Global tourism has been one of the most affected sectors during the COVID-19 crisis. At least 43 airlines have gone bankrupt since the wake of the outbreak due to heavy restrictions on travel and a slump in demand among travelers. The US-based managing consulting firm McKinsey and Company just released a report titled “COVID-19 tourism spend recovery in numbers.” The report’s tourism recovery model forecasts a cumulative drop of $3 trillion to $8 trillion before tourism expenditure returns to pre-COVID-19 levels. Recovery will be slow and driven by the underlying dependencies countries had on domestic and nonair travel. “Different countries, therefore, should prepare for their own recovery curves and reimagine their tourism sectors as well as the support they provide differently,” the report suggests.

While post-COVID-19 tourism recovery will be primarily driven by the strength of the economic recovery, five key drivers are likely to impact the recovery trajectory. Managing those concerns is key to driving a turnaround in tourism, says the report.

One factor that has the highest impact, according to McKinsey and Company’s report, is the intrinsic attractiveness of domestic destinations. It is a core driver for sustaining domestic travel and supporting substitution of outbound trips. There are other factors with slightly lower impact on the recovery of global tourism. Tourism’s dependence on air travel is expected to have a strong effect due to health concerns and potential supply reductions.

Funnily enough, health and hygiene concerns don’t come up as high impact factors. However, health standards in destination countries be it domestic or international, and insurance policies will increasingly affect traveler decision-making. Impact on business travel is typically more pronounced than leisure segments and depends on local dynamics. Despite it being a low impact factor, but high awareness of environmental impact resulted by global tourism is likely to affect travel decisions in the next normal.

McKinsey and Company lays out two scenarios; one is optimistic and the other is pessimistic. Combining rapid virus containment and rebounding economies, the optimistic recovery scenario will see recovery to 85% of 2019 volumes in by 2021 and a full recovery by 2023. Under a pessimistic recovery scenario, 2021 levels can be as low as 60% of 2019, further postponing the recovery.

Domestic tourism will return to precrisis levels around one to two years earlier than outbound travel. Multiple factors drive this: fewer restrictions for travel within own country, more substitution options for nonair-based travel (such as cars and trains), anxiety, and a larger share of business travel. In addition, domestic travel is expected to recover faster than hotel as we see a substitution toward vacation rentals and friends and family in certain markets.

Before the crisis, different markets had different dependencies on domestic tourism and air traffic. This structure designed by McKinsey and Company drives the recovery speeds as cross-country restrictions and safety concerns are determining air traffic.