Impact of COVID-19 on the Philippine Tourism industry

Recovering from the pandemic

To help recover from the pandemic, 78% of the respondents say that they need up to PHP5m in additional funding to help normalize their operations. Majority say that they need such funds for working capital requirements, marketing fund to rebuild their brands, and refinancing.

With 91% of the respondents coming from the micro, small, and medium enterprises (MSMEs), it’s not surprising that 73% are planning to avail of government grants and subsidies to help revive their operations. 

Many businesses are banking on government subsidies and grants as additional funding

Mitigating the impact of COVID-19

To help businesses and individuals mitigate the impact of COVID-19, the country’s House of Representatives approved House Bill 6815 or the proposed Philippine Economic Stimulus Act (PESA) in June 2020. Once passed into law, an economic stimulus package amounting to PHP1.3 trillion will be provided in the next four years to fund the COVID-19 testing, wage subsidies, and assistance to MSMEs. Under the bill, PHP58bn will be appropriated to DOT-accredited tourism enterprises for the following programs:

1. Interest-free loans or issuance of loan guarantees with terms of up to five (5) years for maintenance and operating expenses
2. Credit facilities for upgrading, rehabilitation, or modernization of current establishments or facilities to be compliant with new health and safety standards
3. Marketing and product development promotions and programs
4. Grants for education training, and advising of tourism stakeholders for new normal alternative livelihood programs
5. Utilization of information technology
6. Other relevant programs, including infrastructure to mitigate the economic effects of COVID-19 on the tourism industry

Restarting the tourism sector

With the absence of revenues, majority of the respondents say that they can only sustain their operations for up to six months. Similarly, most of the respondents have a cash runway of up to six months.

How to restart the tourism sector after COVID-19 is one of the top questions leaders across the world are asking. In fact, 79% of the survey respondents say that they expect international tourist arrivals to decline by over 50% in 2020. A respondent shares, “I hope that the government and the Department of Tourism will be able to come up with a clear bounce back program immediately so the stakeholders may be able to make business decisions.” 

While the government is currently reviewing the possible financial assistance that may be provided to the tourism players. According to our respondents, access to customers, reasonably-priced consultants, and suppliers as among their top needs to have sustainable businesses after the ECQ.

In other countries, some of the initiatives to help restart tourism are as follows:

Singapore

• Funding to engage customers and maintain mindshare. 
• The Singapore Tourism Board (STB) has launched a US$20m Marketing Partnership Programme. 
• STB has also launched the SG Stories Content Fund of US$2m
• Online training to upskill workers
• Tools to accelerate digital transformation

Japan

• Go To Campaign - the government will subsidize half of domestic travel costs of up to ¥20,000 per night and issue coupons that can be used at souvenir shops and elsewhere
• Creating attractive stay content for diversifying customers, etc.
• For Japanese consumers who purchased domestic travel products during the period via travel agents etc., coupons equivalent to 1/2 of the price (including accommodation discounts, coupons, and usage coupons for local products, restaurants, facilities, etc.) are given

Thailand

• Project to develop the capacity of entrepreneurs and personnel in tourism to improve the quality of service and build confidence for tourists
• CCTV installation in important tourist attractions to maintain the safety of tourists in Chiang Mai, Surat Thani, Krabi, Chonburi and Phuket provinces
• Project to promote and upgrade tourism operators to Thai tourism standards
• Project to promote the development of accommodation for tourism in the community

Getting back in flight

The Philippines has beautiful islands that will once again attract the tourists after the pandemic. Nevertheless, the country should take this opportunity to rebuild the sector by helping the players upskill and digitalize, rethink the way they do business, and ensure compliance with safety and health standards. Promoting medical tourism and agri-tourism may be among the programs that the country can prioritize to help restart the sector.

While the Philippines is experiencing difficulties at this time, Filipinos should remember that through combined efforts and hard work in the past, the country was able to grow the tourism sector, and made it one of the top GDP contributors. With the country’s renewed commitment, Filipinos can be confident that that the tourism industry will achieve better success after this pandemic.

1. Tax incentivized business
2. Removing barriers to accessing financial support
3. Loan grants
4. Generate a platform for the promotion of MSMEs
5. Loan guarantee scheme that creates modest value
6. Provide a program for entrepreneurs to take up service oriented activities
7. Create a program for startups
8. Capacity building seminar