MARKETS Understanding how demand is changing (including the role of domestic and regional tourism); Interpreting changing business models due to consolidation and corporate restructuring; Mobilizing innovation and technology solutions impacting distribution and market access; and Guiding public investments in destinations to position them for a more sustainable and resilient tourism industry post-COVID-19. 6 MARKETS the Grand Princess cruise ship off the coast of California; and at least 25 additional cruise ships leading to 800 confirmed cases among passengers and crew.25 With a high passenger density the largest ship, Symphony of the Seas, carries 6,680 passengers the cruise sector is particularly at risk for the spread of COVID-19. Further, it brings together diverse markets from around the world, and a high percentage of the market is older adults over the age of 65, who are at higher risk. The Cruise Lines International Association, representing 50 cruise lines, took the first step and announced a temporary suspension all cruise operations at least till the end of May. This was shortly followed by the United States Center for Disease Control no sail order announcement for all cruise ships over 250 passengers until further notice.26 While the dates vary with each company, only a few estimate resuming operations in June Carnival Corporation (August 1), Royal Caribbean Cruises (June 12 at the earliest), MSC Cruises (July 10), Viking Cruises (June 30) and Norwegian Cruise Lines (June 30) and even these dates are tentative. Companies are taking different approaches to staff layoffs during this time. Viking Cruises and Disney Cruises will continue to compensate both shoreside staff and crew for a few months; Princess Cruises maintained shoreside employees while shipboard crew were sent home.27 Since approximately one third of all cruise employees worldwide are from the Philippines, employment loss will have a disproportionate impact on the country.28 The three major cruise companies Carnival Corporation, Royal Caribbean International, and Norwegian Cruise Lines have already seen major drops in stock prices with Norwegian Cruise Lines experiencing around an 80 percent drop since the beginning of the year. The negative shock on stock prices, reputational damage caused by COVID-19, and registration under foreign flags will impact the ability of cruise companies to mobilize capital in the short-term to cover costs. In March, Carnival Corporate had an active cash burn of $500 million per month and required an injection of $6 billion to weather the crisis. With its headquarters in the United States, Carnivals ships, like most other major cruise ships, sail under foreign flags in tax haven countries with weaker employment rules. This has excluded them from the United States stimulus package. Instead, they will be looking to mobilize capital through secured notes, convertible notes, and issuance of new shares.29 While no reliable forecasts on the long-term impact of the crisis on the cruise sector are available, it may fuel further consolidation in the sector, an existing trend over the last two decades. Alternatively, it could lead to increasing market share for smaller ships, which offer higher quality and lower density cruises. In the short-term, discussions on supporting the industry highlight how this crisis provides an opportunity to increase the sectors environmental sustainability and support more sustainable labor practices. 14 MARKETS ii) the supply-side resilience of the country - its ability to respond and recover from the crisis; and iii) the demand dynamics - resilience of the countrys key tourism source markets. Accordingly, the M 19 of these are low and lower-middle income countries. Globally, the countries that most rely on travel and tourism are the small island countries (by GDP in 2019). There are 16 small island countries with more than 30 percent of their GDP from travel and tourism: Antigua and Barbuda, Aruba, the Bahamas, Barbados, Belize,39 British Virgin Islands, Cabo Verde, Dominica, Fiji, Grenada, Jamaica, Macao, the Maldives, Seychelles, St. Lucia, and Vanuatu. In terms of employment, the patterns are similar. In 79 countries, more than 10 percent of employment is attributed to tourism; 17 of these are low or lower-income countries. The table that follows shows all 177 countries in the WTTC GDP dataset categorized by their degree of economic dependence on tourism (see Appendix 2 for further details). The results are divided into four categories of dependence: severe, high, medium, and low. Regionally, Latin America and particularly the Caribbean, Europe and Central Asia, East Asia and the Pacific have the highest number of severely tourism dependent countries. While these countries economies will be most impacted by COVID-19, the economic impact on small islands, across all regions, is likely to be the worst because of low economic diversification of their economies. Ta