© Julian Caushi / Albanian Trip

Tourism in Times of the COVID-19 Pandemic: What Can We Learn as the Situation Unfolds?

FROM: Clara García Parra, Mirtjon Mita, Admir Malaj, Zenebe B. Uraguchi – 06. April 2020
© Julian Caushi / Albanian Trip

There has been much talk about the economic fallout due to COVID-19. Most industries are affected, but none has been hit harder than tourism. The impacts could be unprecedented and could stay longer. Yet, our experience from Albania shows that the tourism sector is more resilient than often thought. Focusing on sustainable tourism rather than mass tourism offers ways for making the tourism sector resilient – to withstand, respond/adjust, recover and learn from a crisis. This works because sustainable tour operators have long-term relationships with a wide range of suppliers, whereas mass tourism businesses operate at low margins and are reliant on limited markets, making them more vulnerable. Also, the relationships between enterprises and different levels of government are an important determinant of enterprise ability to adapt and innovate in response to crises.

 

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‘It could take up to 10 months for the tourism industry to recover.’

‘Up to 50 million travel and tourism jobs could be lost because of the pandemic.’

‘Empty hotels. Idled tour buses. The pandemic is devastating tourism.’

As the graph in this link from the UNWTO forecasts that “international tourist arrivals will be down by 20% to 30% in 2020 when compared with 2019 figures”. 

The above are indicators and predictions from tourism organizations and experts showing the unprecedented extent of the impact because of the COVID-19 pandemic.

Yet, the tourism sector is resilient – in its ability to withstand, respond/adjust, recover and learn. Otherwise, it could not have survived the many catastrophes that have shaken our world for the past several years – including terrorist attacks that led to global travel restrictions; natural disasters in highly touristic destinations spanning tsunamis, earthquakes, wildfires, and flooding; and a devastating financial crisis in 2008.

But are some types of tourism more resilient than others? And what does that mean for development programs, considering the role we play in strengthening the resilience of public and private sector players?

This blog briefly explores these questions in the context of the tourism portfolio of the RisiAlbania project of the Swiss Agency for Development and Cooperation (SDC)[1]. Elton Çaushi from Albanian Trip, a partner tour operator of the project since 2018, provided valuable insights through a telephone interview complying with physical distancing guidelines.

Tourism in Albania: a sobering outlook

Tourism represents a major economic driver and is one of the world’s top youth employers providing jobs for 1 in 10 people globally, contributing over 10% to global GDP. In Albania, tourism and travel contribute over 25% of total employment and 27% of the GDP. Importantly, tourism is one of the most interconnected industries in the world, with hundreds of related sectors dependent on its performance. RisiAlbania selected it as one of its intervention sectors to capitalize on this potential.

The Albanian Government reacted quickly to the first COVID-19 reported cases, and the country has been under strict lockdown for the past three weeks – with restrictions to internal mobility and land, sea and maritime borders closed for private transport. The country has also introduced some fiscal and macroeconomic relief measures to support struggling businesses to cope with the imposed restrictions.

Contributing to a more resilient tourism sector

RisiAlbania partners with the private sector and builds alliances with public institutions to address constraints for tourism as a source of quality employment for young women and men, emphasizing the values of sustainable tourism (environmental, social and economic) and its potential to create jobs all year-round. Some of the project’s key partners in the tourism portfolio are Albanian tour operators, as they play a unique role in developing destinations and products and fast-tracking the arrival of tourists.

Betting on sustainable tourism as an engine for quality job creation may have had an unexpected side effect: the project partners’ resilience to shocks, which started to manifest itself after the political unrest and the lethal earthquake and is now put to the test once more. Here also, the relationships between enterprises and different levels of government are an important determinant of enterprise ability to adapt and innovate in response to pressures or change.

‘Albania can position itself as a champion of environmental management,’ says Elton. The Ministry of Tourism and Environment (MoTE) of Albania announced that the parliament will pass a bill to abolish single-use plastics. For Elton, ‘this is the type of news that can attract visitors. Collaboration between local communities, local actors and decision-makers are going to be much needed.’

Mass versus sustainable tourism: same crisis, different impact

Mass tourism businesses such as coastal resorts have large overheads to serve high volumes of clients and often have agreements with few international tour operators that allow them to meet their target occupancy rates. Tourists that participate in mass organized trips tend to prioritize cost competitiveness and only travel in peak season months. These factors mean that mass tour operators operate at low margins and are reliant on limited markets. In Albania, they are reporting over five million booked per night cancellations for 2020 and may have to reduce staff and maybe file for bankruptcy in the coming months.  

In contrast, sustainable tourism tour operators such as Albanian Trip serving smaller niche markets have smaller overheads and a diverse client base in different source markets coupled with direct sales to consumers: “most of our clients are Scandinavian, American, British, Swiss, Germans, some Italians, Spanish, Latin Americans. In the last years, we’ve also started getting clients from Australia”, says Elton.

Sustainable tour operators’ clients place a higher emphasis on quality of the experience than on cost-competitiveness and their arrivals are less concentrated in the peak season: Elton mentioned his clients “are trying to postpone the tours to later in the year or to next year.  All our Swiss clients who have canceled for spring have left an open window for the tours to happen in September and October”.

Beyond the effects that tourism cancellations will have on mass and sustainable tourism businesses, the effects on their suppliers will also be different. A mass tourism business often relies on a few suppliers that are sometimes integrated into the group, such as catering companies or transport operators. The decrease in numbers of visitors will likely have a knock-on effect on these supporting industries.

On the other hand, sustainable tour operators have long-term relationships with a wide range of suppliers: as Elton explains, ‘most of my partners in rural areas are the owners of their businesses, and they’re small family businesses. Tourism is one of their revenue streams – they still do farming and other activities. They will survive’. The fact that local businesses are owning and working with trusted partners, in turn, prevents the most common problem in the tourism sector: tourism leakage. Simply, it means benefits leaving the host country and ending up elsewhere. Local enterprises invest in the hope of succeeding. However, in many instances, this is simply not the case.

In other words, small tourism entrepreneurs and suppliers, particularly in non-urban areas, are often strongly driven by non-economic factors such as lifestyle – these are issues of sense of place, and identity-related to operating an enterprise in a particular location, as opposed to purely profit motives. On the flip side, strong economic dependence on tourism associated with a high concentration of that tourism to a specific season might make regions more vulnerable.

So, what can a project like Risi do to help its partners?

This isn’t to say that tourism partners such as Albanian Trip won’t face difficulties: Elton mentions that given their size, Albanian Trip doesn’t have many resources set aside and ‘could resist for a year– but with a lot of cutting down’. For a company like his, tours (and revenue) ‘start in March and April is the start of the full season. Spring is very busy. Fall is also peak season – until mid-November.’ He adds that since the pandemic took hold of Italy, ‘every time we opened our inbox it was cancellation upon cancellation. It became very clear the season wouldn’t be normal. All business in spring is wiped out. Now I’m worried, but also hopeful about the autumn season’.

Since the beginning of March, Risi has been constantly exchanging partners to make sure we could respond to their needs while getting a sense of broader developments. Some of the actions that we are taking include:

  • Supporting tour operators with links to business development service providers to support them to access government support packages and manage their finances;
  • Engaging at policy level not only for immediate measures to support tour operators but also to ensure that the Government incorporates some lessons from this crisis and shifts away from mass tourism promotion to the promotion of Albania as sustainable tourism destination post-COVID 19;  
  • Exploring new ideas: as Elton mentions when talking about his rural suppliers, “this is a chance for them to deal with their logistics and their waste management” – both are areas that other SDC projects in the region are tackling and where Risi could work. And why not also explore opportunities around virtual reality for tourism?
  • Supporting partners by being there for them on email and the phone. This may seem like an obvious action, but it is still important to show solidarity.

Although mass tourism is a larger job creator, Risi selected sustainable tourism because mass tourism jobs are seasonal and tend to be precarious.

At this stage, while it’s still early to make informed assessments and the situation is evolving rapidly, it seems the current situation has vindicated the project’s decision to support the development of sustainable tourism in Albania as it shows higher resilience to external shocks. Perhaps the COVID-19 pandemic is an opportunity to pause and rethink seriously about how tourism is structured, so we can build a more resilient economy in the future.

Related reading

 

[1] Implemented by Helvetas and Partners Albania

Clara García Parra is the Component Lead in Private Sector Development for RisiAlbania. She has worked on the design, implementation, monitoring and evaluation of sustainable and inclusive systems development programmes across Sub-Saharan Africa, South-East Asia and the Balkans region. Through her work, Clara has used a range of development approaches and instruments, including systemic approach, challenge funds, and the development of DCED-compliant results management frameworks.
Mirtjon Mita works as Intervention Manager for Tourism at RisiAlbania, an SDC youth employment project implemented by Helvetas and Partners Albania. He has a long experience of working with private businesses as a consultant and in top management positions in some of the most important enterprises in Albania. He joined RisiAlbania in 2017. He holds a Bachelor’s degree in Business Administration and a Master’s degree in Corporate Finance from Sapienza University of Rome.
Admir Malaj
Admir Malaj is responsible for Monitoring and Results Measurement in the RisiAlbania project, which is a youth employment project implemented in Albania by a consortium of HELVETAS Swiss Intercooperation and Partners Albania for Change. He joined the RisiAlbania team at the end of 2016. He previously worked in different positions in the public administration and academic institutions on issues regarding mostly healthcare systems, social services and regulatory environment.
Programme Manager, East Europe, South Caucuses, & Western Balkans; Senior Advisor, Sustainable & Inclusive Economies