UN counts devastating cost of COVID-19 on global tourism

The United Nations Secretary-General Antonio Guterres on Tuesday, Aug. 25, 2020, said the global tourism industry has been devastated by the coronavirus pandemic. (AP)
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Updated 25 August 2020
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UN counts devastating cost of COVID-19 on global tourism

  • 100m jobs, $1.2 trillion, 2.8% of global GDP could be wiped out
  • Saudi Arabia’s focus on domestic tourism may well mitigate some of the economic disruption

LONDON: The coronavirus pandemic could wipe up to $1.2 trillion off the world’s tourism industry and cost 100 million jobs globally, but investment in domestic tourism could help mitigate some of this damage, according to the UN’s World Tourism Organization (UNWTO).

In an online briefing on Tuesday attended by Arab News, UNWTO members outlined the disastrous impact the pandemic has already had on international tourism, and the lasting effects it will have on the global tourism industry.

“Tourism accounts for 7 percent of worldwide trade,” said Zoritsa Urosevic, director of the UNWTO’s Institutional Relations and Partnerships Department, adding that the pandemic’s impact on this sector will be catastrophic.

“Revenues from tourism could fall by $910 billion to $1.2 trillion in 2020,” she said, and this alone “could reduce global GDP (gross domestic product) by 1.5 percent to 2.8 percent.” Worldwide, “as many as 100 million direct tourism jobs are at risk,” she added.

Urosevic said “no nation will be unaffected” by the sector’s collapse, but it is likely to impact women, youth and informal workers the most.

While the UNWTO’s projections are alarming, they also offer a glimpse into the future of tourism: More domestic travel and greater investment in local tourism infrastructure.

Sandra Carvao, chief of market intelligence and competitiveness at the UNWTO, said: “We often underestimate the volume of domestic tourism.”

As consumers feel less confident flying internationally and many countries have implemented travel restrictions, she explained, demand for domestic tourism is likely to increase.

“There is a good base for domestic tourism in many countries,” Carvao said. In particular, “open-air opportunities, rural settings, nature-based tourism and road trips” are likely to see a surge in demand after much of the world has spent five months confined indoors, she added.

This means countries that already embrace their domestic tourism industries, such as Saudi Arabia, may be better positioned to weather the pandemic’s economic storm.

Opportunities for rural experiences in the Kingdom are in no short supply, and destinations including the Neom megacity and the ancient AlUla heritage site were already providing a world-beating domestic tourism experience.

Based on the UN’s findings, this flourishing industry will only become more important as the country and the world emerge from the shock of the pandemic and into a very different global tourism industry.

This approach is already being embraced by both Saudi Arabia’s Tourism Ministry and its people.

The ministry’s Saudi Summer initiative, launched in June, has encouraged Saudis to embrace all that the Kingdom has to offer, while ensuring health and safety measures are in place to prevent the spread of COVID-19.

While Urosevic and Carvao made clear that every country’s tourism industry will take a hit, the Kingdom’s focus on domestic tourism and embracing the Saudi experience may well mitigate some of the economic disruption the pandemic has caused, and will continue to cause in the future.


New Saudi draft project to regulate direct market entry of listed companies’ subsidiaries

Updated 13 sec ago
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New Saudi draft project to regulate direct market entry of listed companies’ subsidiaries

RIYADH: The Saudi Capital Market Authority has launched a draft regulation for the direct listing of subsidiaries of companies already listed on the main market, inviting stakeholders to provide feedback over a 30-day period, according to a statement issued today.

The proposed framework aims to allow subsidiaries of main-market companies to list their shares directly on the main market without undergoing an initial public offering, thereby shortening timelines, streamlining procedures, and reducing the costs associated with listing on the Saudi stock market.

It also seeks to create more investment opportunities in the Saudi financial market, contributing to market depth and product diversification, while maintaining high levels of transparency and protecting investors’ rights.

The proposals enable the issuer and its financial advisor to share information about the company and its financial statements with a select group of potential investors before obtaining CMA approval for the share registration request, allowing them to assess their interest in a direct listing on the main market.

They also allow a specific group of licensed financial advisory firms to prepare research and financial reports, provided these are not published before CMA approval.

The proposed framework emphasizes the importance of proper disclosure by setting out requirements for registering shares on the main market, including submitting a registration document to the CMA.

It also specifies the information that must be included in the registration document, such as the method for determining the reference share price and the risks associated with this method.

Under the draft regulation, securities offering rules, ongoing obligations, and the CMA’s glossary of terms and regulations will be updated to allow this type of listing.

This approach is expected to bring multiple benefits, including maximizing the overall value of the main market with lower risk by listing companies that have greater knowledge and experience of market regulations, as well as deepening the market by increasing the number of listed companies across multiple sectors.