Saving Nepal’s Tourism from Collapse

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Saving Nepal’s Tourism from Collapse

Tourism is suffering massively from the coronavirus pandemic and tourism entrepreneurs are looking forward to the government's introduction of a stimulus package.

--BY Tamish Giri

Times are hard for tourism industry the world over Nepal is no exception. The sector which contributes about 9 percent to the country’s GDP and provides employment to over one million Nepalis is now struggling with an existential challenge in the wake of the coronavirus (COVID-19) pandemic that has ravaged the global travel and tourism business.

The air space above Tribhuwan International Airport, which is usually congested with air traffic, is now becoming eerily silent. There were with less than 40daily domestic flight operations due to the international flight ban announced by the government. Now that too has stopped.

Association of Tour and Travel Agents (NATTA) informs that like any other nation dependent on tourism, Nepal has been enormously affected by coronavirus. "Majority of our tourist source market is either aff ected or is taking precaution against coronavirus; due to this foreigners have cancelled their bookings. This has caused a heavy loss," he informs. Tourists have cancelled bookings for the spring season. "There will be 100 percent cancellation soon," Pandey claims.

Given the current situation of near complete shutdown of travel and tourism activities, it is certain that tourism entrepreneurs will need a long time as well as the government's support to recover from the impact. The loss is massive and NATTA has requested the government for stimulus packages. The association has requested the government to allow them to send employees on unpaid holidays.

Additionally, it has urged for a subsidy on loan interest and also to postpone instalments on loan at least by a year. "Lastly, we have urged the government to postpone the Visit Nepal Year campaign for now," Pandey confirms Tourism Board, foreign currency collection from travel and tourism in Nepal has declined by 90 percent.

Yograj Kandel, spokesperson of Airline Operators Association Nepal (AOAN) informs that helicopter operators have cut off 90 percent of their operations. The remaining 10 percent of operations are mainly for rescue purposes. "The scenario is near when all helioperators keep their aircraft grounded," Kandel opines.

However, fixed-wing operations in the trunk route section are functional but with average occupancy ratio. On a normal day, domestic airlines conduct 27-30 fl ights to Pokhara. On March 12, that number fell to 17 fl ights only and the flight count has dropped from 110 international fl ights to around 25 fl ight operations. None of the flights was completely occupied.

Similarly, fl ight count and occupancy in the STOL (short takeoff and landing) route also has declined, where the occupancy is only around 60 percent. Kandel opines that the coronavirus will have its impact on the entire tourism economy but mostly on aviation.

He says the domestic aviation industry in Nepal will be under the dark shadow of the virus until June-July. AOAN estimates that the domestic airlines alone will lose Rs 8 billion. "International airline operators will suff er more; we fear that some of the airlines here in Nepal may even have to shut down their business completely," he states.

The aviation industry which is on the verge of collapse economically has urged the government to support them with some relief packages. "Donald Trump has promised to provide USD 50 billion worth of stimulus packages to theUS travel industry. Governments in China, Europe, Australia, India and elsewhere are also announcing stimulus packages to stop the collapse of the travel, tourism and hospitality industry of their countries. But our government is yet to take concrete steps in this regard," says Kandel. However, AOAN has been requesting the government to help them with refi nancing schemes for at least six months. "Most importantly we have requested Nepal Oil Corporation (NOC) to lower their profit margin on aircraft fuel," remarks Kandel.

At present, NOC charges 19.33 percent profit on aircraft fuel and AOAN has requested the authority to reduce it to 3-4 percent. Deduction in the fuel pricing will make airfare to some trunk and STOL routes reasonable. This will allow passengers travelling to Bhadrapur and Dhangadi to travel via air at reasonable prices which will help the airlines business sustain their operations. Similarly, AOAN also has urged the Insurance Board to direct insurance companies to convert the insurance premium mortgage of aircraft and air passengers into ‘Ground Risk Payment provision’ until the aircraft are not operational.

Shreejana Rana, president of Hotel Association of Nepal and executive director of Annapurna Hotels informs that the pandemic has hit the hotel industry harshly. "It is difficult for any hotel to operate even on average occupancy of 40 percent but the occupancy now has declined to 10 percent. It is a challenging time for us," she informs. As hotels are getting closed with mass layoff s in the hospitality sector, HAN claims that it is trying to address the problems faced by workers as swiftly and eff ectively as possible. "But, we must also accept that the industry will take at least a few years to recover and reach the same level that we were in before the pandemic hit," Rana adds. The current room occupancy is below 10 percent and HAN states that the occupancy may even reach zero. The cancellation rate at hotels is around 80-85 percent but this is also likely to increase, Rana claims. According to HAN, its member hotels so far have faced an estimated loss of Rs 1.8 billion approximately hotels have already sent their employees on leave. In case if hotels fail to moderate, HAN will have to come up with different strategies to address the crisis. "Similarly, like the airlines, we will have to provide employees with 25 percent of their compensation and instruct them to stay home. However, till now we remain hopeful that if the government helps, we can work together and come up with a reasonable package," she opines.

HAN has collected feedback from the member hotels in terms of losses incurred and currently, the association is in the process of forwarding this together with other pertinent issues to the government. It has also been lobbying for interest reduction, tax deductions and fl exible loan rescheduling on various headings on financial matters. Likewise, HAN has also been lobbying with the government for a subsidy on electricity and fuel. "We are hopeful that the series of high-level meetings and discussions will bring about a positive outcome for the industry," Rana claims.

HAN's demands include interest reduction, tax deductions, loan facilitation, electricity and fuel concessions, and the introduction of costefficient modalities for the hospitality sector. The EU allowed the entire tourism industry and hotels to extend repayments and wereexempted from taxes for 12 months. Similarly, the UAE relieved all hotels and attractions from VAT for 12 months where they will issue VAT from the customers but will not need to pay it to the government. "Here in Nepal also, we hope that both the private sector and government can come to a fruitful consensus and can move forward accordingly," Rana suggests.

Likewise, Khum Bahadur Subedi, president of Trekking Agencies' Association of Nepal (TAAN) informs that almost 80 percent of the total bookings have been
cancelled and it is likely to grow more. "Trekking and rock climbing has already lost around Rs 15 billion worth of income," informs Subedi. The government on March 12 issued a public statement informing that it has cancelled permits for springtime mountain expedition and trekking. Last year over 350 individuals had received permits to climb Mount Everest during the March-May season. The impact of the coronavirus pandemic on the Nepali tourism industry will be five times greater than the 2015 earthquake, Subedi claims. "Governments all around the world have announced stimulus packages for tourism entrepreneurs but our government has not made any decision," he opines.

Likewise, Arniko Rajbhandari, president of Restaurant and Bar Association of Nepal (REBAN) informs that corona has impacted member restaurants. According to REBAN, tourist standard restaurants are estimated to lose 90 percent while others have lost 40 percent of their business respectively. "We have 2,500 tourist standard restaurants in Kathmandu, Pokhara, Sauraha and Lumbini. The restaurants used to have a daily business of Rs 150 million. It has now reduced to 10 percent of that fi gure," Rajbhandari informed. Due to the growing fear of the virus and declining number of guests, popular restaurants like The Ship and K2 have closed their business. "The pandemic has impacted 50,000 jobs involved in restaurants. Our request to the government is to reschedule interest and instalment on bank loans. Additionally, we have demanded subsidies on loans at minimum interest rates like agriculture and reduction on rental tax for a year," Rajbhandari states.

Dhananjay Regmi, the newly appointed CEO of Nepal Tourism Board informs that the list of demands made by tourism entrepreneurs is too big for the  government to commit to. "What everyone needs to know is that the current pandemic will have chain reaction on the entire economy of the country and it has impacted the government the most. In such a situation, the government may not be able to commit to all the demands made by the tourism entrepreneurs," Regmi suggests. The government has formed a committee under the leadership of Deputy Prime Minister Ishwor Pokhrel to address the current crisis. In a recent meeting, Pokhrel requested the tourism entrepreneurs to bring forward a comprehensive strategic problems and solutions document with their main priorities. "It is a global problem and not only for tourism, we need to work together to mitigate it," Pokhrel remarks. He suggests that both the government and the industry have to contribute towards the solution. "It's difficult for us to take the decision, as the scenario is changing. However, it is a strong learning time for the industry. This is the time to come together and observe the tourism industry as a whole, rather than from an individual and association point of interest," he
suggests.

Likewise, Regmi informs that the government at present can reschedule the interest and instalment payment of the entrepreneurs. The government can request
the commercial banks to deduct the interest rates on loans and reschedule the instalments. But the government may not be eligible to fulfi llthe other demands like tax deduction and introduction of packages for the staff force working in tourism, Regmi opines.

Additionally, he suggests that the tourism entrepreneurs need to work hand in hand with the government to overcome this situation. "The country needs to be united to combat the situation and support each other in this hard time," Regmi urges.

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