Will tourism ever recover from the crack of COVID-19 pandemic?

WALE OLAPADE writes that the tourism industry and by extension, the aviation industry, has been hard hit by the COVID-19 pandemic, noting that despite a silver lining it may take some time before everything returns to normal.

 

Travel and Tourism Overview

AS one of the world’s largest economic sectors, Travel and Tourism creates jobs, drives exports, and generates prosperity. In its annual analysis quantifying the global economic and employment impact of Travel and Tourism in 185 countries and 25 regions, the World Travel and Tourism Council’s (WTTC) research reveals that the sector accounted for 10.4 per cent of global GDP and 319 million jobs or 10 per cent of total employment in 2018.

Domestic tourism, which represented 71.2 per cent of all tourism spending in 2018 and had the strongest growth in developing nations, continues to support opportunities by spreading development and regional economic benefits and building national pride.

The USA, China, Japan, Germany and the UK were the top five markets in 2018, collectively representing 47 per cent of the global Travel & Tourism GDP. Across the regions in 2018, Asia-Pacific remained a strong performer, growing by 6.4 per cent, but North Africa’s performance—with 8.6 per cent year on year growth – is particularly notable.

 

Tourism contribution to Nigeria’s Gross Domestic Product/employment

No doubt, tourism plays a very significant role in the economy of every nation, including Nigeria. According to the National Bureau of Statistics, the tourism sector accounted for 34 per cent of GDP and about 20 per cent of the nation’s employment creation in 2017.

According to the body, the art, entertainment and recreation, trade, transport, accommodation and food services, administrative, support and other services account for 34 per cent of GDP in 2017 and about 20 per cent of employment.

 

Effects of COVID-19

The question on the lips of watchers of the tourism and aviation industry in view of the damamge already done to the above contributions to the national economy is, could the industry ever return to normal?

However, many industry players are optimistic about recovery plans in restarting business activities, but could not readily ascertain when this would be, even as some project that within the next two years, COVID-19 will scarcely still be in existence.

Given the fact that the tourism industry is a value chain industry with players depending on one another to survive, a break in one of the value chain affects others, thus putting the whole sector and allied businesses in jeopardy.

Giving graphic details of the loss in the industry, the national president, National Association of Nigeria Travel Agencies (NANTA), Mrs Susan Akporaiye, said the travel and tourism industry have suffered great degree of losses in terms of travel and tour deals running into billions of dollars, let alone joblessness and salary cut.

Noting that from the International Air Transport Association (IATA) update of April 23, 2020, the industry is expected to experience low passenger patronage, adding that “There is going to be 4.7 million fewer passengers travelling, resulting in $3.02 billion revenue loss, risking over 125,000 jobs and $0.89 billion in contribution to Nigeria’s economy.”

The founder of Nairametrics, Ugochukwu Obi-Chukwu, also speaking on the COVID-19 disaster in a live webinar presentation said one of the most hit sectors remains tourism and hospitality, aviation, cinemas and entertainment generally.

According to Obi-Chukwu, with the lockdown largely in place, most of the local and foreign airlines have suspended operations with all the airports under a shutdown except a few local airports which recently reopened in Nigeria on the order by the Federal Government.

Taking a look at the tourism allied sector, he explained that “The film and entertainment industry, in general, has experienced substantial negative impact; movie theatres have been shut down, art exhibitions, movie premieres and musical concerts have either been cancelled or postponed. In fact, multi-billion naira worth of deals have been lost in the sector.”

He added that as of March, the International Air Transport Association (IATA) had reported an estimated revenue loss of $252 billion in the sector globally.

The Director-General of IATA, Alexandre de Juniac, in a recent statement said the airline industry is heading for $84 billion loss in 2020 following different restrictions put in place by individual countries as they open their airspace for travellers.

According to Juniac, “The coronavirus crisis will lead the airline industry into record annual losses of $84 billion as 2020 goes down as the worst year in the history of aviation.”

IATA predicted a further $15.8 billion hit to the industry’s bottom line in 2021 – for a total of about $100 billion in losses largely attributable to the pandemic as recovering traffic remains well short of pre-crisis levels, and airlines slash fares to win business.

As air travel recovery gathers pace in Asia and takes root in Europe and North America, airlines are counting the cost of months of lost business, an increased debt pile and a diminished outlook for future demand.

Even in markets where COVID-19 infection rates have fallen sharply, airlines are still confronted by a patchwork of remaining travel restrictions and consumer wariness.

British 14-day quarantine introduced for arriving passengers recently has prompted an angry response and threats of legal action from the broader travel industry, amid reports that the regime may soon be loosened in favour of air corridors” to agreed destinations.

 

Resetting the industry

However, despite this gloomy scenario, airline passenger traffic is expected to rise 55 per cent in 2021 from its depressed level this year, while still remaining 29 per cent below its 2019 level, the IATA said in an updated forecast.

IATA in its own submission urges governments to refrain from quarantine measures that deter most travels, arguing that on-board safety measures, including mandatory face masks are adequate which according to De Juniac,  “should give governments the confidence to open borders without quarantine measures.”

Specifically, IATA called for aviation-specific financial relief measures from the government of Nigeria to address the severe impact of the COVID-19 crisis on the air transport sector.

Prior to the crisis, aviation contributed $1.7 billion to Nigeria’s GDP and supported 241,000 jobs. IATA estimates that the COVID-19 crisis puts 124,000 Nigerian jobs at risk and some $900 million of the country’s GDP.

Taking a strategic stand on the industry can gain its relevance in the scheme of things, the IATA’s Regional Vice-President for Africa and the Middle East, Muhammad Albakri said “Nigeria has announced general relief measures for sectors affected by COVID-19, but not specifically for aviation. Given the importance of air transport for Nigeria’s economy and connectivity, the government must not let aviation fail.”

“The industry faces a liquidity crisis. Without a viable aviation sector Nigeria’s eventual recovery from COVID-19 will be longer and even more painful. Aviation-specific financial relief measures are urgently needed as a matter of survival.”

He, however, called on government’s intervention in the area of direct financial support to passenger and cargo carriers; loans, loan guarantees and support for the corporate bond market by the government or gentral bank; tax relief/rebates on payroll taxes paid to date in 2020 and or an extension of payment terms for the rest of 2020.

“As the aviation industry looks to restart, it is important that key regional players like Nigeria are ready and able. Aviation is a strategic pillar for social and economic development. Supporting aviation now will mean that Nigeria’s economy can pick up from where it stopped and drive forward,” said Albakri.

Giving her position on the COVID-19 recovery plan in an online interview with a national daily, the Vice President, Vice President, South East of the Federation of Tourism Associations of Nigeria (FTAN), Ngozi Ngoka, said

Government should use the challenges of COVID-19 pandemic as an opportunity to encourage and support the establishment of specialised tourism financial institutions, particularly a tourism micro finance bank, funded by a tourism development endowment fund.

“We shall get through this if government taps into long term tourism planning and investment and include core tourism professionals in the economic planning for states and federal government. We should use this opportunity to develop tourism policies at the national and state levels in order to provide a framework for tourism development and management in the country.

“In doing this, government should constantly engage the different tourism stakeholders and in economic planning, recognise the linkages between infrastructure, environment, sports, culture, transport and tourism. There is a complex interaction between these sectors that when fully utilised, provides for a clearer and more productive tourism environment.

Among other things, we are asking for monetary and fiscal measures like tax reliefs, interest free loans, tax holidays and loan moratorium. We would also like the government to provide for a N95 billion intervention fund and financial grants to support some struggling micro-scale tourism and hospitality businesses.”

 

Global voice

According to the Secretary General, UNWTO, Zurab Pololikashvili, “The impact of the COVID-19 outbreak is felt across the whole value chain of the travel and tourism industry. The sector is particularly exposed with millions of livelihoods across the world, especially within vulnerable communities, supported by the sector. International financial support is key factor to ensuring that Travel & Tourism can lead to wider economic and social recovery in these communities.”

In his remarks, the Secretary-General, African Airlines Association (AFRAA), Abdérahmane Berthé  said “Air transport and tourism industries are among the worst impacted by the COVID-19 pandemic. Air transport is critical for the economic development and integration of the African continent. As such, support to the airline industry will aid in a faster economic recovery.

“An end of operations by African airlines would trigger a host of serious financial consequences, while replacing the air service provided by the airlines would be a challenging and costly process. Urgent, immediate and consistent measures need to be taken for the survival and rebound of the industry.”

The CEO, American Association of School Administrators (AASA), Chris Zweigenthal. “The impact of COVID-19 in Africa continues to be brutal. Air travel and tourism have essentially shut down. Now, more than ever, international countries need to come together to help those communities that are most vulnerable. The survival of our industry and its allied sectors has serious ramifications for Africa’s entire air transport system.”

 

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