Tourism businesses feels the brunt of COVID-19
The Coronavirus (COVID-19) is casting a shadow on the Solomon Islands tourism industry.
Since its outbreak in China late last year, it has now spread to 184 countries and territories which has led to tourists cancelling trips globally including to tourism driven economies in the Pacific region.
Although Solomon Islands remains among a handful of countries in the world to evade the deadly COVID-19 to date, the inevitable impact of this global pandemic is already taking its toll on the small island nation’s economy.
And one of the industries feeling the brunt of this foreign virus is the country’s fragile tourism industry, with a good number of tourism operators already going into hibernation with zero business.
“Since the stringent measures to protect our international borders and entry restrictions were imposed for Solomon Islands, the local tourism industry is one of the hardest hit sectors,” Permanent Secretary of the Tourism Ministry, Mr Andrew Nihopara, said.
For the months of January to March 2020, Tourism Solomons has recorded a 50% decline in average monthly revenues.
The decline is further forecasted to worsen for the month of April onward until such time the visitors started returning to hotels and occupancy rates improve.
Four of the country’s major hotels have predicted an average 18% occupancy rate for March and average 10% occupancy rate for April and the occupancy rates is set to continue.
Heritage Park Hotel, situated at the centre of the capital Honiara, is the biggest hotel in Solomon Islands but since late March, they have had no room bookings and operations has largely scaled down.
The Hotel’s General Manager, Mr Sanjay Bhargava is estimating approximately SBD3.2 million business loss as a result of COVID-19.
“Business has come to a grinding halt,” he said.
“We had started experiencing a slowdown and cancellations since mid-February, there were, however, during the period still new bookings which were being made. Then all of a sudden it reversed and all bookings started getting cancelled. As the airline operations slowed, bookings one by one kept getting cancelled.
“Since the 23rd of March we have zero occupancy in the rooms. There are some guests who had rented apartments for long term and eighteen (18) of them continue to be here.
“All conferences have been called off,” Mr Bhargava added.
Heritage Park Hotel have been planning on building a new conference room and eighteen (18) additional rooms and had progressed 40% of the project, but that too has come to a halt.
Aside from the loss of business, another unfortunate impact is the loss of employment by local Solomon Islanders.
Ninety (90) local staff at the Hotel had to stand down as the Hotel, usually blazing with guests, conferences and customers at its various restaurants and famous poolside and club bars struggle to cope with the unforeseen challenges brought about by COVID-19.
“Unfortunately, the first to be affected in such situations is the workforce. However, with the skeleton staff that we are operating the rosters are being made in such a manner that one batch of people stands down while another is working. After a fortnight the batch of people who were operating, stand down and are replaced by another one. This is done so at least every one gets a chance to earn,” Mr Bhargava said.
“As the situation starts to normalize staff will be recalled gradually. We have no intentions of laying off anyone permanently from the lot who have been stood down currently,” he added.
This situation started with the measles entry restrictions late last year and earlier this year and the trend of booking postponement and now cancellations worsen when the COVID-19 measures were enforced.
Permanent Secretary, Mr Nihopara said globally, the tourism and the aviation are the hardest hit sectors because of this pandemic.
“This situation currently faced is unprecedented and it is important to note that the future of the sector and how it’s going to recoup from the COVID-19 crisis is very uncertain,” he said.
Imperial Travel Service is a locally owned land transport and tours service, and like other tourism operators across the country, they have been out of business for over a month now.
“We rely entirely on tourists’ arrivals and this is not possible when there are no incoming flights in the country,” Imperial Travel Service Director, Ms Ender Rence, said.
Solomon Airlines, the national carrier, has suspended all scheduled international passenger flights as part of the Government’s COVID-19 preparatory plan. And flights maybe suspended through April and May, the Airlines said.
Ms Rence said it is at this time of uncertainties that Solomon Islands need good and strong leadership from our leaders.
“Government need to realize the reality on the ground and the reality is that people and businesses are struggling to survive.
“As businesses we are eager to know more about the content of the Government proposed stimulus package which intends to cushion any negative impact on the economy and measures the proposal will have that will support local businesses including those in the tourism sector.
“We have been in business for more than 14 years and this is the biggest challenge we have ever faced,” Ms Rence said.
With the restriction of international flights not only in Solomon Islands but around the Pacific region and globally, travel agencies are also severely affected.
Guadalcanal Travel Solomons (GTS) is a 35-year-old travel agency company based in Honiara, and according to Country Manager, Ms Jenny Ruffell Smith revenue collection is at an all-time low while business expenses remain the same.
“No international airlines are allowed to fly in or out of the country at the moment so there is no one booking international travel while majority of our airline partners (Virgin, Fiji Airways, Air Niugini) are no longer calling into Honiara anyway,” Ms Ruffell Smith said.
She said even if airlines are allowed in, there will be very little onwards travel to other countries.
“The Australia Border Force has advised that if you are not an Australian and/or returning to a country within Oceania, then you have to apply for an exemption to transit through Australia.”
“Domestic travel is on a reduced schedule and if we should get a case of COVID-19, then Honiara will go into lock down and all domestic travel will cease to and from Honiara,” she said.
Walk-in traffic is a big part of GTS’s business but they were forced to close their door to the public to reduce risk while clients are told to use email or phone to make bookings and get updates.
“Our income is now nearly zero, yet we still have the same expenses (with exception of reduced rent as advised by our landlord) and a team of twelve within GTS to continue to keep busy as well as pay,” Ms Ruffle Smith said.
While businesses especially those in the tourism sector start putting in place required measures to minimize the immediate impacts, GTS is also concerned about what lies ahead.
“When and if the borders open up, will it be done incrementally or completely and will all airlines commence their services at the same time, will there still be restrictions for transiting passengers through other countries and will other countries let anyone else in besides their own citizens,” Ms Ruffle Smith asked.
If this is not the case, she said businesses like GTS are still limited with connecting passengers as well as the airlines that fly in and out of Honiara.
And there is the inevitable matter of less bookings due to fear that COVID-19 might still spread, less booking due to loss of personal earnings during this time, and people choosing to support tourism within their own country and therefore not travelling overseas.
Ms Ruffle Smith joined other businesses to call on Government for a reduction of major expenses such as electricity, relief from Government.
Businesses have asked for Government to provide minimum wage for their employees, special considerations on payment of taxes, as well as NPF contributions and utilities including cheaper electricity, cheaper water, and cheaper internet cost.
Compared to other Pacific countries, the magnitude of COVID-19 impact on Solomon Islands’ tourism sector although small compared to neighbouring Fiji and Vanuatu, Permanent Secretary of the Ministry of Tourism, Mr Nihopara said the Solomon Islands is still the most vulnerable and therefore among the hardest hit in the region.
This was backed by Chief Executive Officer of Tourism Solomons, Mr Josefa Tuamoto.
In an interview with the national broadcaster, SIBC, this week, Mr Tuamoto said the industry is looking at an eighty to ninety percent drop of revenue this year.
Government support for Tourism Sector
The Ministry of Culture and Tourism with its key stakeholder Tourism Solomons are working closely with Ministry of Finance to identify and negotiate some measures of relief for the tourism operators who have virtually no business at the moment.
Permanent Secretary, Mr Nihopara said the reliefs they are seeking from Ministry of Finance and Government in general include both some fiscal and monetary measures to help tourism business make necessary adjustments to their operations and to pave a way for inclusion of the sector in any economy wide stimulus package for sectoral recovery once the COVID-19 crisis subdued.
He said as part of the proactive approach they took for the tourism sector to respond effectively to the lack of business situation that COVID-19 is imposing on us, the Ministry together with Tourism Solomons jointly hosted a Roundtable Dialogue with the Prime Minister’s Office (PMO), Bank South Pacific (BSP), Solomon Airlines, Solomon Islands Ports Authority (SIPA), the Solomon Islands Chamber of Commerce and Industry (SICCI), tourism operators and other stakeholders.
“The dialogue focused on how best and effective the tourism sector can weave its way out of COVID-19 impacts.
“As a result of this dialogue, a Tourism Position Paper on COVID-19 was formulated with all the identified response measures and reliefs being sought and also identified strategies and actions for inclusion in a Stimulus Package for economic recovery at the later stage.
“The paper outlined some of the reliefs we intend to request for tourism businesses during these difficult times,” Mr Nihopara said.
As recommendations from the round table tourism meeting on COVID-19, it was agreed that tourism businesses require some direct interventions during the current period (Preparatory and Response Phase) in order to maintain operations:
- Government discussion with Commercial Banks for leniency on loan repayment schedules and conditions for tourism businesses with loans;
- Government discussions with Commercial Banks on waiver or adjusted reduction on loan interest rates for tourism businesses with loans;
- HCC and Provincial Business License fee waiver for the period of disruption;
- Government to discuss with Solomon Power, Solomon Water and Solomon Telecom for decrease of tariff charges on these utilities for businesses in general (including tourism);
- Discuss with Oil companies (SPOL and Silent World) to offer fuel on credit to tourism operators using GENSETs for electricity supply at their respective properties;
- Consider a stimulus package for the national body Tourism Solomons so that it continues to function and maintain momentum on marketing and promotion programs in preparation for recovery phase;
- Consider support to ensure tourism operators (particularly larger operators) to maintain a small pool of staff during these economically difficult times.
The meeting further agreed that tourism businesses require to be supported during the Recovery Phase with approaches such as:
- Banks to facilitate electronic transactions at tourism facilities and operators for electronic transaction capabilities;
- Banks to consider (through Government discussions) soft credit facility for tourism operators;
- Sought relief from NPF on the obligations by tourism operators to NPF;
- Government to consider tax holiday of some sort for reasonable period for operators to assist in recovery in the absence of a rescheduling tax commitments or vice versa;
- Consider a stimulus package to Tourism Solomons for the recovery phase to facilitate quick recovery of tourism numbers within a minimal timeframe. Such must be aligned to any stimulus package for the quick business recovery of Solomon Airlines.
The Ministry of Tourism and Tourism Solomons are hopeful that the above measures, if in effect, will be of great assistance to the industry to reset its course and pave the way for an effective recovery program.
-This article is the first of a series SICCI Media will publish on business impacts as a result of the COVID-19 global pandemic.
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