North East University Bangladesh

Course Code: ECO-221

Course Title: Macroeconomics

Assignment Topic: Effect of COVID-19 in the tourism sector

Submitted To

Umme Humayara Manni

Assistant Professor

Department of Business Administration

North East University Bangladesh

Submission Date: 5th june,2020

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Introduction
Tourism is the most flourishing sector of a country that not only triggers economic growth
but also generates more employment opportunities and opens up multi-dimensional avenues
of socio-economic and cultural development. As Manila Declaration on World Tourism
(1980) provides that tourism has direct effects on the economic, social, cultural and
educational sectors of a country and their international relations.

The viability and existence of tourism extensively rest on the smooth functioning of
globalization since it is the ongoing process by which regional socio-economic, and cultural
factors are integrated through a globe-spanning network of communication and trade which
help expedite movement of goods, values, ideas and people around the world.

The president of the Tour Operators Association of Bangladesh (TOAB) remarks during a
press conference that, if this situation continues each company will have to go for the golden
handshake with 30% of their staff members. The World Travel and Tourism Council
assessed that, the coronavirus epidemic is putting up to 50 million jobs in the global travel
and tourism sector at risk. In another assessment the equivalent to a loss of three months of
global travel in 2020 could lead to a corresponding reduction in jobs of between 12% and
14%. The coronavirus outbreak therefore clearly poses a serious threat to the industry as a
whole, to those employed within it, and those wishing to continue traveling.

Effect of COVID-19 in the Tourism sector

Tourism is considered as a thrust and potential sector of Bangladesh. The government,
private, academic and research institutions are trying hard to develop and promote this sector.
COVID-19 has created unprecedented challenges in such efforts like other countries.
However, being a developing country and having very less to almost no social safety-net
tourism sector of Bangladesh has seriously been affected. According to WTTC (2019), it is
assumed that nearly 1.18million directly and another 2.43 million Bangladeshi people are
indirectly working in this sector who are affected by such outbreak which has severe socio-
cultural, economic, environmental and institutional impacts. Our Prime Minister Sheikh
Hasina has recognized tourism, hospitality and aviation industry as one of the sectors most
affected by the impact of this pandemic.

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The scenario of unemployment in the tourism sector of Bangladesh is quite alarming. For
example, the direct contribution of travel and tourism to employment in Bangladesh was
1,180.5 thousand persons in the year 2018. At the same time, it increased from 534.1
thousand in 1999 to 1,180.5 thousand persons in 2018 rising at an average annual rate of 4.42
per cent. "On the other hand, in 2018, the direct contribution of travel and tourism to
employment (of GDP) in Bangladesh was 1.9 per cent and the direct contribution of travel
and tourism to employment growth was 7.7 per cent".

Tour Operators Association of Bangladesh (TOAB) forecasts that, because of the outbreak of
Covid-19, tourism sector of Bangladesh will incur a loss of around 5,700 crore Taka. Around
40 lakh people are serving in this sector, including tour operators, travel agents, hotels,
motels, resorts, airlines, transportation, cruising and guiding of tourists. After consultation
with the concerned members, the TOAB has already estimated (from January to December,
20020) that the losses will stand approximately Tk5,700 crores. Therefore, in order to tide
the tourism sector over during the crisis, the TOAB recommended making sufficient
allocations to the tourism and hospitality sector for the next three fiscal years and demanded a
VAT waiver for the industry players.

According to a study (Knoema and The World Bank), travel and tourism sector generates the
highest number of employment (944 jobs per 100 tourists) in Bangladesh than any other
countries in the world. The direct contribution of this sector to employment was 1,180.5
thousand persons (2.2% of total GDP with 4.42% average growth since 1999). However, all
types of (inbound, outbound and domestic) tourism have been seriously affected in
Bangladesh amidst such pandemic. This caused complete loss of part-time and casual jobs
due to so called 'lockdown' situation of the country. The inbound tour operators had to cancel
their planned trips as well as the outbound tour operators which caused severe loss for these
small and medium-sized enterprises (SMEs). Such loss is yet to be calculated. It is predicted
that the pandemic will have a significant legacy effects on this sector for up-coming several
tourism seasons due to up-coming global financial recession.

Though the country's focus currently is rightly on fighting against the health crisis and
mitigating its immediate impacts, planning on how to resume the economy should start right
now. Considering the above circumstances, it warrants to develop, plan and implement crisis
management systems for tourism sector particularly focusing on COVID-19 to reduce the

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negative impacts due to its pandemic outbreak and assist in recovering from these crises. The
activities and projects should be guided by the Global Code of Ethics for Tourism.

Tourism Recovery Plan

In this regard, an integrated, functional and participative 'Tourism Recovery Plan' (a strategic
document that describes how an organization can quickly respond effectively if an incident or
crisis affects a business aiming to shorten the recovery time and minimize losses) warrants to
be prepared where the following recommendations may be considered:

 Tourism needs to be a part of national recovery plans due to pandemic COVID-19

outbreak.
 The loss in travel and tourism sector is essential to assess in order to prepare a priority
list of necessary actions with required time frame to make the recovery plan realistic.
 The percentage of this sector in GDP loss of Bangladesh should be calculated to
understand the situation better.
 Understanding the potential contributions and ability (economic growth, creating jobs
and transforming lives, social harmony, cultural development, environmental
amelioration, empowerment, etc.) of tourism to recover from such crisis should be
recognized before preparing this tourism recovery plan.
 Lifting travel restrictions to Bangladesh as soon as the health emergency allows,
promoting visa facilitation (allowing more on-arrival visas for the tourists), enhancing
marketing, consumer confidence and their satisfaction in order to speed up the
recovery process.
 Research-based solutions for safeguarding Bangladesh's tourism economy during
future pandemics and other crises need to be provided to the policy makers to take
decisive actions.
 Empirical research needs to be undertaken to assess the economic damage (due to the
pandemic) to the local communities who are dependent on tourism for their
livelihood.
 Tourism demand and supply should be assessed in a realistic manner. Actions should
be taken to fulfil the predicted gap between tourism demand and supply.
 Poverty is likely to be increased where tourism and remittances play an important
role. It is also a sturdy reminder of the interconnectedness of the world and the

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 importance of global cooperation to end this COVID-19 crisis and to be better
prepared for the future crises.
 Needs more quality job opportunities for the young, energetic, challenging and
enthusiastic university graduates to make tourism sector more attractive and
competitive.
 Women should be more encouraged to this sector to facilitate their empowerment
opportunities.
 This sector needs to be more dynamic and supported by modern ICT facilities.
 A good and healthy working climate in tourism sector should be ensured.
 The recovery plan should address the issues of sustainability to advance and promote
tourism sector.
 More emphasis to be given on the sector's contribution to the 'Sustainable
Development Goal' agendas and to construct resilience learning from the lessons of
the current crisis.
 Guidance and support for recovery measures among the public, private and other
concerned tourism stakeholders are required.
 Tax breaks for tourism-based businesses, reducing the cost of electricity, natural gas,
cutting interest rates, providing grants to the seasonal/casual workers.
 Tourism development needs a human capital base that is: abundant, highly qualified,
highly motivated, able to gain the economic benefits from tourism.
 Provide more human resource (both soft and hard skills) development facilities for the
people working in tourism sector to make them more competent to serve the best to
their guests to maximize their income.
 Tourism sector of Bangladesh is basically based on domestic tourists. However, there
are immense potentials of inviting international tourists who are fond of Bangladeshi
history, culture, hospitality and natural beauty. Tourism products and services should
especially be planned to target these international tourists which can foster our socio-
economic condition.
 Needs to take proper actions to make the tourist destinations attractive, safe for both
domestic and international tourists, excellent hospitality and tourism services,
comfortable and enjoyable accommodation, safe and hygiene foods and drinks.
 Bangladeshi people are generally not environmental and health consciousness. Even
the educated persons are lack of such consciousness and education. Tourism can play

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 an important role by its virtues to build such environmental and health consciousness
and education.
 The experiences of such recovery plan of other countries need to be availed to enrich
our plan.

Conclusion
COVID-19, a variant of novel corona virus, is the most buzzed word in the whole world these
days. Almost all business sector of the world is facing an array of complexities created by
this crisis. The situation is not positive for Bangladesh as well. Because of the COVID-19
issues the whole world is halted for the last few months. There are no wars going on but the
whole world is maintaining emergency lockdown situation. For the national safety issue,
traveling from one country to another is completely prohibited. Almost all of the countries of
the world are shut down, every domestic and international flight has been cancelled as well as
every medium of public transportations. The result of this cancellation is directly impacting
the travel and tourism sectors across the world. Almost all of the hotels, motels and resorts
are totally vacant.

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References
https://www.newagebd.net/article/106347/

https://www.observerbd.com/details.php

https://thefinancialexpress.com.bd