Pandemic costs Tk 60,000cr

The adverse effects of Covid-19 were profound in Bangladesh's hospitality and tourism sector as it lost about Tk 60,000 crore in gross value added during the pandemic, according to a survey by the Bangladesh Institute of Development Studies (BIDS).

The research organisation estimates that the sector would have contributed about Tk 150,000 crore in terms of gross value added in absence of the pandemic, but it was ultimately reduced to around Tk 95,000 crore by the coronavirus fallout.

The transport sub-sector endured more than 40 per cent of the loss while hotels and resorts accounted for about 29 per cent.

Meanwhile, restaurants bore 25 per cent of the loss in gross value added while other related businesses made up the rest.

Gross value added is an economic productivity  metric that measures the contribution of a corporate subsidiary,  company, or municipality to an economy, producer, sector, or region.

The BIDS conducted the primary survey with enterprises and employees drawn from 200 hotels and resorts, 138 travel agencies and tour operators, 200 restaurants, and 63 tourism SMEs across the eight divisional cities and Cox's Bazar.

The survey, styled "The COVID-19 Pandemic and Hospitality and Tourism Sector in Bangladesh", was revealed at a seminar organised by the BIDS at its conference room in Dhaka yesterday.

The findings show that sales and revenue in the sector dropped significantly in the April-June quarter of 2020 compared to the same period in 2019.

The fall in revenue was about 84 per cent for hotels and resorts, and between 98 per cent and 100 per cent for tour operators, travel agents and amusement parks.

Most of the enterprises started to show an improvement in sales revenue from the July-September period of 2021, and it improved more in the next quarter of October-December.

The average number of workers hired by hotels and resorts was 42 per cent lower during the pandemic compared to pre-pandemic levels.

Even though amusement parks came up with greater employment generation in 2019 compared to other sub-sectors, the net employment generation in 2020 was low with no hiring.

According to the survey, the average reduction in wages and salaries was quite substantial among hotels and resorts (34 per cent), tour operators (34 per cent), and travel agents (26 per cent).

In comparison, benefits were reduced by about 50 per cent for employees in these sub-sectors.

The average employee working in restaurants at the time was drawing 80 per cent of the salaries and benefits relative to a normal period.

In 2019, about 82 per cent of hotels and resorts, 83 per cent of tour operators, 86 per cent of travel agencies, and 91 per cent of enterprises that act as both tour operators and travel agencies provided bonuses to their employees.

During 2020-2021, the incidence of providing bonuses reduced to only 54 per cent in hotels and resorts, 19 per cent in tour operators, 35 per cent in travel agencies, and 36 per cent in enterprises that act as both tour operators and travel agencies.

The percentage of employees reporting a fall in earnings was sizeable among tour operators and travel agencies (72 per cent), tour guides (50 per cent), and hotels and resorts (50 per cent) during the second quarter of 2020, when a strict nationwide lockdown was in effect.

The situation remained almost the same during the third quarter except for employees working in hotels and resorts, with 45 per cent reporting a fall in earnings.

This improved during the last quarter of 2020, when a lesser number of workers from all three sub-sectors reported decreased earnings.

The major coping mechanisms adopted by the enterprises were: temporarily shutting down the business, reducing wages and salaries and other benefits to employees, and laying off employees during the strict lockdown.

The enterprises under the hospitality and tourism sector perceive that recovery of losses due to the Covid-19 pandemic is almost impossible without assistance from the government, the study said.

The sub-sectors mainly charted out two major types of support: fiscal stimulus and access to credit at low-interest rates.

"Wage subsidy was provided by the government for the industry during the first phase of the pandemic stimulus package announcement. The tourism sector, which faced similar losses, believes if they could receive such subsidies, their employment losses wouldn't be that much and recovery would be faster," said Binayak Sen, director general of BIDS.

He went on to say that the foundation of Bangladesh's economy is heavier than the tourism-dependent economy of Sri Lanka as the country's economy is driven by garment exports, remittance and agriculture.

One of the reasons for Sri Lanka's crisis is that they are a tourism-dependent economy and the country's tourism sector was largely affected by the pandemic.

"For that, they fell into a macroeconomic crisis," Sen said, adding that there are other factors behind the slump in Sir Lanka's economy.

The current situation in Sri Lanka proves that there is a chance that if the tourism sector gets damaged, the entire economy could be affected.

"So, Bangladesh could learn a lesson from the situation in Sri Lanka," he said.

Mohammad Yunus, senior research fellow at BIDS, Mohammad Mainul Hoque, research fellow, and Tahreen Tahrima Chowdhury, research associate, were present at the event.