The Economic Impact of COVID-19 on the Tourism Sector in Kosovo
A close estimate of the two-month lockdown on the hotel and accommodation sector may have an impact of: some 13 million EUR loss in circulation, and due to the passivity of the hotel and accommodation sector, the further impact on the related sectors may exceed 10 million EUR.
Due to measures taken from mid-March 2020 to restrict and stop movements and business activities in Kosovo, and the world, due to the COVID-19 pandemic, sectors like tourism, travel, accommodation and gastronomy bore a heavy brunt. There is still no precise assessment of the impact this period shall have on these economic sectors in Kosovo, but initial figures indicate that a return to the situation before March is going to be a long and not an easy process.
In open letter to the world Governments, the World Travel and Tourism Council (WTTC) warns that without travel & tourism, economies around the world face an existential threat. To counter this, WTTC, which represents the global travel & tourism private sector, calls upon governments of all countries to take immediate action to help ensure the survival of this critical job-creating sector.
“Tourism is an intersection of many sectors; an entire chain where the pandemic has had a negative impact. Apart from ceasing of services, we began to receive booking cancellations. Tourism was affected from day one” says Baki Hoti, President of the Kosovo Alternative Tourism Association, who publicly called to the Government to support this sector.
The United Nations World Tourism Organization has released a set of recommendations calling for urgent and strong support to help the global tourism sector not only recover from the unprecedented challenge of COVID-19 but to ‘grow back better’. These specific recommendations give countries a check-list of possible measures to help our sector sustain the jobs and support the companies at risk, and are divided into three key areas: managing the crisis and mitigating the impact; providing stimulus and accelerating recovery, and preparing for tomorrow.
On 3 April 2020, the Ministry of Finance and Transfers (MFT) of the Republic of Kosovo approved and published the Operational Plan on Emergency Fiscal Package. This package intended to provide financial support to businesses in difficulty due to the decrease or termination of their activity following the situation in the country due to the pandemic. MFT did not elaborate the measures by economic sector but followed the approach to support small and medium enterprises to partially subsidize the losses and employee salaries for two months: March and April.
Before the package was published, the Swiss Agency for Development and Cooperation project Promoting Private Sector Employment (PPSE) prepared a report on the “Economic Impact of COVID-19 Pandemic on Kosovo’s Hospitality Sector”. This report was submitted to the Ministry of Finance and Transfers to support their planning for the economic measures for this important sector in the economy of Kosovo.
According to the PPSE report, a rough estimate of the two-month lock down of the hospitality sector may have the following impact:
- more than 12,000 inactive employees at risk of losing their jobs and without income;
- people employed in this sector would lose a total amount of over EUR 6 million in wages;
- 3,683 SMEs are directly impacted with costs of around EUR 13 million loss in turnover,
- and due to inactivity of the hospitality sector, further impact in interlinked sector could be more than EUR 10 million.
There are other data forecasting how difficult it will be for the economy of Kosovo, in particular the for the tourism, hospitality and gastronomy businesses to return to the pre-COVID-19 state.
According to Kosovo media reports, the Institute for Free Market Economy (IETL), conducted in collaboration with the Association of Gastronomy a research on the impact of pandemic on the hotel, restaurant and cafeteria businesses (HoReCa) in Kosovo. Figures speak: 76.2% of businesses in the HoReCa sector in Kosovo would have to bankrupt if the situation created by COVID-19 will continue in the next three months. Or 55.4% of the surveyed owners have stated that they will have to dismiss all employees. More information is found in the news report by Insajderi.com.
How do tour operators in Kosovo deal with the current situation?
Arsim Rexhepi is the founder of Balkan Destination, an in-bound tour operator that mainly organizes cultural, gastronomy, tradition and daily life tours. “Our market is mainly foreign. We begin with our tours by the end of April and May, so this period should have been really busy for us. The closing down of activities due to the pandemic has negatively affected us because all booked groups until June were cancelled, an in fact, we do not even know what will happen with the September and October groups,” he says.
Foreign tourist groups have cancelled bookings confirms Virtyt Gacaferi, founder of Balkan Natural Adventure, a tourism services provider in Kosovo that also covers other countries in the Western Balkans. “We have received many cancellations from foreign clients. Some 90% of our clients are from the EU countries, Australia, US and Asia. We do not expect to start the summer season this year. If we can resume in November, it would be good”.
To adapt to the new circumstances created that are outside of the control of businesses, Balkan Natural Adventure is now leaning towards new summer activities focusing on the local visitors. “We are leaning towards the local market. We are preparing a good and affordable offer for the citizens of Kosovo. For example, we are thinking about activities in the mountains, where our team will guide groups to collect tea plants, mushrooms and blueberries, for example. We are trying to find new models to substitute our work so far and have offers for clients unlike our clients so far” says Virtyt Gacaferi.
In fact, the focus this year is expected to be on the local visitors, and creating tour packages within the country, which are suitable for this new clientele but with affordable prices for them. The ceasing of economic activity in the country has resulted in decreased income for families, and this year, travel and holidays abroad may be more of a luxury that usual. Many tour operators are using this period with no activity to re-design their business models and come up with attractive offers for local visitors.
Meanwhile, it looks like measures are relaxing and Kosovo is getting ready the tourism offers for the locals. It is time to love Kosovo more and give new life to the tourism potential of our country.