A group of Southeast Asian tourists seen in Colombo this week. Owing to COVID-19 concerns and mitigation measures including partial shutdown of the airport industry fears tourism numbers will come to zero next week – Pic by Shehan Gunasekara
Says COVID-19 by far biggest crisis for industry following Easter Sunday terror attacks
Warns of mass scale unemployment leading to multiplier effect on rest of economy
Urges Government to act now to protect jobs
The Hotels Association of Sri Lanka (THASL) yesterday made a fresh appeal for urgent support from the Government to prevent what it called “unprecedented levels of closures and job losses” from the novel coronavirus COVID-19 crisis.
Whilst welcoming the Government’s six-month moratorium granted for all businesses as a step in the right direction, THASL said the twice-battered tourism industry needs an immediate and far-reaching fiscal recovery package.
Its main suggestions are:
1) Moratorium for capital repayment of all loans and overdrafts taken by tourism businesses from banks and leasing companies to be extended for a period of two years with effect from 1 April;
2) Complete waiver of interest on loans and overdrafts for a period of two years; and
3) In order to retain employees and maintain hotel plants while having zero revenue, the industry is requesting interest-free loans with lengthy repayment periods to meet the working capital needs of tourism businesses to fund their salaries and maintain hotel plants for at least the next six months.
“This is by far the biggest crisis we have ever seen in our sector. Closure of airports and worldwide travel restrictions have effectively shut down the tourism industry. The impending collapse of the industry, especially after these two major setbacks including the 2019 Easter Sunday attacks, will likely lead to mass scale unemployment and have a multiplier effect on the rest of the economy. As the biggest investor in the tourism industry and with the largest employee base, THASL is gravely concerned about the present situation and urges the Government to act now to protect people’s jobs,” the statement noted.
It said that the COVID-19 pandemic has led to a major contraction in both supply and consumer demand, pointing out that the fall in oil prices, together with the decline in consumer goods imports, should create less pressure on Sri Lanka’s balance of payments.
“This is likely to create a deflationary environment in the economy and open up space for a more flexible monetary policy. We therefore request the Government to encourage the Monetary Board to further reduce interest rates to create a greater stimulus for growth and investment. This will greatly assist the tourism industry which accounts for 6% of GDP, to emerge from this crisis.”
THASL pointed out that in 2018, prior to the Easter Sunday attacks on churches and hotels, the tourism industry earned $ 4.5 b for the country and in 2019 the industry was well on the path of recovery and earned $ 3.5 b. Irrespective of geographical regions, this pandemic has affected the entire world and the tourism industry is the worst hit, it added.
According to a recent statement put out by The World Travel and Tourism Council, “The tourism industry which accounts for 10% of the world’s GDP and jobs is severely impacted by the COVID-19 pandemic and Asia is expected to be the worst affected.”
THASL emphasised on the urgency of these measures which it said would help to significantly curtail the negative consequences of the current crisis. “Any delay will be fraught with peril for the employment situation in particular and for the economy in all aspects,” it warned.