Coronavirus: Tourism crumbles

Massive job losses, closures on the horizon

26 March 2020 | Tourism



Less than 10 days after Namibia’s government announced the first travel restrictions to curb the spread of the Covid-19 pandemic, the country’s tourism industry has cratered with mass job losses and company closures on the horizon.

“The Covid-19 crisis has already had significant and far-reaching consequences on the tourism industry,” Bernd Schneider, chairperson of the Federation of Namibian Tourism Associations (Fenata), said this week.

He said the sudden halt to income has caused the industry to flatline and warned that many companies simply don't have the financial reserves in place to weather a zero-income storm.

Schneider underlined that no one in the industry is immune from the pandemic’s disastrous impact.

“It entails everyone, from the smallest companies and individual tour guides to large lodges."

Schneider said the standstill in the tourism industry will lead to devastating ripple effects for the country’s economy, seeing that it was one of the few sectors still performing well during the recession.

To date, there are few indications of how the industry will staunch the deadly blood loss it has sustained.

While tourism umbrella bodies, including Fenata and the Hospitality Association of Namibia (HAN), have held several crisis meetings with government and banks over the past weeks, no solutions have been announced.

Schneider warned it will be difficult for Namibian authorities to mimic efforts by fiscally healthier countries that have rolled out support mechanisms for citizens and businesses impacted by the pandemic.

The Namibian tourism sector directly employs 47 000 people, while indirectly 120 000 people's jobs are linked to the sector, including restaurants, vehicle service companies and others.

“The impact is unprecedented. We will unfortunately see that many in the industry, and those who service the industry, will not survive this,” Schneider said.

He added that while preliminary figures on possible job losses and closures of companies are not yet available, the picture looks bleak.

“The only thing that will help anyone through this time, is if somehow they secure sufficient cash flow to weather the storm. And unfortunately, very hard decisions have to be taken now.”

Hold tight

Heinrich Hafeni of Hafeni Tours and Travel, and the owner of a restaurant at the coast, confirmed that his tour operations and restaurant have come to a virtual standstill since last week.

“Hafeni Tours is in the same boat as everyone else. We are thinking about how we will pay the bills next month. The pandemic has caused havoc.”

He said his restaurant has seen only a trickle of customers due to "increasing fear."

Like others in the sector, Hafeni says he has reached out to staff, partners and banks to find ways to survive the coming months without having to close shop entirely.

Major job losses

HAN’s Gitta Paetzold agreed that the industry is facing a “huge test”, stressing that many in tourism face huge overheads, with zero income expected for months.

She said while the goal is for companies to do everything they can to keep their doors open, “given the scope of the crisis we will see many companies fold and close. There will be major job losses.”

Paetzold said the sector is advised to act within the scope of applicable labour laws, but added: “At this stage, we also need to appeal to everyone, including staff and authorities, that extraordinary times call for extraordinary measures. The situation is dire, and in a time like this, we all need to support each other.”

In addition to doing everything to protect jobs in the long run, the industry has been advised to relax normal cancellation fees as a move to encourage the postponement of business, rather than wholesale cancellations.

Labour ministry executive director Bro-Matthew Shinguadja this week confirmed that the Labour Act’s section 12 (6) can be invoked “in situations like this.”

The section allows businesses that suffer economically and can no longer afford to pay overheads to reduce an employee’s ordinary working hours and pay for no longer than three months.

Labour experts however advised that employees should be consulted before such steps are taken, noting that in many cases solutions are found that are “simply and widely accepted, which will keep the good spirits between employer and employees alive.”

Singhuadja underlined that the law does not make provision for forced unpaid leave. However, “unpaid leave may be an alternative, provided it is mutually agreed to and so recorded.”

Domestic tourism

Environment and tourism minister Pohamba Shifeta this week confirmed the ministry has met industry players for crisis talks in the past week.

He said the ministry’s technical committee is looking at the suggestions put on the table, but could not yet confirm if any offers to help can be extended by the government.

The minister conceded that this year “will not be good for tourism” and said while it is unclear when the pandemic’s restrictions might be eased worldwide, it is important to remain optimistic about tourism’s future.

The minister nevertheless cautioned against a drive to promote domestic tourism for the next 30 days, “until we are sure there are no internal transmissions”.

Remain hopeful

Fenata’s Schneider underlined that despite the grim reality he believes there “is light at the end of the tunnel. In the aftermath of Covid-19 we have a lot going for us. We are a destination with limited population density, which people will be looking for. And our general reputation as a travel destination has not been tarnished. So, depending on how we position ourselves, how we survive this, getting to the other side might be very positive for us.”

For now, Fenata advises tourism companies to work with staff to find ways how to protect their jobs in the long run, to cut unnecessary expenditure, and to get in touch with banks before cash-flow problems become serious.