‪Tourism and hospitality haemorrhaging money, and employees

The travel and tourism industry is going through an unprecedented crisis in the wake of 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. In Bangladesh, there are about 10 million domestic tourists where the turnover is around Tk25 billion a year. That has come down to zero! 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 (WTTC), a nonprofit 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 percent of all economic activity. The council estimates that travel and tourism are responsible for 319 million jobs around the world. The United Nations World Tourism Organisation (UNWTO) had forecast a 3–4 percent growth in 2020.

Now, the picture is quite grim. The 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." WTTC says the sector is laying off one million jobs a day. They envision the industry could lose 75 million jobs and as much as $2.1 trillion by the end of the year. Pacific Asia Travel Association (PATA) also predicts similar numbers in job losses (75.2 million) with the Asia Pacific region losing approximately 48.7 million jobs as a result of the pandemic.

In our neighbouring country, India, the national federation of 10 tourism, travel and hospitality organisations, FAITH, estimates their overall loss to be Rs 5 trillion and job cuts of 40 to 50 million.

No comprehensive data exists in Bangladesh's tourism sector and so we spoke to various industry leaders for their expert opinion. In Bangladesh, the scenario is no better. In fact, industry pundits, such as Shahid Hamid, Executive Board Member of PATA Global and Chairman of PATA Bangladesh Chapter, say that our losses until June 2020 will be to the tune of Tk 79.1 billion and 300,000 job losses, that too by conservative estimates. They also opine that hundreds of travel and Tour Companies will close; hundreds of small hotels, motels, resorts and restaurants will shut down.

The hospitality industry in Bangladesh has shown 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 cost of land, amount to approximately TK 400-500 billion. 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.

In a conversation with a general manager of an international hotel that would normally have an occupancy of over 70 percent and an ADR (Average Daily Rate) of over $100 at this time of year, he was lamenting that he now has only one guest in the house. He 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 was expecting three more guests; international development staff who were coming from Chattogram.

Another 300 plus room 4-star hotel in the city had five guests and 29 out of 370 staff members in the hotel. They're trying to pay all their staff but fear they may not be able to as there's no cash flow and the reserve in the bank almost dried up. The average staff may have a salary between TK 10,000 – Tk 20,000. They get added benefit of receiving service charge that can range between Tk 5,000 and Tk 25,000, depending on the revenue of the hotel. Now, even if they get paid partial salary, they will be deprived of the service charge portion.

Yet another hotel in the posh Gulshan area with over 100 rooms had fared no better with 10 guests. Usually, at this time of year the hotel has anywhere between 70-90 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.

The average occupancy of the hotels in the city in anywhere between 1 and 10 guests. They retain a skeleton staff of no more than 10 percent of their overall workforce. Hotels do not shut down unless they are bankrupt as reopening costs can be staggering. Hotels need to remain open consistently and continuously service chillers, generators, elevators, Fan Coil Unit (FCU) and Air Handling Unit (AHU), 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 will be 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 between Tk 10 million and 4 million, 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 of a nation in development. They 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, 2020, to the civil aviation and tourism minister sought Tk 10 billion in urgent aid to pay their employees. This is quite a reasonable request given that the government has already announced a stimulus package of Tk 50 billon for exporting sectors, mainly the readymade garments industry, to pay their workers. PATA Bangladesh Chapter also sought Tk 20 billion as interest-free loan for the industry. Furthermore, they requested all utility bills be waived. All these requests went out prior to the announcement of the Tk 72.5 billion stimulus package.

We hope the government will take note of the haemorrhaging effects of the pandemic on tourism and hospitality. We expect the government to step forward and allocate immediately needed funds for this sector. The entire industry hopes the government will include tourism and hospitality in the national recovery policies and action plans.