The Impact of COVID -19 Pandemic on Hospitality (Tourism& HotelSector) and Mitigation Mechanism in Ethiopia review
Solomon Mequanent Biwota*
Department of Tourism and Hotel Management, College of Business and Economics, Bahir, Dar University, Bahir Dar, Ethiopia
Submission: August 23, 2020; Published: August 26, 2020
*Corresponding author: Solomon Mequanent Biwota, Department of Tourism and Hotel Management, College of Business and Economics, Bahir, Dar University, Bahir Dar, Ethiopia
How to cite this article: Solomon M B. The Impact of COVID -19 Pandemic on Hospitality (Tourism& HotelSector) and Mitigation Mechanism in Ethiopia review. Agri Res & Tech: Open Access J. 2020; 25 (1): 556290. DOI: 10.19080/ARTOAJ.2020.25.556290
Abstract
The tourism industry is one of the sectors that would be greatly affected by COVID-19 pandemic. Data for the review was generated from desk review of secondary materials, online blogs and interview through social media chat. Findings of the review reveal that the outbreak of pandemic disease led to rapid shutdowns in cities and states across the country, which greatly affected the hospitality industry. This pandemic showed the rapid negative impact on the country tourism and hotel industry. The findings of the review reveal that COVID-19 has increased cancellations of hotels and travel bookings resulted in revenue loss and unemployment situations, resulting loss of substantial revenue to the government and increasing incidence of poverty among others. The review recommends that provision of alternative service and diversification of service and product and compensation to business operators in the sector to return back to normal operations.
Keywords:Ethiopia; Covid-19; Hospitality; Tourism; Impact
Introduction
Unexpected occurrences of infections in the form of outbreaks are no longer exceptional. The world is encountering infection outbreaks of different types, with coverage, at times, having global ramifications. Going through the archives, one can see that there have been deadly outbreaks that have changed the course of human history. The plague that peaked from 1347 to1351, for example, affected the landscape of Europe and the world, wiping out 17% of the then 450 million global populations [1] The Spanish flu and subsequent outbreaks of different extents have offered worrying warnings to public health authorities and health systems in the globe. Evidently, advances in technology and science have improved global health systems, including, for example, artificial intelligence (AI), which can predict the location of the next outbreak, development effective drugs, the design of new molecules that could halt viral replication, and so on [2].Yet, threats of emerging and re-emerging infections have not shown much decline – rather, they have become more common. In the past few decades, the world has continued to witness and be threatened by infection outbreaks of varying severity in terms of consequence and geographical coverage [2].With the frequent occurrence of emerging and re-emerging infection outbreaks of different scales, predicting what would be the next one became rather elusive [3]. Since the world was hard hit by the Spanish flu, there have been a number of outbreaks, including Ebola, Zika, dengue, Middle East respiratory syndrome (MERS), severe acute respiratory syndrome (SARS), and influenza, as well as the looming spectra of rising antimicrobial resistance (AMR) in specific geographical settings. These infections have already threatened the health, social and economic mainstays of the countries affected by the outbreak [2]. Now, COVID-19 is rocking the globe with more threats, more uncertainties and mounting consequences.
The global communities wake up in December 2019 to an outbreak of a disease named novel Coronavirus disease 2019 (Abbreviated as COVID-19). The disease was described as an infectious disease that is caused by severe acute respiratory syndrome coronavirus. The COVID-19 disease has spread to about 196 countries and territories in every continent across the globe. Since then, there has been concerted effort to curtail the further spread of the infection which is believed to be transmitted by human-to-human. The disease has greatly slowed down economic activities across the world, with many countries coming under partial or total lockdown. The pandemic has not only brought entire socio-economic structures into a halt but has challenged the globalization and global operations of enterprises. vParadoxically, potential impacts and alternative way outs are yet volatile. However, for a speedy recovery and recover of the economy, employment and business functions a sustainable and fresh beginning is necessary in most of the worsened economic sectors. Conventionally, an infection used to attack the vulnerable groups with food, health care insecurity in their lifestyle and they normally used to be the poor of the society. Ironically, COVID -19infections first attacked the international travellers and the pandemic was caused through the travel and thus has confronted mainly the affluent social class globally. The Covid-19 pandemic has resulted in mass production shutdowns and supply chain disruptions causing global ripple effects across all economic sectors in a manner that was never expected. It is projected that the spread of the disease will have serious humanitarian challenges to the countries of the world and especially Africa and Ethiopia in particular. Economically, the effects have already been felt as demand for Africa’s raw materials and commodities in global market has declined and Africa’s access to industrial components and manufactured goods from other regions of the world has been hampered. This is causing further uncertainty in a continent already grappling with widespread geopolitical and economic instability [4]. Some of the measures and policy put in place by the Ethiopian government in its effort to restrict the further spread of covid-19 include social distancing, staying at home policy and other policy declined by state emergency for five month in which workers are expected to work from their individual houses and work place and public gatherings of all kind were banned. This policy imposed limitations in spending and declining consumptions. Many factories have responded by shutting down or cutting down production and output, while in other instances, staff works from home and other work place to limit physical contact. This has the potential of worsening the poverty and unemployment challenges in Ethiopia [5].
Tourism is a reason for most of the human mobility in the modern world. According to the World Tourism Organization (2020), the international tourism has indicated continues growth for the tenth consecutive year reporting 1.5 billion international tourist arrivals in 2019 and estimated 1.8 billion of international tourist arrivals by 2030 )people are forecasted to be [3]. The tourism industry is fast becoming a major source of employment contributing greatly to the GDPs of many countries of the world. Although Ethiopia has not taking advantage of the great potentials in the tourism industry over the years, the sector is gradually contributing to the country’s GDP and economic development in recent times. For example, Ethiopia In 2018, tourist arrival was arrivals 849,000. Arrivals of Ethiopia increased from 115,000 in 1999 to 849,000 in 2018 growing at an average annual rate of 11.56 %( MoCT, 2019).
Statement of the problem
The tourism industry is an umbrella industry networked with many other sectors in the economy including hotel, community level operations, education, financial, agriculture, medical, travel and transportation, construction, real estate, retail, and vice versa. Due to the heavy toll of tourism in the country‘s economy, it is important to review how the reliance of the industry might shape the recovery of its main sub sectors once the pandemic subsides. Tourism brings in large amounts of income in payment for goods and services available, accounting for appreciable component of the world’s exports of goods and services. It also creates significant opportunities for employment in the service sector of the economy associated with tourism. These service industries include transportation services, such as airlines, cruise ships, and taxis; hospitality services such as accommodations, restaurants including hotels and resorts; and entertainment venues, such as amusement parks, casinos, shopping malls, music venues, and theatres. According to UNWTO [6] international tourist arrivals (overnight visitors) worldwide grew 4% in 2019 to reach 1.5 billion, based on data reported by destinations around the world. Based on current trends, economic prospects and the UNWTO Confidence Index, UNWTO forecasts a growth of 3% to 4% in international tourist arrivals worldwide in 2020.
The outbreak and spread of covid-19 will affect the tourism industry most. As countries of the world continue to place travel restrictions and closure of their borders, cruise companies, hotels and hospitality industries are facing declining demand and patronage. For example, in Hungary alone, about 40 to 50% of hotel reservations have been cancelled [7]. Also, the pandemic is placing up to 8 million jobs in the leisure and hospitality sector at risk, with travel crashes and cancellations expected to continue [7].The WorldTravel and Tourism Council (WTTC), estimates that more than 50 million jobs in the travel and tourism sector could be at risk globally. The pandemic statistics in the Africa continent according to the UN health agency said 10 countries account for 89% of all reported COVID-19cases in the Africa region: South African Nigeria, Ghuna,Algeria,Kenya,Ethiopia,Cameroon,Ivorycoast,Madagaskar And Senegal. COVID-19 is having an unprecedented impact on the Ethiopian hotel industry. The full fallout is unknown, as the ultimate scale of the outbreak is yet to be determined. However, travel restrictions and social distancing policies have had a dramatic effect on the industry. However, this review presents to assess COVID -19 impacts on tourism and hospitality sector in Ethiopia with the aim of suggesting areas that will require critical intervention as the country struggles with measures of revitalizing the economy and mitigating the impact of covid-19 on the Ethiopian economy.
Literature review
Tourism is the temporary movement of people to destinations outside their normal places of work and residence, the activities undertaken during their stay in those destinations, and the facilities created and services provided to cater for their needs [8]. Tourism was defined as people travelling abroad for period of over 24 hours (Vijaya, 2016). It involves the motivations and experiences of the tourists, the expectations of and adjustments made by residents of reception areas and the roles played by the numerous agencies and institutions which intercede between them [8]. Tourism is multifaceted phenomenon which involves movement to and stay in destination outside the normal place of residence.
According to Tourism Society in Britain, “tourism is the temporary short-term movement of people to destination outside the place where they normally live and work and their activities during the stay at their destinations, including movement for all purposes, as well as day visit or excursions”. Tourism mostly depends on the range and types of accommodation available at the destination. Accommodation is a core of the tourist industry, and plays a distinctive role in the development of this ever-expanding industry. Tourism also tends to give support to local handicrafts and cultural activities; both in urban and rural areas. Expenditure by tourists has a multiplier effect and also generates considerable tax revenue for local economy. Tourism has become a major and an integral part of economic, social and physical development (Viyaja, 2016). It comprises complete system of nature, the universe, the space and the galaxy which includes the man and his activities, wildlife, mountain and valleys, rivers and waters, forest and trees, social and cultural system, flora and fauna, weather and climate, sun and the sea. Tourism is a service industry, consisting of transportation, accommodation and hospitality. The term tourism and travel are often used interchangeably though literally there is a difference. The tourism industry is a major sector of the economy of any nation. The constituents of the tourism industry are varied ranging from small scale businesses operating at local levels to multinationals. More over these different components are closely linked to each other. This linkage is there in spite of the competition within one set of constituents. The tourism industry is made up of the following;
a. Hotel and hospitality, this includes lodges, resorts, tourist homes, guesthouses, restaurant and eatery among others.
b. Transportation services that include air, water, road, rail and foot.
c. Entertainment services that is casinos, social halls, churches and mosques.
d. Information services that is travel agencies, tour operators etc.
e. Attraction services both natural and manmade.
f. Education and research, which is tertiary colleges and universities.
g. Stakeholders that is shareholders, local community and the government.
According to the World Tourism Organization (2020), the international tourism has indicated continues growth for the tenth consecutive year reporting 1.5 billion international tourist arrivals in 2019 and estimated 1.8 billion of international tourist arrivals by 2030 )people are forecasted to be [3]. Reporting the COVID 19 or the Corona outbreak started from Hubei province, Wuhan City in China in November, 2019 and spread all over the world by March, 2020 has been remarkable in world history as the most challenging tragedy occurred in the world after decades may be the World War II. The major disruptions on the global economy from the transmission of this virus especially to the retail sector, food, consumer goods, healthcare delivery and a potential curtailing of travel and tourism as major drivers of the most of the countries in the world is in immeasurable and severe than expected by many. The situation should be strategically addressed with suitable proactive and reactive measures considering the current situation and to overcome future threats to ensure the socio economic wellbeing of all humans keeping space for increased travel and tourism.
However, the decisions on limiting the movements of people and commodity mainly affected to the industries like tourism, because, tourism include air transportation, rail way transportation, food handling, accommodation sector, entertainment and recreation etc. it impact on COVID- 19 pandemic on Ethiopian tourism and hospitality sector. Being a country has very less experiences on health system with respect to technical and technological to protect such types of pandemic in the globe. Ethiopia was to clear mechanism to mitigate the risk of the pandemic and survive the country economy and social problem. However, after the pandemic case reported in Ethiopia was the Government is highly participate to make measurements, policy and rule to mitigate the pandemic consequences in the country. Due to this, regular hand wash policy, social distance, use mouth and nosh protective masks. There are number of service providers such as accommodation suppliers, travel agencies, event coordinators, and transportation Suppliers etc. At the current situation they don‘t receive any income from their tourism products. Therefore it is important protect this sectors and remain them for cater the future tourism demand to the country. Otherwise this may lead to reallocating the resources to other industry where Tourism industry would face the challenge of finding the service providers in the future. To overcome this situation it is good release them from their business loans temporarily, help to retain the employees in their organization, using the tourism resources like hotels as quarantine centers with a monthly rental to the organizations. With the available technologies and medial advancements it is expected to overcome from this emergency within a short period of time. Hence, safeguarding the tourism industry would be a good investment in the future development of the country.
Methodology
Meta-analysis
The review relied substantially on secondary (desk) research to identify existing literature on covid-19 through web-based generic search engines and its impact on global economy and tourism in Ethiopia in particular. Relevant online materials, especially newspapers, broad cast media and blogs were used. Interview was also carried out through social media chat with some individual key players in the tourism and hospitality sector in Ethiopia. The data generated were analyzed using content analysis.
Result
Impact of Covid-19 on Tourism in Ethiopia
Covid-19 affects every aspect of human life in economically and socially across the world. These ranges from postponement of many social and cultural events, meeting, games and sporting events, shutting down of institutions and centers of learning and closing of internal and international borders. Although the severity of the impact of covid-19 varies across different sectors, this review focuses on the impact on the tourism &hospitality sector in Ethiopia.
Impact on Travel Agencies
Travel agencies are business outfits whose functions include ticket sales outlets to book the airlines traffic, promote the business of the airline through intensive campaigns, use of effective media outlets to communicate innovations in the industry to the public and assisting the airline customers with information about desired flight information and reservation [9].
Impact of Hotel sector
COVID-19 is having an unprecedented impact on the Ethiopian hotel industry. The full fallout isunknown, as the ultimate scale of the outbreak is yet to be determined. However, travel restrictions and social distancing policies have had a dramatic effect on the industry.Hotel occupancy in the Ethiopia has dropped to 43% and revenue per available room has declined by 30.5% for the week ending March 14, according to Smith Travel Research (STR). The World Travel and Tourism Council (WTTC) in 2020 estimates that more than 50 million jobs in the travel and tourism sector could be at risk globally. The hotels and hospitality sector is a major revenue earner, with potential of creating thousands of jobs annually. The hotels and hospital subsector of the tourism industry have also had their own share of the challenges from the covid-19 lockdown policy of the government of Ethiopia. With government announcement of “stay-at-home policy” and “social distancing” movement restriction, most restaurant businesses were greatly affected. This led to rapid shutdowns in cities and states to control the spread of the covid-19 disease, which threw many restaurants and hotels across the country into sudden shock.Many hotels have recorded decline in bookings due to the health scare, while restaurants in major towns in the country are now restricted to offering only delivery services. Since most restaurants operate with fresh food products, which are difficult to keep in stock as demand fluctuates, they are bound to incur losses. Hotels across the globe perceived booking cancellations worth billions of dollars, and the hotel industry required a $150bn bailout [10]. Resorts and hotels that were booked by excited vacationers and corporate conference-goers before the present covid-19 pandemic are receiving calls to postpone plans or cancel entirely their earlier proposed events. This has made most of the hotels and restaurants to embark on temporary suspension of normal operations which puts the estimated loss of jobs to 24.3 million globally, and 3.9 million in the US alone due to the decline in hotel occupancy during the pandemic period [10]. The economic impact of the covid-19 pandemic on the hotel industry was enormous. The impact of Covid-19 will make it extremely difficult for many of the tourism industry’s players to continue paying staff with a sharp drop in sales and income, resulting in job loss. Many hotels are already closing down because of low patronage and inability to meet up with payment of worker’s salary and electricity bills.
Impact on Airline Operation
Air transport is a very important sector of the Ethiopian economy. The covid-19 outbreak led the governments of many countries to impose restrictions on non-essential travel to countries affected by the disease, indefinitely suspending tourism travel, work visas and immigrant visas [10].Some countries placed a complete travel ban on all forms of inward or outward travel, shutting down all airports in the country.The federal democratic of Ethiopia declare to close on April, 2020 of airline and its borders to all forms of movement and transportation except the commodities and material that needs for the prevention of pandemic. The government of Ethiopia also has put in place several measures to control the spread of the disease. In the beginning of April theEthiopia airline in the country were closed for flight and arrivals in order to prevent an imported COVID-19 case which was the main source of outbreaks [10]. The economic effect of this on Ethiopia will be influenced not only by what is happening in the region, but also by how the disease affects global supply chains, markets and the worldwide flow of goods and people. However, the Cargo service of Ethiopia airline is working still with strong precautions to prevent the spread of the pandemic. The covid-19 outbreak led the governments of many countries to impose restrictions on non-essential travel to countries affected by the disease, indefinitely suspending tourism travel, work visas and immigrant visas. Some countries placed a complete travel ban on all forms of inward or outward travel, shutting down all airports in the country. At the height of the coronavirus pandemic, most airplanes flew almost empty due to mass passenger cancellations. The travel restrictions imposed by governments subsequently led to the reduction in the demand for all forms of travel which forced some airlines to temporarily suspend operations [10]. Furthermore, The travel restrictions cost the tourism industry alone a loss of over $200 billion globally, excluding other loss of revenue for tourism travel and were forecast to cost the aviation industry a total loss of $113billion according to IATA [10].
Impact on Tourist Inflow
Although the tourist flow into Ethiopia has reduced in recent times due to increasing security challenges in the country such as internal migration of people from one region to the others, ethnic conflict, violence of law in some parts of the country.The recent outbreak of covid-19 and lockdown policies that follows has only impaired the challenges of reduced tourist flow into the country. According to IATA as April, 2020, it is estimated that because of covid-19, Ethiopia will have 2.5 million travellers resulting in US$0.91 billion revenue loss, risking 120,400 jobs and US$0.80 billion in contribution to Ethiopian economy (Interview, 2020).
Impact on Entertainment Industry
Covid-19 pandemic has greatly affected the Ethiopian entertainment industry by altering the Ethiopian Film Industry, football, athletic and other games and entertainment activities (MoCT, 2020) revenue forecast beginning with an extraordinary disruption of the global films calendar.Most international and national football game and film festivals and markets that would have schematically occurred from March 2020 have been cancelled and some local and international films and football game already scheduled for release have been rescheduled on account of covid-19 pandemic in Ethiopia [11]. Other aspect of tourism sector that will equally be affected by the covid-19 pandemic is the transport, hospitality and trade sectors. The government policy of social distancing and stay at home restrict movement within the country and most urban centers. This also led to stoppage of interstate and inter-town travels, culminating in loss of revenue to operators in the transport sector for the period of non-operation.
Conclusion
Presently, this unprecedented public health crisis has become a catastrophic economic crisis to the entire globe and consequently the tourism, hotel and event sector.The recovery has to be gradual parallel to the recovery of other sectors, combatting the outbreak and regaining economic performances. Thus the measures proposed are to be implemented incrementally in response to the evolving conditions. Therefore, ensuring the safety of the guests and the staff has become a top concern of the hospitality industry stakeholders.At the same time, to recover business losses and to rebuild the positive image in the mind-set of the guests it is essential to initiate strong marketing and promotional campaigns both locally and internationally. Further, promoting flexible services’ would be another strategic tool to attract potential customers. Hence, offering flexible prices, cancellation policies, flexible work environment etc.; would be beneficial in achieving long term sustainability of the hospitality business industry. This review has examined assess the impact of COVID-19 pandemic on tourism and hotel sector development in Ethiopia. The finding of the review reveals that Ethiopia as a country would be more affected by the present covid-19 pandemic which is decline the international arrival that loss the revenue.This outbreak and spread of covid-19 disease show the rapid negative impact on the country tourism and hotel industry.Some of the impacts of covid-19 on tourism and hotel include increased cancellations of hotels and travel bookings and increased cancellation and rescheduling of events in the entertainment industry, resulting in billion dollar revenue loss and millions of job loss.It is feared that the volume of revenue loss may affect the ability of most of the industries and businesses in the hospitality& tourism sector to return back to normal operations after the covid-19 pandemic without appreciable financial support from the government.
Recommendation and Suggestion
Based on the findings of this review, the following recommendations are made: There is no doubt, that this pandemic situation has brought lot of negative impacts to the Ethiopia Hospitality sector.
a. Maintaining the safety and security of employees and guests is clearly the highest priority. That includes setting up a secure remote working environment. While there will inevitably be some loss of productivity as employees work away from the office, companies need to ensure that employees are engaged and productive in the new operating environment.
b. Availability of cash: keeping cash on hand via liquidity management strategies, such as maximizing one-time revenue opportunities, realigning and reducing costs, employing working capital crisis management techniques and deferring capital expenditures.
c. Further, promoting flexible rates and allowing guests to move a booking to a new date is another key strategy to promote hotel business in compensation for emergency cancellations. Further, making some timely-modifications to existing hotel policie are also vital, such as flexible cancellation policies, flexible rates for all services, ensuring strict hygiene policies should be some of the key areas of concerns.
d. At the same time, it is also recommended to promote flexi-services instead of promoting value-added services. Because of the pandemic situation people are very much concern about their health and safety. Thus, taking some additional time for cleaning the entire hotel is essential. These strategies will positively impact on ensuring hygienically clean safety and secure environment for guest stay.
e. Practicing E-marketing and Electronic transaction strategy with suppliers to prevent the spread of the pandemic and safe the frustration of customers and employees.
f. A digital resource platform with social media profiles, electronic signatures, has been created to provide different options for any individual, business or institutional user to join this initiative.
g. In addition, hotel companies need to have plans in place to quickly recover once the worst of the pandemic has passed. In the face of potential hotel closures, companies will have to assess their employee retention and operational policies.
h. Empowering local and national health care industry
i. The world, with respect to the special attention of World Tourism Organization (UNWTO), has already lunched several practices to save the essentials of tourism industry at present. The special campaign named “Travel Tomorrow “has become the common thread that runs through the World Tourism Organization‘s response to the current crisis, highlighting the enduring values of tourism.”By staying home today, we can travel tomorrow”.
j. Announcements and advices carried out from global institutional structures such as UNWTO and WTTC in order to recover the industry level globally
k. Knowledge sharing and collaboration with necessary stakeholders locally and globally
l. Hoteliers, travel agents and other service providers should be continuously keep in touch with key customer base during the outbreak (check their safety maintaining a strong linkage)
m. Responsible and ethical use of social media and mass media
n. Destination rebranding is very much essential after the situation highlighting the positive elements during the outbreak
o. The domestic travel market will significantly grow compared to the international tourism market to release the home bound stress of the community as an immediate effect
p. The government‘s attempt to invite indigenous medical practitioners to explore alternative medical solutions to this global pandemic, specify the value of this fact.
q. Finally, it is recommended to initiate collaborative strategies among the public and private sector. Specially, government could initiate tax reduction schemes (for certain period of time) for both micro and macro level business owners could think of introducing interest-free capital loan schemes and job guarantees for permanent carder employees.
r. More researches should be carried out with the support of academia to see the indirect effects of the outbreak the pandemic in the country.
What will be the Future of Hospitality, Travel and Tourism when the Danger is over?
As an industry, we need to have a resilient strategic plan to reconstruct the country‘s economy. The impact of this infortune will lower the business investment due to increased uncertainty and risk. Consequently, the demand for the travelling and consumer confidence also may very lower due to uncertainty and fear. This will ultimately leads to reduce the spending of people as lowering the disposable income with limited economic activities and homebound life to reduce the probability of infection. Moreover, the face to face contact may generate the lower confidence for both service provider and consumer in the related services and supplies in tourism, transportation and retail spending.
Once hotel companies react and recover from this pandemic, attention will turn to how to grow. Strategic options will exist that were not available before, and companies should startthinking about:
a. Are there any permanent changes to hotel operations that need to be taken into consideration? Is hygiene and sanitization a key priority, and how do you plan for that?
b. What will the hospitality environment look like postpandemic?
c. What demand patterns will or could change?
d. Where will opportunities arise as a result of the changing environment?
e. How can you prepare yourself to take advantage of any opportunities that arise?
f. How can you build resiliency into your operations to protect against similar future shocks and the resulting disruption?
It is clear that COVID-19 poses key short-term and long-term issues for the industry. But every indication is that the industry will rebound quickly once the worst of the pandemic is over. The rebound might be tempered by prolonged economic performance, so hotel companies have to be prepared for multiple scenarios that might unfold. The key will be to react to the short-term issues that arise but then quickly hinge to long-term planning and identification of opportunities.
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