but when restarted it will be an opportunity to reflect the consequences of the pandemic, and the address forward-looking issues including sustainability and digitalisation.

Other countries are seeing the crisis as an opportunity to reset and rethink the tourism system, and to fast track the move to greener and more sustainable models of tourism development by ensuring recovery plans are aligned with sustainability principles and the SDGs (e.g. Belgium Wallonia, Colombia, Greece, Mexico, New Zealand). Mexico, for example, sees the potential for the crisis to be a catalyst for its ‘Mexico is Reborn Sustainable’ initiative, which aims to create a new generation of tourism routes to promote social well-being, harmony with nature and integrated development approaches to create sustainable tourism destinations, and encourage sustainable production and consumption throughout the tourism value chain.

It is clear that trade-offs will be involved in moving to more sustainable models of tourism development. This is necessary to better balance the economic, environmental and social dimensions. There is also recognition that governments face considerable challenges of prioritising long term sustainability priorities with short term survival priorities in the current environment. Nonetheless, destinations are already taking action in this direction. In the midst of the crisis, for example, the Greek Island of Santorini has launched the Plastic Free Santorini Campaign, with communication, education programmes and direct interventions to reposition the island as a sustainable destinations.

Improving crisis management strategies to better prepare tourism businesses, destinations and the sector more broadly to respond to future shocks will be a key part of this. The crisis has exposed fragilities of the sector and policy makers will need to learn the lessons from the COVID-19 crisis to build a stronger, more resilient tourism economy for the future. This will require improvements in risk assessment by government and industry, and stronger co-ordination mechanisms to support a ‘whole-of-sector’ approach. Some countries are already looking beyond the tourism crisis management structures established to respond to the pandemic. In Greece, for example, a Committee for Crisis Management will remain in place beyond the lifetime of the dedicated COVID-19 response committee. Colombia, meanwhile, will develop a Risk Management System as part of its Tourism Sector Reactivation Plan.

Building tourism sector resilience also involves policies to address structural weaknesses, advance key priorities and take advantage of new opportunities. This includes encouraging new business models and creation of flexible tourism products, building a more diversified tourism economy, embracing digitalisation throughout the tourism ecosystem, including for managing visitor flows, and promoting connectivity. New mobility concepts and infrastructure also open up possibilities for more sustainable travel. The crisis has also exposed the financial fragility of many tourism businesses, particularly SMEs.

The crisis is accelerating the digital and other trends that were already transforming tourism and changing the way people live, work and travel before the pandemic. Countries that have comprehensive programmes in place to promote the digital transformation of tourism have been building on these frameworks help destinations and businesses to take action and adapt to the crisis. As part of Spain’s Smart Tourism Destination initiative, for example, destination action plans are being developed to among other things address the competitiveness, sustainability and structural challenges associated with the pandemic, as well as the health and financial challenges facing, and identify good practices to guide new technological solutions. Such approaches have the advantage of embedding digitalisation into the recovery efforts.

Other countries are intensifying digital transformation efforts, which are seen as key to making the tourism sector more resilient. This includes promoting the opportunities digitalisation opens up for marketing, product and destination development, as well as developing digital skills and strengthening tourism data. In Hungary, digitalisation is a core pillar of the review of the National Tourism Development Strategy 2030, building on development projects already underway. In Germany, tourism SMEs can benefit from a new Digital Now programme (Digital Jetzt), which provides a financial subsidy to invest in digital technologies and upskill workers.

Years of work to develop strong and dynamic tourism destinations has been overturned in a fraction of the time, and the already fragmented tourism ecosystem is even more fractured. Rebuilding these destinations and getting the tourism system back up and running, stronger, more sustainable and more resilient, will require concerted efforts by government across policy areas and levels, and with the private sector. Destinations and segments of the tourism sector are reopening and recovering at different speeds, and this is likely to have consequences for the shape of the tourism sector for some time. Response measures have largely focused on individual consumers, workers and businesses, but there is also a need to support destinations, and the wider tourism ecosystem.

A key issue for destination recovery is whether a critical mass of services will remain operating after the crisis, to cater to visitors when they do come. A dynamic tourism economy depends on the availability of a variety of tourism services within destinations, from accommodation and good services to attractions, activities and events. Support and recovery efforts will need to be comprehensive across the sector branches that make up the tourism experience. There is a particular need to focus on preserving strategic tourism assets and businesses so destinations have the skills and capacity to respond to demand recovery when it comes.

Destinations which have been severely impacted and are most vulnerable will require particular attention in the recovery phase. This includes providing support (financial and non-financial) to destination management organisations, as is already the case in some countries (e.g. Japan, Slovak Republic, United Kingdom). In Iceland, for example, the six municipalities that have been most affected by the steep decline in international tourism will receive a total of ISK 150 million from the supplementary budget to mitigate the impacts. The purpose of the support is to create a stronger basis for a more diverse long term economy, and to foster innovation.

Comprehensive tourism recovery plans are being put in place to address this challenge, incorporating both demand and supply side measures. Some recovery plans have a 12-18 month timeframe, focusing on the survival and stabilisation of the sector between now and the end of 2021 (e.g. Austria, Finland, Japan). Other countries have taken a 24-36 months view, to incorporate the recovery period to 2023 (e.g. Ireland). Common priorities and areas of focus in these recovery plans include measures to support workers, businesses and destinations (financial and non-financial), promote traveller and business confidence, generate demand and encourage domestic tourism, re-establish international and internal connectivity, ensure safe reopening and operation of tourism activities within wider health measures, and improved information and data sharing. Other issues include restoring competitiveness and encouraging investment.

Recovery plans sometimes include specific measures to support strategic tourism assets, or branches of the sector which are particularly hard hit or remain closed. This includes the aviation and meetings, incentive, conference and events sectors, as well as national parks, zoos and wildlife sanctuaries (e.g. Australia, Belgium Wallonia, Canada, Colombia, New Zealand, Portugal, United Kingdom). Tourism will also benefit from programmes to support tourism-connected activities, such as Germany’s Restart Culture programme (Neustart Kultur), Canada’s Emergency Support Fund for culture, heritage and sport, and the recently announced support of SEK 1.5 billion for the culture sector in Sweden. The United Kingdom has also announced a GBP 1.6 billion rescue package for the arts, culture and heritage sector. Japan, meanwhile, is considering the benefits of staggering national holidays to spread domestic tourism more evenly throughout the year, as well as the development of new, safe mobility options.

These recovery plans need to be back by sufficiently resources to be effectively implemented. Some countries have created dedicated funds to support the implementation of tourism recovery plans and programmes. However, this is not the case for all countries, limiting their ability to implement these plans. In other cases, the sector is a beneficiary of general COVID-19 recovery funds.

Governments need to ensure that the sector will be ready to resume and keep on innovating and transforming. Some countries have also put in place measures to support innovation in tourism SMEs, to ensure stronger long term economic resilience. Tourism businesses and destinations will also need to adjust their offer to respond to accelerated digital and other trends, as well as the need for structural and sustainability transformations.

Measures to support innovation and stimulate investment will be needed, to maintain capacity, restore the attractiveness of the destination, bolster the quality and competitiveness of the tourism offer, and improve the prospects for sustainable recovery. The extraordinary uncertainty facing the sector has dented business confidence and is likely to hold back business investment for some time, while many tourism businesses also face insolvency if capacity cannot be restored and demand does not recover. Tourism businesses will need support to modify service delivery, pivot to alternative markets and adjust business models, and as well as take advantage of new opportunities and integrate digital and low carbon solutions.

Investment is needed to adapt the tourism offer to address health requirements, provide safe travel options and meet visitor expectations, during and after the pandemic. Tourism businesses have been required to make structural and physical changes to their businesses to protect workers and visitors, sometimes at significant financial cost. Businesses have also had to adjust service deliver practices, provide training to workers, and take steps to ensure ongoing compliance with the latest health measures. In the longer term, the crisis is likely to change visitor expectations and travel behaviours. Businesses may need to adjust the business model and product offer, and destinations may need to adjust the tourism-related infrastructure. Investment will also be needed in human capital and skills to retain and develop a skilled workforce.

Business adaptation measures put in place to support the reopening of tourism businesses will need to evolve to encourage longer term investment in tourism related-infrastructure. This is already the case in Australia, for example, which has put in place a scheme to incentivise investment, including in tourism, and has earmarked AUD 233 million for investment in National Park Infrastructure. Colombia’s Tourism Reactivation Plan includes plans to develop an investment attraction strategy for tourism, as well as the development of tourism infrastructure projects. Chile, meanwhile, has allocated CLP 50 million for investment in digital projects that tourism businesses can benefit from.

The pandemic is also triggering innovation in the sector, as new opportunities open up in the face of adversary. This includes business model and service delivery innovation related to pandemic control and prevention, including the use of digital tools and contactless solutions (e.g. contactless check-in). It also includes innovations catering to new demand trends, for example from the domestic market, and in rural destinations and natural areas. In Finland, while the most urgent funding need for most businesses during the early stages of the crisis was business cost support, there are some successful examples of the newly established Coronavirus Development Fund supporting innovation in tourism businesses during the crisis. Examples of innovation measures funded include new services and products, new partnership and subcontracting models, new operating models, and other new measures businesses deem necessary in the present circumstances.

The COVID-19 crisis has completely altered the travel and tourism economy, severely impacting people’s livelihoods, neighbourhoods and businesses. As the pandemic continues to evolve, the full consequences for the tourism economy are not yet clear. However, a return to ‘business as usual’ is unlikely. Policy makers will need to learn from the COVID-19 crisis to build a stronger, more resilient tourism economy for the future. While it is still too early to say with any certainty what these will be, a number of initial lessons are outlined:

  • Crisis has revealed the macroeconomic importance of tourism in most OECD economies, and has highlighted the crucial need for a whole-of-government approach and integrated tourism policy responses to ensure recovery measures are well-targeted to support the tourism sector. Government, and the private sector, need to be better prepared and have the capacity to react and adapt quickly, with more robust risk assessment and crisis response mechanisms, and closer co-ordination, locally, regionally, nationally and internationally.

  • Delivering well-targeted and sufficiently resourced support as quickly and efficiently as possible has been crucial in reaching vulnerable tourism businesses, workers and tourists during the crisis. Some countries advocate using existing mechanisms, although the scale of the crisis meant many countries created new mechanisms to distribute the exceptional supports. Challenges include balancing general and tourism-specific supports, and ensuring measures are well tailored to the needs of tourism businesses and accessible to those targeted, taking into account business size.

  • Tourism has benefited significantly from general economic stimulus measures. However, as the sector remains one of the most heavily impacted by travel restrictions and containment measures, supports are needed to address the particular needs of the sector, particularly for those parts of the tourism ecosystem that are not yet open for business and where demand recovery is likely to take some time (e.g. meetings, incentive, conference and events). Destinations that have been most severely hit and are most vulnerable will also require particular attention.

  • The outlook for the tourism economy remains extraordinarily uncertain. Providing policy clarity and taking steps to limit uncertainty (to the extent possible) will be crucial to support tourism recovery. Clear communication, well-designed information policy and clarity on the epidemiological criteria will be particularly important where there is a need to change travel restrictions and containment measures in response to virus outbreaks and the shifting sanitary situation.

  • Continued government support will be needed, to ensure destinations and tourism businesses are ready to provide tourism services to meet demand when the recovery comes, and already starting to address the long term implications of the crisis. It will be important to work with tourism businesses so they are sustainable beyond the end of the supports. This support needs to be increasingly conditioned on broader environmental, economic and social objectives.31

  • Governments need risk-based solutions based on sound scientific evidence to safely lift travel restrictions and get the international tourism ecosystem back up and running. These solutions also need to be feasible to implement, with sufficient capacity available to ensure these systems are can function reliably.

  • Information gathering, data analysis and research needs to be improved to underpin policy and business decisions. The crisis has highlighted shortcomings in the availability of timely, comparable data in quickly evolving situations. Reliable and consistent indicators are need to monitor recovery progress, and evaluate the effectiveness of programmes and initiatives.

  • Crisis has once again exposed structural shortcomings in the tourism system and the vulnerability to external shocks. While the immediate priority is to secure the survival of tourism businesses and well-being of people, there is an urgent need to diversify and strengthen the resilience of the tourism economy, to better prepare for future shocks, to address long standing structural weaknesses, and encourage the digital, low carbon transformations that will be essential to shift to stronger and more sustainable models of tourism development.

This annex provides links to pages set up by International Organisations and private sector associations on the evolution of the impact of the COVID-19 on the tourism sector.

Contact

Jane Stacey (✉ jane.stacey@oecd.org)

Notes

← 1. International tourism refers to tourism that crosses national borders for tourism purposes (leisure, business etc.). OECD estimates are based on international tourism arrivals in the OECD area.

← 2. UNWTO, World Tourism Barometer, Volume 18, Issue 5, 15 September 2020

← 3. World Trade Organisation, International trade in travel and tourism services: economic impact and policy responses during the COVID-19 crisis, 30 September 2020.

← 4. OECD (2019), "Providing new OECD evidence on tourism trade in value added", OECD Tourism Papers, No. 2019/01, OECD Publishing, Paris, https://doi.org/10.1787/d6072d28-en.

← 5. UNCTAD , Covid-19 and Tourism: Assessing the Economic Consequences (UNCTAD/DITC/INF/2020/3), 2 July 2020

← 8. Marques Santos Anabela; Madrid Carmen; Haegeman Karel; Rainoldi Alessandro (2020), Behavioural changes in tourism in times of Covid-19: Employment scenarios and policy options, http://publications.jrc.ec.europa.eu/repository/handle/JRC121262

← 9. OECD (2020), OECD Economic Outlook, Interim Report September 2020, OECD Publishing, Paris, https://doi.org/10.1787/34ffc900-en.

← 10. United Nations Secretary General Policy Brief, COVID-19 and Transforming Tourism, August 2020

← 11. World Bank. 2020. Rebuilding Tourism Competitiveness : Tourism Response, Recovery and Resilience to the COVID-19 Crisis. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/34348 License: CC BY 3.0 IGO

← 12. World Trade Organisation, International trade in travel and tourism services: economic impact and policy responses during the COVID-19 crisis, 30 September 2020.

← 15. OECD Policy Responses to Coronavirus (COVID-19), Coronavirus (COVID-19): SME policy responses, Updated 15 July 2020

← 19. Marques Santos Anabela; Madrid Carmen; Haegeman Karel; Rainoldi Alessandro (2020), Behavioural changes in tourism in times of Covid-19: Employment scenarios and policy options, http://publications.jrc.ec.europa.eu/repository/handle/JRC121262

← 20. European Commission Joint Research Centre Territorial Development, Barranco, R., Rainoldi A., Lavalle C., EU Regional impact on GDP from travel restrictions for non-residents, April 2020

← 21. OECD Policy Responses to Coronavirus (COVID-19), The territorial impact of COVID-19: Managing the crisis across levels of government, Updated 16 June 2020

← 22. OECD Policy Responses to Coronavirus (COVID-19), From pandemic to recovery: Local employment and economic development, Updated 27 April 2020

← 25. OECD Policy Responses to Coronavirus (COVID-19), Coronavirus (COVID-19): SME policy responses, Updated 15 July 2020

← 26. OECD (2012), "Tourism Governance in OECD Countries", in OECD Tourism Trends and Policies 2012, OECD Publishing, Paris, https://doi.org/10.1787/tour-2012-3-en.

← 28. OECD (2020), OECD Economic Outlook, Interim Report September 2020, OECD Publishing, Paris, https://doi.org/10.1787/34ffc900-en.

← 29. G20 Guidelines on Safe and Seamless Travel endorsed by G20 Tourism Ministers in the Diriyah Communiqué on 7 October 2020, based on OECD report on Safe and Seamless Travel and Improved Visitor Experience prepared for the G20 Tourism Working Group

← 30. OECD (2020), "Rethinking tourism success for sustainable growth", in OECD Tourism Trends and Policies 2020, OECD Publishing, Paris, https://doi.org/10.1787/82b46508-en.

← 31. OECD (2020), OECD Economic Outlook, Interim Report September 2020, OECD Publishing, Paris, https://doi.org/10.1787/34ffc900-en.

Disclaimer

This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD member countries.

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The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

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