THE travel and tourism industry is going through an unprecedented crisis amidst the COVID-19 pandemic. With billions of people advised to stay at home and the world coming to a standstill, the industry is haemorrhaging money and has itself become one of the biggest victims. Bangladesh’s tourism industry is estimated to be employing over 2.4 million people and the country is ranked seventh out of 10 best value destination by Lonely Planets. There are over 10 million domestic tourists and the industry reportedly contributed over $5.3 billion to the gross domestic product in 2017. That contribution has now taken a drastic dip. The number of domestic tourists has come down to zero. Hotel rooms are empty, travel is at a dead stop and employees are told to go home. The only good news is that the Morning Glory is thriving and the little red crabs are scurrying around with wild abandon on the beaches of Cox’s Bazar.
According to the World Travel and Tourism Council, a non-profit industry group based in London, the travel and tourism industry contributed $8.8 trillion to the global economy in 2018. This accounted for 10.4 per cent of all economic activity. The council estimates that travel and tourism are responsible for 319 million jobs around the world.
Now, the picture is quite grim across the globe. Be it Bali, Bangladesh or New York. New York Times in one of its reports states; ‘Millions are losing their jobs and economies are suffering as once-bustling tourist sites give way to eerie emptiness.’ The same can be said about Bangladesh. The WTTC says that the sector is laying off one million jobs a day. It envisions that the industry could lose 75 million jobs and as much as $ 2.1 trillion in business by the end of the year. The Pacific Asia Travel Association also predicts similar numbers in job losses (75.2 million) with the Asia-Pacific region losing about 48.7 million jobs as a result of the pandemic.
In the neighbouring India, the national federation of 10 tourism, travel and hospitality organisations, FAITH, estimates an overall loss of Rs 5 lakh crore and job cuts of 4–5 crore.
No comprehensive data exists in the Bangladesh tourism sector. However, industry leaders are able to provide much needed insights. The PATA Bangladesh chapter says that our losses till June 2020 will be to the tune of Tk 7,910 crore and initial job losses to over three lakh, that too by conservative estimates. He also opines that hundreds of travel and tour companies will close and hundreds of small hotels, motels, resorts and restaurants will shut down. The numbers are escalating with each passing day of the COVID-19 lockdown.
The hospitality industry in Bangladesh has shown a tremendous growth in the past decade and a half. From 2003 to 2018, as many as 46 luxury hotels (4–5 star) have come up throughout the country. The investment, including the cost of land, towards these amounts to approximately TK 40,000–50,000 crore. There are more hotels in the pipeline scheduled to open within the next few years and some are luxury chain properties. They are all suffering. The financial institutions will not be immune either as a result.
A general manager of an international hotel, that would normally have occupancy of over 70 per cent and an average daily rate of over $100 at this time of year, was lamenting that he now has only one guest in the house. Only a month ago, we enjoyed a friendly chat over tea by the poolside of his hotel when he was upbeat and excited with the various promotions to celebrate Pahela Baishakh and the almost full house he would have before Ramadan. He now has a skeleton staff and sent the rest home. Fortunately, this is the only hotel we are aware of who has not laid off a single staff yet. He is expecting three more guests today, international development staff who are coming from Chattogram.
Another 300 plus room 4-star hotel in the city has five guests and has 29 out of 370 staff in the hotel. Their monthly turnover would be in the range of Tk 10–12 crore. They are trying to pay all their staff but fear that they may not be able to as there is no cash flow and the reserve in the bank almost dried up. The average staff may have a salary between Tk 10,000 and Tk 20,000 but have the added benefit of receiving service charge that can range from Tk 5,000 to Tk 25,000 (depending on the revenue of the hotel). The executive director of the hotel was visibly upset that even if the staff get paid, they will be deprived of the service charge portion.
Yet another hotel in Gulshan with over 100 rooms has fared no better with 10 guests. Usually, at this time of year, the hotel has anywhere between 70 and 90 guests. In February, they had a full house for a week. All these 10 guests are associated with development work. The expatriate general manager is juggling with maintaining social distance, providing the best in hospitality service and ensuring safety of his staff and guests. Fortunately, hotels have one of the most trained personnel and are quick to adapt any environmental changes thrown their way. Hotels put a high priority on safety protocols.
The average occupancy of the hotels in the city is anywhere from 1 to 10 guests. They retain a skeleton staff of less than 10 per cent of their overall work force. Hotels do not shut down unless they are bankrupt as reopening costs can be staggering. Hotels need to remain open to consistently and continuously service chillers, generators, elevators, fan coil unit and air handling unit, ventilation system, laundry facilities and so much more. The hot and cold cases in the kitchen need constant servicing. The rooms and public areas need constant cleaning. Shutting these down translates to mould and fungus. Should any of these require replacing, the cost is high. It is cheaper to continue regular maintenance work. If shut down, it takes a hotel three to four months to be operational again. The cost can be anywhere from Tk 1 crore to Tk 4 crore depending on the size and quality of the hotel. Besides, the hotels need to be ready to accept guests as soon as the pandemic ends.
Hotels are the unsung partners for development of a nation. Hotels house foreign dignitaries, athletes for sporting events, international aid workers from international development organisations, buyers and business travellers associated with all export oriented industries, international experts and consultants associated with the development work in the country, tourists and pretty much anyone who is travelling from one city to another in need of short term accommodation. Thus, hotels play and will continue to play a crucial role in the rebuilding efforts of Bangladesh’s economy post COVID-19 pandemic.
The Global Tourism Crisis Committee, established by UNWTO with high-level representatives from across the tourism sector and from within the wider United Nations system, released a set of recommendations calling for ‘urgent and strong support to help the global tourism sector not only recover from the unprecedented challenge of COVID-19 but to “grow back better”.’
This set of recommendations emphasises the importance of providing financial stimulus, including favourable tax policies, lifting travel restrictions as soon as the health emergency allows for it, promoting visa facilitation, boosting marketing and consumer confidence, in order to accelerate recovery. The recommendations also call for tourism to be placed at the centre of national recovery policies and action plans. ‘Recommendations give countries a check-list of possible measures to help our sector sustain the jobs and support the companies at risk at this very moment. Mitigating the impact on employment and liquidity, protecting the most vulnerable and preparing for recovery, must be our key priorities’, said UNWTO secretary general Zurab Pololikashvili.
In Bangladesh, various industry related organisations have sent out clarion calls for the government to step in. PATA Bangladesh chapter in a letter, on April 1, to the civil aviation and tourism minister sought Tk 1,000 crore immediately to pay their employees. This is quite a reasonable request given that the government has already announced a stimulus package of Tk 5,000 crore for export-oriented industrial services sector to pay their workers. They also sought Tk 2,000 crore as interest-free loan for the industry. Furthermore, they requested all utility bills be waived. The request had gone out before the government announced the Tk 72,750 crore stimulus package.
It is not just the hotels, airlines, tour operators and travel agencies but related service providers who are also suffering. Some of the marketing agencies, various service providers and suppliers that earn their bread and butter from the industry cannot even find crumbs to stay afloat.
The government is expected to take note of the haemorrhaging effect of the pandemic on tourism and hospitality. The service sector is as important as the manufacturing. The government should step forward and allocate the needed funds immediately for this sector and save it. The industry hopes the government will put tourism and the hospitality industry at the centre of national recovery policies and action plans.
M Shahadat Hossain, managing director and chief executive officer of Astute Horse, is a hospitality industry marketing specialist. He is also the director, marketing and communication of PATA Bangladesh chapter.
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