Impact Assessment of COVID-19 Pandemic on the Tourism and Hospitality Industry in the EAC and Post Recovery Strategy for the Sector

Loading...
Thumbnail Image
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.
Description
Keywords
Citation