Impact Assessment of COVID-19 Pandemic on the Tourism and Hospitality Industry in the EAC and Post Recovery Strategy for the Sector
Date
2021-10-08
Authors
Muoki, D.
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
Tourism is one of the largest foreign exchange earners and fastest-growing sectors in
the East African Community (EAC). According to the EAC Secretariat, tourist arrivals
in the EAC region increased from 3.5 million persons in 2006 to about 7 million in
2019. Tourism contributed to the Gross Domestic Product (GDP) of the EAC Partner
States by an average of 9.5% in 2019. It contributed an average of 17.2% to EAC total
exports and 7.1% to employment. However, the upward trajectory in tourism in the
region, with its positive impact on the economy, was devastatingly affected by the
onset of COVID-19 pandemic in March 2020.
In view of this, the East African Business Council (EABC) with the support of the
African Economic Research Consortium (AERC) and Bill and Melinda Gates Foundation
(BMGF) commissioned undertaking of this study. Essentially, the study aimed at
assessing the impact of COVID-19 on the tourism and hospitality industry, and to
generate policy options that the EAC Partner States should adopt to protect sector
players from COVID-19 disruptions and future pandemics. The main activities of the
study included: assessment of the impact of COVID-19 pandemic on the tourism and
hospitality industry in the EAC; analysis of the current fiscal incentives for the sector;
assessment of the non-tariff barriers that the sector has faced during this period of
the pandemic; and propose recommendations for the tourism sector in EAC arising
from the assessment.
To achieve the objectives, the study deployed a mixed-methods approach of
data collection. This entailed a qualitative method through interviews with key
industry informants and a quantitative method whereby a semi-structured survey
questionnaire was administered to all key subsectors of the tourism and hospitality
industry. The latter was aimed at determining how the sector was impacted upon
at micro-level. In addition, the study involved analysis of trends in key tourism
indicators from statistical reports from Partner States and other sources. These
included indicators such as international tourist arrivals, tourism receipts, tourism
jobs, visitors to parks, and hotel occupancy rates.
This study establishes that EAC Partner States may have lost international tourism
receipts to the tune of US$4.8 billion in the year 2020. About 4.2 million foreign tourists
were not able to travel to their preferred EAC destinations. The trickle-down effects
have been felt across affiliated industries and the rest of the economy. In terms of
impact on employment, it is estimated that tourism jobs in the region dropped from about 4.1 million jobs to 2.2 million jobs, that is, about two million jobs in the tourism
sector were lost. There was a significant decline of about 65% of visitors to national
parks and therefore impacting negatively on wildlife conservation efforts in the region.
The Study also shows that hotels in the region registered average occupancy rates of
below 30%, thus affecting their operations significantly including maintaining staff.
As part of the study findings, the online survey of tourism businesses in the region
has indicated that 28% of the businesses lost their entire projected revenues during
the pandemic period, 48% lost 75% of their projected revenue, 12% lost 50% of their
projected revenues, and others created new revenue streams (6%), while others cited
huge losses due to lack of work. The respondents indicated that 38% reduced staff by
more than 50%, 20% reduced staff by below and up to 50%, 30% maintained staff at
partial pay, and only 10% maintained all staff at full pay, while the rest (12%) applied
measures such as; closing business, laying off workers, reducing working time by
50%, among others. According to key informants, businesses turned to borrowing to
fund their running expenditures such as rent and utilities due to reduced operational
capital. The fate of the most retrenched employees is a subject that needs a specific
scrutiny as generally, with loss of household incomes, many a family resorted to
traditional income generating activities such as farming and small-scale businesses
whose returns are meagre.
The recovery of the sector calls for concerted efforts in the region to forestall
protracted tourism-related losses in terms of GDP, export earnings, employment, as
well as income and benefits accruing to the wide array of tourism stakeholders. As
far as policy interventions recommended are concerned, commentators in the sector
seem to all agree on need to sustain certain aspects of the stimulus packages provided
by the governments, re-engineer and re-define the tourism products offerings to
ensure sustainability, giving more thrust to the domestic and regional markets,
leveraging digital technologies in tourism marketing and promotion, entrench the
ongoing shift of working from home in the regulatory frameworks, establish an
effective tourism crisis management mechanism, roll-out national-wide vaccination
drives, and prioritizing tourism employees in the process and review of insurance
policies to protect tourism businesses and employees from future crises.