TOURISM, one of the biggest foreign currency earners for most economies, has been hit hard by the Covid-19 lockdown, which reduced visitors to a trickle as most countries shut their borders and airlines grounded planes.
International tourist arrivals plunged 93% in June when compared to 2019, according to the United Nations World Tourism Organisation (UNWTO), showing the severe impact Covid-19 has had on the sector.
The World Tourism Barometer from the UNWTO’s specialised agency, international tourist arrivals dropped by 65% during the first half of the year. This represents an unprecedented decrease, as countries around the world closed their borders and introduced travel restrictions in response to the pandemic.
Over recent weeks, a growing number of destinations have started to open up again to international tourists. UNWTO reports that, as of early September, 53% of destinations had eased travel restrictions. Nevertheless many governments remain cautious and the latest report shows that lockdowns introduced during the first half of the year have had a massive impact on international tourism. The sharp and sudden fall in arrivals has placed millions of jobs and businesses at risk.
UNWTO Secretary-General Zurab Pololikashvili says the coronavirus has devastated the tourism sector.
“The latest World Tourism Barometer shows the deep impact this pandemic is having on tourism, a sector upon which millions of people depend for their livelihoods,” Pololikashvili recently. “However, safe and responsible international travel is now possible in many parts of the world, and it is imperative that governments work closely with the private sector to get global tourism moving again. Coordinated action is key.”
According to UNWTO, the massive drop in international travel demand over the period January-June 2020 translates into a loss of 440 million international arrivals and about US$ 460 billion in export revenues from international tourism. This is around five times the loss in international tourism receipts recorded in 2009 amid the
global economic and financial crisis.
In the midst of this dramatic chaos, Zimbabwe has also been badly affected. Hospitality Association of Zimbabwe (HAZ) president Clive Chimwanda (CC) says the country could lose up to US$1 billion this year as travel restrictions from high-risk nations remain in place.
With most hotels at Zimbabwe’s premier resort Victoria Falls running at 10% occupancy, the industry is bracing for a long, arduous road to recovery. Thousands of casual workers have lost their jobs, while industry players say it will
take longer than expected to recover.
Industry players say measures such as the exemption of Value Added Tax for local tourism will go a long way in boosting local travel. Chamwanda spoke to The NewsHawks reporter Nyasha Chingono (NC) on the prospects of the industry post-Covid-19. Find excerpts of the interview below:
NC: The 2021 budget consultation meetings have begun. What are the main submissions from the tourism industry?
CC: You will appreciate that the hospitality and tourism industry has been the worst hit by the Covid-19 pandemic. The emergence of the sector from the pandemic will be a long and arduous journey. It is therefore critical that the sector gets as much assistance as is possible to ensure business survival and preservation of jobs. Our suggested solutions include a more elaborate and deliberate tax holiday for the sector spanning the first half of 2021 looking specifically at VAT and corporate taxes that cuts across.
This will ensure that players preserve whatever small cashflows they will get towards working capital to sustain operations, otherwise how else will a 200-roomed hotel in Victoria Falls running at less than 10% occupancy survive? Over and above this, the sector is grateful for the import rebates on capital goods it has enjoyed over the past five years. Given that for the whole of this year businesses had to suspend capital expenditure, it only makes sense that another extension to this import rebate be granted.
Lastly, we are also encouraging the government to come up with a policy framework that seeks to transform Zimbabwean skies and make us the hub of regional air travel. Prior to South Africa becoming independent, Zimbabwe was the hub for regional travel and the country has comparative advantage in this regard. We just have
to transform this into competitive advantage and, that way, hospitality and tourism will be the biggest beneficiaries.
We believe there are still quite strong headwinds and facing the economy. Inflation is still unsustainably high, the foreign currency market still carries with it distortions, albeit having stabilised since July and the productive sectors of our economy are still performing well below desirable levels. There are simmering tensions in both the private and public sector over salaries and as such, I believe it is still too early to make that call.
NC: Minister of Finance Mthuli Ncube was last week bullish over the economy which he said had weathered the storm. He also believes that all the necessary fundamentals are now in place for recovery. What are your thoughts
on his submissions?
CC: Most operators had their doors shut and were not trading for up to five months. Even as we are reopening our doors, the volumes of business are still significantly subdued. As a result, the impact of Covid-19 to the sector has been massive. From hundreds of millions if not something close to a billion in lost revenue, to suspended product improvement plans, to lost jobs, Covid-19 has been disruptive in unimaginable ways.
NC: How has Covid-19 affected the tourism industry? Do you have any statistics on job losses or tourism operators that have folded during this period?
CC: While I do not have concrete statistics, we have something above 1 000 jobs, if not more, lost to Covid-19. This includes permanent, contract and seasonal jobs. We also have quite a huge number of employees sitting at home, have not been retrenched, but are on unpaid leave. As a result, the magnitude of lost household income is massive.
NC: Government set up a Covid-19 rescue package. How much money has the tourism sector received?
CC: The much-touted tourism recovery package is coming in the form of bank guarantees by the government. The modalities involved to access it, as well as the general complexity of the whole package has been such that I am
not aware of any of our members who have accessed it. What I can point to as a success story is the fact that Value Added Tax on domestic tourists has been suspended until August next year. While we would have wanted the statutory instrument that deals with the issue to be more comprehensive so as to avoid input tax becoming a cost to the business, as the instrument specifically deals with the consumer side, we are glad that at least there has been some concession.
NC: The country is opening up, with international flights now allowed to fly into Zimbabwe. Do you think this will have an impact on your industry in any way?
CC: It’s a welcome move though, realistically, it will take some time before travel normalises. Currently, while borders are open, some conditions required of travellers make it practically impossible to travel. For example, in some countries, there are quarantine requirements of up to 14 days upon returning from countries perceived to be
high risk and this just puts the traveller off. In addition, most of travel into Zimbabwe happens via South Africa and, as you would know, South Africa has been the worst affected country in Africa and the fact is that it is still very difficult for travellers to come via South Africa complicates matters for the industry. Having said that, we still need to acknowledge that the opening up of ports of entry is a step in the right direction.
NC: What are your industry prospects in the short-term to long-term post-Covid-19?
CC: The recovery of the sector will be gradual and will take time depending on the location and the market segments that supply each destination with business. For instance, the Eastern Highlands is pretty much a local destination and with the return of workshops, the festive season we are already seeing some positive signals there. However, Victoria Falls, our main international hub, needs lot of time to recover. In short, our assessment therefore is that of segment-specific recovery with a long-term view on the actual normalisation of demand. Up to a year from now at the very minimum.