ConsultEcon Management & Economic Insight

 

March 31, 2021
Covid- Where do we go from here…Current Impacts
Written by: Thomas J. Martin, President, ConsultEcon, Inc.

The Covid crisis has resulted in significant impacts and many cultural and nature conservation organizations have had to rethink their missions and operating profiles. The experiences of the last year have been stressful for all and for some traumatic on both a personal and a work basis. Many people are asking where do we go from here? The staff at ConsultEcon have been working with clients thru the Covid crisis and monitoring the trends and prospects for the visitor attraction and travel and tourism industries, which have been particularly hard hit. We are sharing our thoughts in a series of blogs; previously presented was What history can tell us. his blog addresses What has been the impact and what has changed. Finally, we will address What are the prospects going forward- the emerging opportunities.

What has been the impact and what has changed?
On the anniversary of the declaration of the worldwide pandemic in March 2020 we can now hopefully see the proverbial light at the end of the tunnel. With the dreadful death toll nationally and internationally continuing, many are hopeful that by the Fall we will have reached herd immunity in the U.S. and life will return to some semblance of normal. But the socioeconomic impacts have been and remain significant. In January, the Wall Street Journal reported that total job losses in 2020 were the worst since 1939 when records were first kept. This included temporary layoffs as well as significant permanent job reductions. While few industries have been spared, the hardest hit were: restaurants and bars: arts, entertainment and recreation, travel and accommodations; as well as local and state governments including education. Unsurprisingly, the closures have accelerated the “on-demand’ economy, one of the few growth sectors last year. Following are examples of the magnitude of the impacts related to travel, entertainment and the arts:

  • A study by the USTA (United States Travel Association) indicated that domestic travel lost $1.1 trillion in economic output last year, with this economic sector reporting 5.6 million fewer jobs at year end, a decline of 34%, many of which will not return for a long time, if ever.
  • Spending on travel likewise fell by 42% in 2020 and airline enplanements declined dramatically. The number of routes decreased by 30% and the total number of flights by 42%.
  • The cruise industry closed down for the better part of 2020, and is only now seeing a small revival for later in 2021. For instance, Carnival Corporation sustained a 99.5 percent decline in revenue in 2020.
  • A recent study by IAAPA (the Global Association for the Attractions Industry) indicated that theme parks, historical sites and museums, and zoos and aquariums saw employees’ wages drop by $1.1 billion dollars last year, and employment down by 125,000 jobs between March and May of 2020 with the total negative impact on the industry at $23 billion.
  • Reports from Californians for Arts and Otis College, summarized in the New York Times article “A Recent Report Finds California Lost 175,000 Creative Economy Jobs” from Feb. 25, 2021, found that as of last fall the state had lost 175,000 creative economy jobs in: arts and cultural organizations; architecture and the arts; and performing arts, entertainment and digital media. A survey by the Massachusetts Cultural Council found that cultural organizations in the state sustained loses of at least $484 million and more than 30,000 jobs, with creative individuals being particularly hard hit.
  • The museum industry has likewise been hard hit. As attendance is the major driver of revenue for most museums, the precipitous declines in attendance have caused steep declines in revenues and massive job losses. Because there about 35,000 museums throughout the country and the moving nature of local restrictions, it is hard to get an accurate industrywide overview of total loss of attendance, jobs and revenue. But, needless to say, it has been substantial.
  • Directors’ responses to an American Alliance of Museums’ COVID Snapshot Surveys in June and October of 2020 suggest that up to 33 percent of American museums are at risk of closure in the coming year due to Covid-19-related hardships. Examples of the many permanent closures are the Portland (OR) Children’s Museum and Indianapolis Museum of Contemporary Art.

Most industry analysts predict that the climb back to pre-Covid levels of travel, entertainment and the arts will be slow, although there is a significant pent up demand for what some analysts have called “revenge” travel.

The rise of vaccination rates have given hope that these impacts will be reversed in the next year, but much permanent damage has been done. Many companies and institutions have adjusted their operations to survive and then plan to take advantage of the new opportunities available in the coming year. The last installment of this series will discuss that outlook.