For a new and just economy in tourism

Using stimulus packages and bailout programs to transform tourism

Antje Monshausen
Empty Road in India
© Sankalp Sharma - Unsplash

Experts estimate that, in 2020, international tourism could drop by 60 to 80 percent and, worldwide, some 100 million jobs could be lost, and will not be quickly recovered. In Germany, three quarters of hotel, gastronomy and tour operator employees still have reduced working hours. In March and April, this was the case for more than 95 percent of the hospitality industry. Globally, the situation is even more dramatic: In most of Brot für die Welt’s partner countries, reduced hours compensation is non-existent, leaving the people who live off of tourism standing directly before a financial void. Where governmental protection schemes do exist, they only apply to companies’ direct employees, but not to tour guides, rickshaw drivers or beach vendors. On a global scale, some 50 percent of all tourism-related jobs are in the informal sector.  The situation is especially precarious for the many millions of foreign seasonal workers in tourism, about one million of which are employed on cruise ships alone. Many of them lack the financial resources to return to their home countries, or borders have been closed. These workers are stuck abroad with no income, while their families back home miss not only the family income but also a mother or father.

Taking instead of giving

However, people suffer not only because of faulty social security systems, but also due to irresponsible business practices. The TUI Group, which received a government-guaranteed loan in April amounting to € 1.8 billion in German taxpayers’ money, paid out a dividend of over € 300 million in February. That was not before the “Corona Crisis”: Almost two weeks earlier, the World Health Organization had already announced the global health emergency, and airlines were starting to cut routes. Since then, TUI has announced its decision to cut 8000 jobs and the company has suspended subsequent payments on travel that already took place between January and March. Hotels and their employees in Thailand, the Caribbean and Spain are among the affected.

Small businesses and specialists in developing countries hit hardest

While most of the generalist industry, that is, large corporations catering to the mass tourism segment, will somehow manage to make it through the crisis with government aid, cross-financing structures and tax avoidance strategies, small, specialised tourism suppliers now have their backs to the wall. A tour operator specialising in hiking tours in Peru or Cambodia cannot simply switch to offering active holidays in the Alps. A safari specialist in East Africa has no holiday rentals on the island of Sylt that can be used, thanks to the booming rise in domestic tourism, to cross-finance– at least basically - their running costs.

Many of these specialists are small or medium-sized enterprises. When they are gone, not only will their service providers around the world be left out in the cold. Also the possibility of personalised travel made possible through encounters on eye-level will also disappear. The industry as a whole is at risk of losing the pioneers in sustainability, who had proven in recent years that responsible business practices in tourism are possible, thus also driving travel discounters in the same direction.

Overcoming the crisis, towards a new travel economy

First of all, every job in tourism that is lost is dramatic, and people must be protected from poverty and insecurity. But this is not just true with respect to the COVID crisis; it was too often ignored before this as well. The Federal Association of the German Tourism Industry (BTW) has been pushing for extensive rescue packages in response to the COVID crisis, on the grounds that 62 percent of people working in tourism are in the low-wage bracket, whereas this figure is just 18 percent on average in other sectors. With this line of reasoning, it is clear that they are not concerned with making a lasting improvement in the circumstances of workers in tourism, but rather in consolidating the status quo, in which profits rely on low wages. The major travel associations have never made a concerted effort for the industry to improve the wage structure in tourism or to tackle the issue of widespread avoidance of the minimum wage, not even in the years of booming tourism in the past.

A new assessment of travel, in terms of price and in sustainability and quality, is urgently needed. It is striking to see that a majority of the businesses operating in the tourism and hospitality industry do not have sufficient reserve funds to help them get through two months of total loss of business with their own resources. This is the fallout of cut-throat price wars and a communication strategy of “you deserved your holiday” over the years.  Yet this has nothing to do with the “democratisation of travel” repeatedly invoked by mass tourism lobbyists. While top earners would rather go on holiday three times a year instead of two, there are still too many children even in rich Germany whose families cannot afford to let them go on their class trip.

Using stimulus packages for designing the transformation of tourism

Since government funds for aid packages, rescue schemes and stimulus programmes are limited, priorities must be made. It is true that the tourism industry has been and continues to be particularly hard hit by the lockdowns and global travel restrictions, making short-term help necessary. But not every business model in tourism must be maintained; the crisis and the government aid linked to it offer the chance to correct some of the more unfortunate developments from recent years, such as travel products like cruises or weekend getaways to other cities by plane, but also management concepts like outsourcing.

In the medium term, economic aid must be tied to a shift away from the principle of maximising profits, to business models that take the climate and the weakest links in the value chain into account. Right now in particular, the parliamentary process in Germany regarding the long overdue supply chain law cannot be allowed to fall by the wayside, because this law would make it possible to bolster the labour rights of hotel employees and the opportunities for participation by the inhabitants of holiday destinations even with respect to international tour operators. The mobility transition, which could significantly reduce the negative impact of short and medium distance travel on the climate, is now more important than ever, and actively contributes to (climate) crisis prevention. Whereas the French government has intervened in the bailout of Air France, removing short-haul flights from the programme, for example, the German federal government has not exerted this influence on Lufthansa: the nine billion euros in government aid represent merely an expensive bailout, but not a much-needed proposal for the future.

Towards global support, away from isolationism

It is also important to reflect on the globalisation nexus, which have become even more visible in the era of COVID-19, instead of supporting new isolationism. Development cooperation funds are not at odds with stimulus packages, but instead complement them in a necessary way: by financing educational programmes and bolstering basic health and mobility infrastructures, as well as supporting local trade, local economic structures become more resilient and, thus, more crisis-resistant. In tourism, it is clear that when there is domestic demand in addition to international visitors, tourism businesses will weather a crisis like the COVID pandemic much better. Ultimately, this also benefits the tour operators and holiday-makers in these countries who - when travel in developing countries is once again possible without running the risk of introducing the virus into fragile health systems - can build upon existing structures, offering high-quality travel options that increase global solidarity and empathy for the world.

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