What you need to know:
- DESPERATE TIMES. Covid-19 has made it financially tough for tour operators to continue doing business. A great number of tourists have cancelled their bookings and are demanding refunds.
- Presently, 100 per cent of the hotels have scaled down on operations Just like the hotels, majority of the tour operators have laid off a big number of their staff, writes Eric Ntalumbwa.
Covid-19 has put me out of business,” said 31-year-old Donna Katesi quietly as we stood in her compound at Gayaza, about a 30-minute drive from the capital, Kampala. The female driver guide attached to Kazinga tours had just returned from her garden in the backyard, which keeps her busy lately.
She narrates how she took her green tour van for modification and upgrade ahead of the forthcoming high season. Little did she know, a pandemic would put the global tourism industry to a standstill
“I was excited about 2020 because I expected my repeat clients. But when my biggest clientele from Italy, Netherlands, Belgium, Spain began to cancel and postpone, I knew it would not be business as usual. My last trip was in January and I have not had clients since then,” says a disappointed Katesi.
Private sector hit hard
In a bid to enhance Uganda’s sustainable economic development, the tourism private sector seizes business opportunities by deploying the entrepreneurial acumen and resources, with a sense of professionalism. Over the years, it identifies, mobilises and targets financial and human resources to drive firm tourism growth and development.
Much as it has been severely affected by Covid-19, it is working round the clock to strategise and attract more than 1.5 million tourists this year, amid cancellations. Through their umbrella body, Uganda Tourism Association (UTA), guides, tour operators, hoteliers, craft sellers, travel agents have made submissions to government in order to increase foreign exchange earnings from the previous $1.6 billion in 2019, (about Shs6.7 trillion).
Businesses seek financial interventions
UTA has asked government to avail real tangible interventions such as to defer the taxes until the businesses have recovered. “Government should avail us with liquidity to manage the situation first. When we are out of the financial stress, then it can generate a framework to meet our tax obligations,” suggests the chief executive officer of UTA, Richard Kawere.
UTA has implored government to provide soft loans and put them in Uganda Development Bank to kickstart their businesses. “Recovery is going to be a hurdle without running capital. We have also suggested that it puts a suspension on foreclosures; financial institutions should restructure payments with loan facility holders, but also Bank of Uganda should not penalise commercial banks for the loans they have not recovered in this period of time,” Kawere explains.
Effect on international tourism
According to United Nations World Tourism Organisation (UNWTO), the world is facing an unprecedented global health emergency. The containment of the pandemic is the utmost priority and the tourism sector is committed to supporting all measures taken to curtail the outbreak. UNWTO is working closely with the World Health Organisation, its member states and the industry to ensure a coordinated and effective response.
Covid-19 has brought unforeseen impact on lives, economies, societies and our livelihoods and there are growing risks of a global recession and a massive loss of jobs. UNWTO estimates international tourist arrivals could decline from 50 per cent to 30 per cent in 2020. This would translate into a loss of $300b to $450b in international tourism receipts (exports), almost one third of the $1.5 trillion generated globally in the worst-case scenario.
Stimulus package for hoteliers
Presently, 100 per cent of the hotels have scaled down on operations to survive the crisis; during the 14-day period of quarantine, 90 per cent have closed and only 10 per cent are still open as quarantine centres.
UTA CEO Richard Kawere says, hotels have reduced the wage bill to a minimum that is affordable to keep the business running. Meanwhile, Uganda Hotel Owners Association (UHOA) has written to Ministry of Finance, Planning and Economic Development (MoFPED) through the Ministry of Tourism, Wildlife and Antiquities (MTWA) to organise a stimulus package for the hotels.
“Once hotels resume operations, it will take a long time to recover the losses incurred. We have requested for the reduction of loans, removal of Value Added Tax (VAT), PAYE, NSSF for six to 12 months so that employees who are earning 50 per cent salary, do not get a reduction further once they resume work. We project that it may take six months to declare Uganda Covid-19 free,” explains Uganda Hotel Owners Association CEO Jean Byamugisha. During this period, she urges employees to learn an online skill in line with their work, and management of hotels not to lay off staff.
Time for a contingency plan
Hoteliers are currently drawing contingency measures for the future in case a similar situation occurs. “We are also drawing a budget for post-Covid-19 marketing for both hotels and the country. This will boost our efforts in shaping our image in the competitive global hospitality markets,” says Byamugisha.
“Hospitality is very dynamic. There is need for capacity building of hoteliers. When hoteliers resume, we need to furnish them with new techniques to compete favourably with their colleagues in other destinations, and also embark on a membership outreach programme across the country,” she says. She also urges Uganda Tourism Board (UTB) to support the training of the 520 UHOA members, embark on aggressive marketing and quality assurance, since standards of the hotels have fallen greatly in this period.
Postpone your travel
It has not been easier on the side of tour operators either. Majority of them receive payments in advance to book primate tracking permits, tourist activities and lodgings on behalf of their clients.
With the outbreak of Covid-19, quite a number of tourists demanded for refunds, but majority of tour operators had already paid a big chunk of money to the different tourism service providers.
“Travellers have been asked to be patient as we monitor the situation and once it subsides, tour operators can set new dates for them to travel. This means there won’t be a total loss,” reveals Jonathan Ahabyona, the public relations officer of the Association of Uganda Tour Operators (AUTO).
He further explains that they have conducted a survey among the 315 AUTO members.“ There were a number of questions whether they have had significant reduction in revenue, whether they expect to lay off staff, or expect to close within a period of three to six months. On the question of whether clients are willing to postpone or have cancelled, 25 per cent said their clients are considerate, whereas 75 per cent of the clients have insisted on a refund.”
Tour operators to lose jobs
Just like the hotels, majority of the tour operators have laid off a big number of their staff and kept a few as they monitor the pandemic. “ I know some of the established companies that have made half payments to their staff, but the new entrants like the small and medium sized companies which are the majority, requested their staff to go back home by end of march as they follow developments because there is no business at the moment. This was qualitative study,” Ahabyona comments.
Bernard (not real name) is an employee in a water rafting company at Jinja. He says he received half of his pay exclusive of his allowances by the end of March.
“I stopped working in February because of cancellations. I have been at home since then. Management had just paid their taxes and licences and there is no money to sustain the staff. We were told to go home until further notice. We are not sure we will receive our salary for the month of April”.
Bernard acknowledges the tight changes attributed to coronavirus, but sympathises with the crew on the river which is a daily wage earner. “They earn per raft trip. They cannot sustain their families. They expected the company to support them during this outbreak of the Covid-19 pandemic.”
Need for tax breaks
A section of tour operators who have sustained their staff with a reduced pay propose that government prepares for intense marketing, and injects cash to support tourism businesses that have been meeting their tax obligations.
“Government can offer credit with minimal interests, support companies travelling to travel trade exhibitions for a sustained period, at least six months to one year because tourism has the potential of rebounding. When the situation normalises, it will be very big,” suggests Francis Kimbowa, the managing director of Pinnacle Africa Safaris.
The seasoned tour operator is worried that government has delayed to engage tourism businesses. “Through our private sector associations, government should support emerging businesses with financial assistance or give tax breaks on PAYEE, VAT, among others.”
Lessons in strategic planning
Coronavirus has given the tourism marketing arm of government an opportunity to examine the effectiveness of strategic management in dealing with a highly uncertainties. Uganda Tourism Board CEO Lilly Ajarova says they are reviewing the impact that the pandemic has had on tourism, and drawing lessons from the crisis in order to recommend plans for the private sector.
“After this calamity, we shall prioritise digital marketing. We are going to produce attractive e-marketing materials, explore virtual tours and videos as ways to communicate with potential travellers and offer a seamless user experience”.
Ajarova further says in partnership with the line ministry and private sector players, UTB is lobbying MoFPED, and President’s Office to support a sector that is Uganda’s highest foreign exchange earner. She says engagement with some of the development partners are ongoing to support the private sector.
She advises the private sector to take a few lessons from this pandemic, and learn to forge private-sector networks. “Such hard times are not for businesses to react in an adhoc way. The better prepared the private sector in tourism, the better the sector will be positioned to respond in the face of an emergency and the more valuable it will become as a partner to government in meeting the challenges of recovery”.
Ajarova maintains that when the pandemic is over, UTB will continue to support capacity building programmes, train hotel and restaurant assessors and work with Market Development Representatives (MDRs) to market Uganda both in the known and unknown global markets.
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