Post Covid-19: Prospect of Nepal Tourism
Since the lockdown started on March 24, 2020, the question has been nagging Nepal tourism industry as to how to cope with this tremendous amount of staggering problem. The government foresees one million workers returning from the Middle East and Malaysia soon after travel restrictions are relaxed. Tourism Employment Survey conducted in 2014 figured out about 138,148 persons are directly engaged in the tourism industry. Though the manufacturing sector would return to normal by the end of this year yet tourism would take much longer than 2 to 3 years to actually revive much less to reach the same level as in 2019. It is also estimated that tourism will take at least five years to recover its present loss. The earliest revival would take at least two years. World expert predicts that world tourism growth will take considerable time to revive when tourism generating source markets are reeling and grappling their own problem in the post-covid-19 period.
Importance of Tourism Economy
Foreign exchange receipt from tourism is second after remittance from men power – labour export. Remittance from labour would be decreased to a very low level and tourism activities wouldn’t begin until the economy of source countries comes to normal. Until then Nepal will be going through a deep economic crisis that we have not seen in our lifetime. Nepal’s economy is based on remittance and foreign exchange from tourism. And Government revenue is largely based on import tax. Until now labour and tourism have maintained its balance of payment and robust economic activities. Without remittance and tourism Nepalese economy would face serious consequence. And both are in a downturn. World Tourism Council in its Annual Research Report said, “In 2018 Tourism generated Rs 240.7 billion in revenue. It supported 1.05 million jobs, directly and indirectly.” Tourism contribution to Nepal GDP was 7.9 percent in 2019.
Employment generation: In the last three years after the earthquake in April 2015 tourism was buoyant. Many luxury standard hotels came into operation – that means huge capital investments were made. Many small homestay facilities were established throughout the country; it involved local subsistence farmers. Many quality eateries came into business. New adventure activities were established to cater to millennial and thrill adventure seekers. Apart from these establishments, there are 1884 travel and 1758 trekking companies affiliated with trade associations. There are more outside the associations. All these enterprises have been generating self-employment. Trekking and climbing have created seasonal jobs for people in their off time from farming work. Supplementary income from tourism activities has been able to educate their children and contribute to uplift rural economy. Tourism activities and specially trekking has a multiplier effect in creating employment and business at a micro-level. Tourism Employment Study – 2014 had concluded that every six tourists generate one employment. If all these income generations are considered tourism income it would surpass any industry in Nepalese economy.
Current Problem in Tourism Economy
Liquidity Crunch: The biggest problem of the tourism sector at the moment is cash flow. Without tourism activity, there is a liquidity crunch. Even without regular income tourism establishments has to pay and maintain a payroll of their staffs and workers. Hotels of every size in Kathmandu and other big cities have added leased rental to their liabilities. Banks are not ready to become cash cow despite their stake tied to investment in hotels. Current bank interest rate @12 to 15% per annum is astronomically high. Central Bank has instructed banks to keep their spread @5 % but banks have been keeping this spread very high. The interest rate has always been an issue with business communities.
Hotels have closed their business: Hotel Association of Nepal had made a statement in May to close all hotels until September 2020. During this period they had plan to pay 12% of their salary and balance to be maintained by social security fund and subsidy from the government. Meanwhile many hotels actually have given their staffs leave without pay before HAN made its statement because their liabilities were mounting. Many business organizations have retained their staffs in reduced pay in anticipation of an abrupt economic downturn that lay ahead. In a recent post, one of the seasoned and prominent hotelier posted that his hotel will lose 50 million rupees by the end of 2020. He said he will have to think hard not to lose another 50 million. Since there is no road map from Nepal Tourism Board and the government the chances of bankruptcy in the hospitality sector has been increasing by the day.
Problem to maintain ongoing expenses: Organized sector of tourism and business companies across the industry are asking the government to release huge fund that remained as guarantee and in other forms locked in the bank. They believe the idle fund can somewhat help mitigate the present problem. The industry needed a long term soft loan without stringent condition to help meet salary and other regular expenses. The regular expenses keep on mounting until business become normal. Tourism enterprises including hotels may not see the business at the same level coming their way even after tourism activities are resumed. Maintaining staffs and upkeep the establishments are the main concern of hoteliers. ‘No Business. No Work, No pay’ is not the solution for the tourism industry, unlike manufacturing.
Domestic Tourism: Some entrepreneurs are advocating domestic tourism. They think it is the answer to mitigate the current situation. But this sector of the economy is very weak. It may help homestay and hotels but there is little chance that it would benefit the larger tourism sector. There are no statistics to figure out its viability because the government does not consider domestic travelers in the definition of tourist. However, it can be a solution as the last resort when there is no option. Many countries have strong domestic tourism that can be helpful. In recent years there have seen some increases in domestic tourism yet it won’t have a denting effect. Hence it is very difficult to say how it is viable.
Prospects in Tourism Revivable
Nepal Tourism statistics of 2017 shows that throughout 1990 until 2017, irrespective of any crises, trekking (including climbing) and pleasure tourists’ number has consistently increased except some years. Unlike all crises that happened in the past that includes Maoist insurgency from 1996 to 2006 and earthquake in April 2015, the crisis brought by Covid-19 is entirely very different. The global lockdown is something the world had never seen or experienced.
Prospects of Trekking and climbing Sector.
Trekking entrepreneurs don’t have as big baggage as other capital intensive tourism sector. It is possible that trekking will be first to regenerate. The world tourism expert believes that now people will travel with purpose. A recent article by Juliet Kinsman for Conde Nast Traveller identified post-lockdown travelers – Quote:”travelers will travel with purpose and sensitivity towards the health of people and planet. The travelers of the future will take fewer, but longer trips and will have a desire for more experiential travel that is seen to benefit local communities directly. They will also be looking for greater transparency from travel brands and as a result, robust data on their sustainable measures will be key driving consumers confidence.”
No one can disagree that covid-19 has taught human being all over the world a most important lesson: Become human. Accept that human beings are not strong to defy death from disease especially when it is pandemic and comes in full force. To become human we ought to get back to nature, respect nature. To adopt this lesson trekking in the mountain is the best medium to get closer to nature and mountain. It takes travelers to local communities. Distribute their income directly to the people living in marginal income from their farm.
Trekking activity in itself is sustainable and responsible. It does not need elaborate infrastructure and luxury. It is a recipe for success in poverty elevation and growth. In the Nepalese context, trekking generates 36% of the total employment. More than the hotel sector – 29%. On top of that its multiplier effect in generating part-time employment, local product production and distribution of income is far-reaching in rural communities than in the cities. Trekking is a healthy exercise. It benefits the trekkers as well as the providers. It is an important link to ‘homestay’ that ILO is promoting to elevate poverty. It helps indigenous communities to save their heritage and culture, and trekkers get refreshing and unique experiences.
Once international airlines start flying, borders are opened, security and health concern are addressed people would travel for pleasure and adventure. We must say Nepal is fortunate to have comparatively less positive cases of Covid-19 cases so far. Mountain is a safe place but mountain people are to be assured as much as the trekkers that they will not be affected.
What is our Plan?
Our Survival Strategy: It is simple. An important lesson we have learned in life is if you don’t fight back there is no chance of survival. So, it is imperative to fight back to survive and come back alive to live another life. Therefore during these zero business condition, it has become paramount to revamp and retrench our business as our first strategy for survival. Next, use hibernation strategy during Covid-19 environment until the pandemic is controlled.
I expect more than 80% of tourism enterprises survive the pandemic with scratches for six months. About 60% will survive for a year. And very much less than 50% will revive if the recovery is prolonged to two years. If the pandemic continues after third-year chances of survival diminishes considerably.
We expect it is going to take more than three years to recover business at the 2019 level. And another 3 to 5 years to recover the loss incurred during the slow down period provided the situation continues to improve without another big wave of the pandemic.
Covid-19 Situation in Nepal – News Brief
Immigration Visa Fees: Immigration and government office has resumed their service from June 12, 2020. There were confusions among the foreign visitors and tourists regarding visa extension charges that Immigration has started charging. Visitors were angry because Immigration office had started charging fees for the lockdown period. Earlier Immigration office had announced that visa fees for the period from March 24 to Jun 12, 2020 would not be charged.
Border Opening: Nepal government has stopped all domestic and international flight until Jul 15, 2020. Border remained closed until further notice. §
Lockdown period: Lockdown is still in effect. It has been relaxed since June 12, 2020. In the first phase, only essential services are allowed to open. This includes shops and stores that sell daily essential food and service. Malls, public transport and schools remained closed. Private transports are allowed to ply on the basis of odd and even number.
Opening of Flight: Domestic and international flight are lockdown until 15th July. There is unconfirmed news that most possibly domestic flight would be allowed to operate starting 1st of July and international flight from 15th July, 2020. There is a news report that Kathmandu airport is almost complete and ready for opening.
Response to Covid-19: People are angry against the response of the government in the management of Coronavirus Pandemic. Nepal was fully locked down until 12th June. Both domestic and international airports are closed since March 24. The government has closed it until 15th July, 2020. Immigration entry points are closed until further notice. Nepal Government cancelled Spring 2020 climbing. They have not indicated if peaks will be opened soon.
Nepalese government has relaxed its lock down rule from 14 June. They plan to relax more public areas in gradual stage based on the intensity of Covid-19 cases. Nepal is quite lucky that a number of death is low. As on 14 July, 2020 the death toll from coronavirus is 38 and 16,945 infected cases. After rapid testing done on the people arriving at border points with India the number of positive cases has increased rapidly. Kathmandu valley is considered quite safe. There are very few cases reported in the mountain region. There are the problem in some of the districts that adjoined Indian bordering states. The porous borders entries are made tight yet it is difficult to control thoroughly. Now the biggest worry is from the Nepalese returning home from India and abroad. And when air travel becomes normal there is potential danger of imported infection from stranded Nepalese citizens returning home. The quarantine facilities are very poor. Testing level is inadequate. The rule requires people entering Nepal to remain in quarantine for two weeks. But the monitoring is loose, tracing and tracking system are not up to standard. These scenarios suggest Kathmandu valley is susceptible to the pandemic. Moreover, the news media have been saying the country doesn’t have sufficient equipment for testing and safety equipment for frontline health workers. Those medical equipment bought to deal against corona cases are inadequate and below medical standard. Insufficient response from the government have added woes in a potential humanitarian crisis. The curves continued to rises rapidly after the government relaxed lockdown condition. It has created an alarming situation. People in Kathmandu are moving around cautiously. They believe relaxing the lockdown without precaution and control is a recipe for disaster.
Government response to tourism revivable: Government response is lacklustre to the plight of Nepal’s tourism industry. Of course, the government itself has a limited capacity. It is struggling to find way out to fill the gap between its current liability and current revenue. In a recent public statement, the Finance Minister of Nepal admitted there is a shortage of fund to meet its own current expenditure. And nobody knows how long Covid-19 will remain a threat. In the current financial year though the government has allocated substantial amount to its own program related to aviation and tourism development there is nothing much that can alleviate liabilities of private sectors. They are reeling under an increasing burden to upkeep their staffs and meet their running cost. Government has not chalked our recovery plan. At one point the Minister of Tourism announced that it has 10 year Visit Nepal Year plan without elaborating. Travel trade entrepreneurs did not buy his idea. While neighbouring countries are opening up with operating strategy Nepal has so far no roadmap to open the economy. Though the government have indicated they have tentative plan to open the border and, allow international and domestic flights to operate yet travel protocol floated by Nepal Tourism Board is not complete. The government Health ministry so far has no clear instructions and plan for the public to follow.
Current Travel Condition in Nepal: There is movement restriction from one district to other. Private transportations are allowed within a district with odd and even number in alternative days. Public transports are restricted. Private vehicles are allowed to travel within the three districts of Kathmandu valley. This restriction will remain until further notice. People are restricted to travel three persons in private transport. All major business like malls, schools, and public places remain closed until the restriction is uplifted. People are requested to maintain social distancing and wear mask to cover mouth and nose. Sanitization is part of the rule to avoid infection. Domestic and international flights remain lockdown until 15th July, 2020.
Do Nepal have any travel protocol:
Not yet. Besides social distancing, frequent soap washing and sanitization there is nothing as of date. Concerned people in the hospitality sector and tourism have expressed their concern to get the protocol in place before travel restrictions are lifted. Villages and cities should declare that they are ready to host tourism activities and adhere to protocol. They have to be welcoming. The government must prepare traveler safety programs so risks are minimized. Travel condition has to be conducive so that chance of getting stranded in foreign land is low. All governments have to ensure people don’t make “unlimited travel without incalculable risks.” Host government must come with a protocol. Most Europeans are not expected to travel before September. Nepal Travel trade expects the government will come up with a protocol as a guideline by the time they lift air flight restrictions.
In this cloudy perspective, there are already some rays of hope. “The International Monetary Fund (IMF) on 9th May 2020 said it has approved $214 million in funding for Nepal to help the tourism-dependent South Asian country address the severe loss of income caused by the collapse in global travel after the coronavirus (COVID-19) pandemic.” Qatar Airways in its 8th May statement has listed Kathmandu in its June flight schedule. In their press release Qatar quoted its CEO message that says, “However, I could see a scheme where Qatar is allowed a few commercial flights a week based on special restrictions by the government as a trusted partner during the crisis.” They have added that “We will begin a phased approach to rebuilding our network in line with passenger demand evolution and the expected relaxation of entry restrictions around the world.” (https://bit.ly/3ca6dTL)
There are no indications that NTB and the government are gearing up their plan for post-covid-19. The most recent interview of Tourism Minister indicated their 10-year plan to cope with the downturn. NTB has floated a protocol for tourism activities to assure and ensure that the country is safe for tourists and visitors. The protocol deals with social distancing and hygiene in hotels, restaurant, trekking, and tour.
There are discussions to kick start domestic tourism. All hope that it will gear up the hospitality industry gradually and build up its capacity to serve international tourists and travelers. In a situation when there is nothing any such idea is good enough.
We hope that by the end the year corona cases would be normalized. This will create suitable travel condition that in turn helps pick up momentum. It would create some kind of confidence-building in international travel. Human beings are resilient creatures. Eventually, it will be history. Until then it is important to help each other to get back to business with a new vision and thought that are less competitive and more nature-based tourism. Go for sustainable and responsible tourism rather than after trips that are lucrative. Best to go for less carbon footprint. Walking and nature-based tourism is the answer to COVID 19. It has taught to create an environment conducive to a healthy earth. Tourism is one of the forceful medium that helps regenerate business and environment. Tourism resurgence lies in nature and community-based tourism. Let us do it together!
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