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London (CNN Business)When the coronavirus pandemic erupted in early 2020, the ensuing border closures and stay-at-home orders brought travel and tourism to its knees. One year on, governments are using the same playbook, inflicting more pain on a sector that accounts for 10% of global GDP and a similar share of jobs.
What's happening: While some countries such as Australia and New Zealand never lifted their travel bans, other governments that had relaxed restrictions are moving to tighten controls again in response to new coronavirus variants, dashing hopes for a rebound in global air travel.
From Monday, people arriving in the United Kingdom from 33 countries will be required to isolate at their own expense in "quarantine hotels" for 10 days. Canada implemented the same measure late last month, and suspended flights to the Caribbean and Mexico through April. It's also clamping down on its land border.
Meanwhile, the Biden administration might mandate negative Covid-19 tests for domestic US air travel, according to Transportation Secretary, Pete Buttigieg.
Heathrow Airport CEO John Holland-Kaye said in a statement last week that Britain's new measures are "essentially a border closure that will inevitably delay the country's recovery and hurt the UK's supply chains."Â
Passenger volumes at the airport, once one of the world's busiest, collapsed 89% in January compared to the same month last year.
If severe travel restrictions persist, international passenger demand could recover to just 38% of 2019 levels this year, according to the International Air Transport Association (IATA). Demand in 2020 was about a quarter of the previous year's level.
"The world is more locked down today than at virtually any point in the past 12 months and passengers face a bewildering array of rapidly changing and globally uncoordinated travel restrictions," IATA CEO Alexandre de Juniac said in a statement this month, adding that airlines will need continued financial support from governments to remain viable.
Why it matters: It's not just airlines at stake. Thousands of companies rely on travel and tourism to earn an income. These firms employed 330 million people globally in 2019, according to the World Travel and Tourism Council (WTTC). The industry body estimates more than half of these workers have been laid off or are currently on furlough.
"We don't see a clear exit strategy," WTTC CEO Gloria Guevara told me. "It's easy to close borders, but not that easy to open them."
With very little guidance on when restrictions will be lifted — some UK officials are asking people not to book any holidays just yet — companies in this vital industry face an increasingly uncertain future.
There are signs that people want to travel and are even willing to pay more for their vacations. Tui (TUIFF), the world's largest tour operator, said last week that bookings for summer 2021 are tracking ahead of last year, with strong demand for more expensive deals. But whether those trips are actually taken is far from certain. The company is accepting small down payments and free changes until 21 days before departure on trips booked before February 9.
Up next: A string of earnings out Thursday from major industry players, including Air France-KLM (AFLYY), Norwegian Air, Airbus (EADSF), Hyatt Hotels (H) and Marriott International (MAR), will offer some insight into the road ahead.
All eyes on the US consumer
Walmart reports earnings for its holiday quarter on Thursday, promising to provide market participants with early indications of the financial health of US consumers.
The pandemic has dramatically altered how people shop and investors will be hunting for clues that point to how lasting the changes wrought by the past year will be, reports my colleague Nathaniel Meyersohn.
While delivering a mega boost to online retailers such as Amazon (AMZN), the crisis also lifted big box chains such as Walmart (WMT), Target (CBDY) and Costco (COST), which remained open throughout the pandemic. Many smaller rivals and mall-based retailers were forced to shut and have since folded or not yet bounced back.
Pandemic winner: Walmart's stock has rallied nearly 25% over the past year, highlighting the company's enviable standing in retail.
Investors will also be keeping a close eye on the performance of Walmart's digital sales. The company has been building out its home delivery and curbside pickup options as more shopping moves online. Online sales jumped 79% between August and October, compared with the same quarter last year.
Looking ahead: The world's largest retailer also introduced Walmart+ in September, a membership program to take on Amazon Prime. Investors will want to know how many customers have signed up thus far and will be looking to gauge how big the program might become.
Up Next
Monday: EU trade and industrial production data
Wednesday: Fed minutes; US retail sales and industrial production for January; Rio Tinto (RIO), Shopify (SHOP), Hilton Hotels (HLT) and Cheesecake Factory (CAKE) earnings
