Measuring COVID-19’s impact on local hospitality and tourism sectors

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Words by

Multimedia Reporter

Data around the economic effects of COVID-19 shift every day. But current projections are painting a bleak picture of the hospitality and tourism industries.

Worldwide, these industries are expecting a loss of $2.1 trillion in revenue. The World Travel and Tourism Council, the trade group representing major global travel companies, estimates around 75 million jobs lost to the pandemic.

Regionally, Southeast Asia’s tourism-dependent economies are particularly vulnerable—not least because of its growing dependence on Chinese tourism. China’s rapidly swelling middle class sparked a boom in tourist visits abroad, which soared from 20 million in 2003 to 150 million in 2018. With much of the country still reeling from the pandemic, that swell has dipped considerably.

In the Philippines, hoteliers started feeling the crunch even before the Luzon-wide lockdown. Waterfront Philippines Inc. (WPI), which operates two Waterfront hotels in Cebu, said last month that room occupancy went down 55 percent on average

“This pandemic is causing a harsh economic downturn and is continuously taking a toll on the tourism industry and its allied services especially with the imposition of travel bans and community quarantines,” WPI reported, noting the booking cancellations and sales slowdown are causing “revenue strain.”

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The operations of the Donatela Hotel in Bohol is likewise significantly affected by the community quarantine: “The management is keeping the expenses at minimum and is executing general cleaning and small in-house renovations while occupants are expected to be low at this time.”

Industry-wide, Arthur Lopez, president of Philippine Hotel Owners Association, told Philstar.com the group’s members are “feeling a downslide in their occupancies ranging from 30-50%, depending on source markets.”

Banking on local tourism

The current reality is that barely any tourists are taking holidays, many accommodations are running empty, and hotel personnel are being asked to cut work hours. Because this is an especially challenging year for tourism, the Philippines is banking on domestic travel to at least partly offset the expected dive in international visitors. “Domestic tourism cannot completely offset our losses from our foreign markets,” said Robert Zozobrado, president of Pacific Asia Travel Association, a group of airlines, hotels and restaurants, in a phone interview with PhilStar.

Tim Hentschel, CEO of HotelPlanner, a booking service which specializes in negotiated group deals and corporate events, shares this view. After having watched Singapore’s hotel occupancy rates from February until this month, he says that, “consumer demand for travel is now on life support and close to being dead. It will take at least two years before international travel comes back to 2019 levels worldwide. The new normal will be to travel locally and book staycations. This is extremely hard on Singapore and Southeast Asia that depends mainly on international travellers.”

To ensure that hotels win travellers back, Hentschel suggests two key strategies: First, let guests feel safe. Hotels can combat the fear of getting COVID-19 by conducting temperature screening for all guests, staff, suppliers, etc.; getting guests to complete a travel and health declaration and giving them a set of surgical masks and sanitizers upon check-in; and sanitizing public areas and guest room door handles regularly.

Second, provide customers with the flexibility to change their plans. “Not allowing discounted bookings, as well as the flexibility for date changes and cancellations, are no longer practical in today’s world where travel plans can be disrupted by government restrictions and other external factors. Trying to go after customers for extra cash to bolster your revenue will hurt your brand’s reputation and turn repeat customers away,” Hentschel said. Properties must also consider consulting their business insurance brokers, which should cover them for business interruptions like this outbreak.

A pledge of support

The Department of Tourism (DOT) has meanwhile pledged support for the travel and hospitality sector, saying it has lined up a host of incentives and will extend financial assistance to cushion the impact of the crisis. 

Among the immediate response actions are a moratorium on the collection of accreditation fees from new and renewing applicants from tourism—and tourism-related enterprises for 2020; the waiving of participation fees in international fairs and exhibitions between now and the end of 2021; and financial support like low interest loans from the Development Bank of the Philippines and the Land Bank of the Philippines through the Rehabilitation Support Program on Severe Events (RESPONSE) and the Rehabilitation Support to Cushion Unfavorably Affected Enterprises by Covid-19 (I-RESCUE) Lending Program.

The DOT has furthermore made representation with the Social Security System, Pag-IBIG Fund, and PhilHealth for the deferment of tourism workers’ contributions.

“To cushion the impact, the DOT and its attached agencies, even before the lockdown, laid out the response and recovery plan during the initial stages of the COVID-19 outbreak in the country with the tourism sector taking a direct hit early on,” Tourism Secretary Bernadette Romulo-Puyat said. The department pledges to help not only tour operators, but the entire travel and hospitality sector.

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