Globally, the hotel and tourism sector is one of the worst affected by COVID-19. In Ethiopia too, this is one of the sectors that are retrogressively hit by the economic recession. According to a study conducted by the Hotel and Tourism Training Center, the sector is suffering more than any other sector in terms of economic capacity, business and manpower.
Mazengia Shimeles, research coordinator and coordinator of the hotel and tourism training institute, said during a recent conference on the impact of the coronavirus on Ethiopia’s hotel and tourism sectors and the way forward; the study focuses on the economic performance of the hotel and tourism sector during the prevalence of COVID -19. It has well scanned the impact the pandemic has had on the business activities. In particular, it has clearly shown the impact on workers and those involved in the value chain beyond the economic crisis.
The study, which included 2,637 permanent employees, assessed the level of damage based on three main indicators, he said. In particular, he explained that the study indicated the results in relation to the same period last year and comparing the average activity before and during the outbreak of the problem with that of the same period last year. He said the study showed a significant reduction in tourism revenue since the outbreak in March, April and May.
Bed rental services are one of the major sources of income for hotels, he said. Revenues from this service fell 16 percent from last year. He noted that comparing the post-pandemic average bed rent to that of before the pandemic, it has reduced by 61 percent.
He said that, the hotels’ income in March, April and May 2020 has declined by 58 percent compared to the same period last year due to the crises happened to bed rent.
According to Mazengia, hotels’ revenue from services such as food and drink, gymnasium and spa has also been affected. Numerical data indicates that there is a 62 percent reduction in these services. He further explained that there has been a sharp decline in revenue from other sectors related to the hotel and tourism sector. Traditional and modern restaurants are also providing partial service by declining 67 and 87 percent respectively, he said.
The number of tourists visiting tourist attractions, according to Mazengia, has also decreased significantly. It is down 92 percent this year compared to the same period last year (March, April and May). He also said that hosting capability of tourists at destinations has decreased by 97 percent. In addition, 69 percent of the tourist destinations have stopped operating.
According to Mazengia, the outbreak of COVID-19 pandemic has affected the entire world, especially the major tourist generating countries for Ethiopia, which have closed their borders. In Ethiopia, partial curfews, as well as forcing foreign visitors and citizens to stay in detention centers, have put a strain on the sector. In terms of the present business acumen, many companies have gone from being laid off to part-time.
Experts say that in addition to the weakening and slowdown in the hotel and tourism sector, the coronavirus has caused severe damage to workers. Prior to the pandemic, one worker earned an average of 1,300 Birr a month and 600 Birr in service allowances, but now 53 percent are forced to earn less than 200 Birr. In addition, 17 percent of the workers’ salaries have been reduced, he noted.
The government revenue from employment income tax has shown a 24 percent reduction and a 65 percent reduction in value added tax. The expert has also explained that the reduction could be induced in the number of workers or the reduction in the benefits that workers are entitled to gain.
In addition to the economic damage caused by the corona pandemic, psychological damage is also said to be on the rise. Although the government has provided various assistances since the outbreak was announced, institutions in the sector have not been able to benefit from the support as per the promises. The study also found that the work bondage of the institutions was disrupted; they failed to fulfill their social responsibilities and it is the time that cast a shadow over human resource development. Nevertheless, the study found that companies in the sector, such as hotels, restaurants, tourist destinations and tourism organizations, have not been able to design emergency management and alternative way out strategies.
According to Mazengia; though the government has offered various loan options to keep the sectors from sever crisis, they have not been able to take the needed advantage because of lack of efficient process. Performance and staff allowances have not yet been implemented. In this way, the study has shown the direction of the solution. In the future, it is important to strengthen the supply of credit, cost reduction and financial support in the economy.
In order to save the current business activities, incentives, price adjustments, technology development, industrial linkages and promotion of new destinations should be implemented through market development, he said.
He divided the solution directions into two parts, during and after corona. Despite the prevalence of corona pandemic, basic remedial measures must be taken. Those in the hotel and tourism sectors need to carry out their job through taking basic steps to prevent the disease.
Mazengia said various support should be provided to those engaged in the sector. Financial support should be provided to those who need it. But, according to the study team leader, finance does not solve all the problems. Non-financial supports such as market related supports should be provided to those in need, he said.
According to Mazengia, the study has also indicated what needs to be done in the post-corona season in addition to the work done during the corona. When Corona is over, everyone enters the industry as a newcomer and expects competition from the rest of the world. Considering the works that need to be done, there are a lot of works to be done in connection with COVID-19.
He said there is a need to increase the number of employers’ forums, use multi skilled workers, improve working hours, implementing government support and other options. He added that focus should be on business continuity, restructuring of government institutions, improvement of the legal framework, and renewal of tourism destinations.
Problems with short-term and long-term loan options need to be addressed urgently. Institutions in the sector must also work to reduce costs. Institutions engaged in the sector should focus on cost reduction.
Mazengia further explained that market-oriented work needs to be done. It is important to provide incentives to tourists to encourage domestic and regional tourism. If various incentives are offered, people will be initiated to visit.
Gezahagn Abate, Deputy Director General of the Hotel and Tourism Training Center, on his part said that various sources have been speculating about the impact of the coronavirus on the hotel and tourism sectors in the past. He noted that the estimates did not reflect the level of impact. From now on, however, all parties should use the information verified by the study.
Minister of Culture and Tourism, Dr. Hirut Kassaw, for her part said that the center conducted the study to clarify information in the sector. It aims to provide comprehensive and nationally refined information and to seize the opportunity to protect the sector from the effects of COVID-19.
The study outlines what needs to be done now and in the future, she said, noting that so far there is no comprehensive study of the effects of corona in the past.
The study, in which more than 25 researchers participated, selected cities in areas with 20 tourist destinations, including Addis Ababa; a total of 300 hotels and a number of restaurants with a direct contact with tourists were involved. The two-month study was conducted in collaboration with researchers at the center and Addis Ababa University scholars. Therefore, she said, the study will be a good starting point and policy input for all regional and federal decisions.
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