Philippines: Tourism recovery to be gradual; small firms struggling to survive

THE recovery in the tourism industry will be gradual and will depend on how well governments arrest the spread of infection, though the industry is expected to report significant losses over the full year, according to the International Institute of Finance (IIF).

It said the industry in tourism-dependent emerging markets is disproportionately reliant on small and medium-sized enterprises, “which may find it more challenging than larger enterprises to survive.”

“Tourism accounts for a substantial share of employment in a number of large EMs such as Mexico, Thailand, and the Philippines and, under our baseline scenario, the economic impact may reach dramatic levels in many countries,” it said in a research note.

According to the Philippine Statistics Authority, employment in the sector was 5.71 million in 2019, equivalent to 13.5% of total jobs.

IIF’s base-case scenario for 2020 is for international tourist arrivals of 50% of 2019 totals.

“Even under more optimistic assumptions (75% recovery by the year-end), many countries would face an overall loss of 60% of arrivals, and thus tourism revenue,” it said, noting a second wave of lockdowns for tourism-centric countries could make matters worse, with recovery expected to take more than two years.

With the pandemic changing tourism behavior and highlighting the need to keep visitors safe, the Philippines may need to implement specific measures in order not to lag other countries in the region which have more successfully contained the virus, according to John Paolo R. Rivera, associate director at the Dr. Andrew L. Tan Center for Tourism at the Asian Institute of Management.

“Considering the rate at which we report cases relative to other ASEAN countries, it is giving the impression that the Philippines has a lot more work to do in ensuring prospective tourists are safe when they visit the country,” he said in a text message.

Mr. Rivera said traveler mindsets have been drastically altered by the virus, and the industry needs a comprehensive strategic plan to recover.

“Safety is now the primary consideration for tourists when they decide to travel. Are travel safety protocols in place? Are they clearly defined? Are they guaranteed to be strictly implemented?,” he said. — Luz Wendy T. Noble