Unemployed rates are now twice what they were in 1933 at the depths of the Great Depression. This trend is even more pronounced in the travel and hospitality segments of the economy. At least eight million of the 15.8 million travel-related workforce that existed in the US just three months ago have evaporated into thin air.
Despite receiving billions of dollars of financial aid under the condition that they not fire any workers before October 1, airliners will likely see continued cuts to their workforces, especially once this requirement expires.
Delta Air Lines (NYSE: DAL) said it will have a surplus of 7,000 pilots by the end of the year if it does not furlough any of its 14,500 pilots. The same is true for all of the industry's Big Three, American Airlines Group Inc (NASDAQ: AAL) and United Airlines Holding (NASDAQ: UAL).
The lodging sector has suffered as much as transport, with companies such as Marriott International (NASDAQ: MAR) losing as much as 75 percent in revenue. Even Hilton Worldwide Holdings (NYSE: HLT) estimates it'll be quite a while before it returns to 2019 performance levels despite the fact its hotels in China have been reopened.
The carnage in the labor market is far greater
The 8 million travel-related lost jobs figure does not account for employees throughout the sector's extensive supply chain such as aircraft manufacturing and support products providers such as toilet paper and bedding.
The government-tracked figure shows that more than 23 million people applied for unemployment benefits since the pandemic took full hold over US. But that figure doesn't fully reflect the level of economic pain being felt. April data alone shows that the number of part-time workers jumped by 5 million in just one month and these are most likely workers which held full-time positions before the pandemic and are now forced to become ‘contract' workers to weather the storm.
The Great Travel Depression – slow recovery ahead
Economists expect the US's overall GDP to contract as much as 40% in the second quarter this year and are doubtful that the country will get back into positive production figures before next year.
The travel industry typically contributes $2.6 trillion to the nation's total GDP output. According to the CEO of the U.S. Travel Association, COVID-19 will hurt travel six or seven times stronger than the 9/11 attacks.
The only glimpse of hope is coming from China as hotel bookings have increased by 40% during the first week in March as the country is emerging out of the COVID-19 lockdown. But have no doubt, the recovery will be slow as this is battle yet to be won.
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