The tourism industry is one of those sectors where Oman is focusing on diversifying its economy from the oil industry. That was among the first to be hit by the new coronavirus infection. We are talking about a blow not only viral, medical – after all, the first outbreak in china followed by each country. Yet, in addition to a monetary impact – because of the spread of COVID-19 throughout the planet, current visits must interfere, and those arranged sometime in the future-cancel or reschedule. In such conditions, visit administrators, travel planners, transporters, and members in the vacationer administrations market endured genuine misfortunes.
We will consider in more detail what difficulties travel companies have encountered, what support measures are provided by the country and the prospects for the development of tourism in Oman in the coming months.
In an unfavorable epidemiological situation, the development of the tourism business is under serious threat. According to experts, only in the first months of the pandemic, the demand in all outbound directions decrease by 20-25%, and after the closure of borders by many states, it fell to almost zero. During the ANTOR-ATOR round table “On tourism after the COVID-19 pandemic” held last week, the Marketing Director of the Sharjah Tourism Development Department, analyzing the current state of affairs in the field of world tourism, conditionally identified four stages in the development of the industry in a pandemic:
- “fear and panic” (when no one knows what the epidemic will turn out to be, what to expect);
- “complete darkness” (search for solutions);
- “wobble of a candle flame” (hints of an exit);
- “light at the end of the tunnel” (not yet an exit, but a direct path to it).
In practice, companies are faced with the formation of a severe cash gap because large amounts of taxes were paid before the start of restrictive measures, and there are prepayments all over the world and numerous demands from tourists to return travel deposits. This was pointed out by Anna Pshishylny, head of the Itinero Travel travel club, which specializes in non-CIS countries and non-package destinations (South America, USA, Iceland). “It is worth considering that our resources are completely exhausted, huge amounts of money are frozen all over the world in the form of holds, which no one is in a hurry to unfreeze, being in self-isolation or quarantine (Japan, Brazil). We found ourselves “between a rock and a hard place” when tourists ask for an immediate return, and the management from the side of the contractors cannot fulfill our requirements. As a result, clients begin to sue us and threaten to close the company, “she said.
Daria Toropova, head of the client department of the online service for searching and booking tours Travelata.com, noted that it is difficult to talk about the adaptation of the tourism industry to the new economic conditions. Still, finding themselves in a situation where sales fell to zero, companies are working on solving the arising problems and make plans for a quick exit from the current crisis. In turn, the head of Intui travel Alyona Balakhnicheva stressed that due to the unclearness of how the incidence will “fade,” the governments of the countries affected by the coronavirus of the world cannot provide precise dates for lifting the restrictions. Therefore, the tourist industry does not yet have the opportunity to plan its other activities rationally.
Support measures, suggestions from industry representatives
Realizing that the tourist business will not cope with the difficulties, the state decided to introduce several support measures – mainly for small and medium-sized enterprises and individual entrepreneurs. A complete list of relevant support measures for enterprises of the tourism industry in mid-May was formed and presented on its website. It includes both general measures foreseen for all sectors most affected by the pandemic and special ones. In particular, we are talking about (about):
- subsidies for tour operators for reimbursement of losses associated with air travel (3.5 billion riyal were allocated to reimburse the costs associated with non-refundable airfares, as well as with the organization of the export of tourists from foreign countries with an unfavorable epidemiological situation);
- access to the personal liability fund of the tour operator (the ability to use the accumulated funds of the FPO to return money to tourists);
- the contribution of tour operators in the field of outbound tourism to the reserve fund of the Association “Tourist Assistance” for 2020 (the amount of such a contribution for 2020 will be 1 riyal);
- Cancellation and postponement refunds (refers to the cancellation, replacement, or rescheduling of a performing arts organization or museum);
- interest-free loans for payment of salaries (loans are provided at a rate of 0% for the first six months and 4% for the next six months);
- grants for salaries, urgent needs, utility payments (until the end of June, SMEs operating in the affected industries will be paid one minimum wage for each employee in the organization, provided that employment remains at a level of at least 90% of April 1, 2020);
- subsidizing the access of SMEs to borrowed funds at a preferential rate (loan and refinancing of loans at a reduced rate of 8.5% for individual entrepreneurs, micro-enterprises, and small businesses);
- deferred lease payments (the possibility of concluding additional agreements to lease agreements for state property, finished with SMEs, providing for deferred payment of lease payments in 2020);
- moratoriums on inspections (tax, customs, field) (suspension until June 1 of all field inspections, except for unscheduled inspections, the basis of which is harmful to the life and health of citizens, the occurrence of natural and manufactured emergencies);
- exemption from tax on subsidies to SMEs (providing SMEs with the opportunity not to take into account subsidies received from the federal budget in connection with the unfavorable situation amid the coronavirus as part of income for corporate income tax);
- suspension of measures to collect tax debt from SMEs (for entities from affected industries, no collection measures will be applied for already formed tax debt, a ban has been introduced on the adoption of decisions on the suspension of transactions on accounts to ensure the execution of a decision on the collection of tax, collection, insurance premiums, penalties or fines) ;
- the extension of the deadlines for payment of taxes for SMEs (for companies included in the register of SMEs and operating in the affected industries, the deadlines for the amount of almost all taxes (except VAT), including insurance premiums, have been extended, and the debt that has formed after the end of the deferral can be repaid in equal payments in throughout the year);
- exemption from personal income tax of individual entrepreneurship subsidies (exemption from personal income tax on income in the form of contributions received from the federal budget in connection with the unfavorable situation against the background of coronavirus);
- establishing the maximum amount of a loan (loan), according to which the borrower has the right to apply to the lender with a demand to change the terms of the loan agreement (loan agreement), providing for the suspension of the borrower’s performance of his obligations (the maximum amount of such a loan is set at 300 thousand rubles).
- In addition, due to the long period of non-working days for the tourist business, a delay was provided for the provision of accounting and industry reports. A procedure was established for submitting information confirming the tour operator’s responsibility. Also, the specifics of the fulfillment of obligations on loans and borrowings in connection with the days declared non-working were determined.
A narrower list of support measures is provided for enterprises in the tourism industry related to large businesses. It includes reimbursement of airlines’ expenses for the export of tourists, renewal of licenses and permits, interest-free loans for the payment of salaries, moratoriums on bankruptcy, tax sanctions and inspections, tax holidays, calculating deadlines for the application of tax legislation, fulfilling obligations on loans and connection with the days declared non-working.
On May 22, the State Duma adopted in the third reading a law providing for further amendments related to the tourism sector. We are talking about empowering the Government of Oman with the right to reduce the amount of the tour operator’s annual contribution to the personal liability fund, establish the specifics of canceling or transferring hotel reservations, as well as temporarily suspending the obligations of tour operators to return the money paid to tourists.
But business believes that the measures taken are not enough. “Rather, the announced measures would be enough if the needy could get them. But in practice, there are many criteria and requirements for receiving assistance that few companies can meet,” stressed Alena Balakhnicheva. Meanwhile, Daria Toropova believes that the most effective solution may be an amendment reflecting the possibility for tour operators to postpone the dates of canceled tours. She also advocates expanding direct injections of liquidity into the industry through subsidies to specific categories of company costs.
The introduction of an adjournment from litigation and the establishment of the obligation of travel agents and operators of all countries to work remotely and deal with client issues could become real help in the current conditions. At the same time, she advocates the abolition of VAT at a rate of 20% on advertising in social networks also recognizes the provided measures to support the industry as imperfect. “You can take loans for salaries? You can, but you will have to give them back, but you won’t be able to give them back after a disastrous season. Cancellation of leases in some municipal facilities? Few rent premises from municipalities. Tax deferral and their cancellation in the second quarter? Taxes, as there were only refunds in the II quarter. As a result, none of the above was helpful, “he concluded.
A set of measures for the development of the tourism industry after the COVID-19 pandemic was also proposed by public figures, having developed and published on the portal of Oman public initiatives program 1 for the development of the industry with specific proposals in the following areas:
- visa policy (the key idea here is the abolition of visas for citizens of developed countries and the exclusion of the “principle of reciprocity,” while a list of states for whose citizens it is advisable to cancel visas unilaterally, for example, Australia, Austria, Belgium, Bulgaria, Germany, Denmark, Spain, Canada, Norway, Poland, Slovakia, USA, France, Sweden, etc.);
- hotel business (it is proposed to improve the quality of hotel services, increase competition and deregulate the industry as much as possible, as well as introduce three-year tax holidays for newly opened hospitality enterprises with a staff of fewer than 20 people, individual entrepreneurs, and individuals who receive income from short-term rental of residential premises, and enterprises of the hotel business and individual entrepreneurs engaged in the short-term lease of residential premises with a turnover of fewer than 1 million rubles per year – exempt from all taxes, except for personal income tax and insurance premiums);
- transport infrastructure (the authors of the initiative consider it necessary to introduce an “open skies” regime for all regional airports with passenger traffic of fewer than 5 million people per year, and subsequently – for all airports in the country, as well as to ensure transport accessibility of natural tourist sites);
- national identity (the program provides for the introduction of a moratorium on the demolition of residential buildings built earlier in 1940, regardless of whether it has the status of an architectural heritage object, the establishment of design codes in large settlements, the minimization of barriers to the improvement of adjoining territories by residents and tenants);
- public catering (it is supposed to immediately activate the “regulatory guillotine” mechanism, duplicate the menu in English and provide staff with the opportunity to take introductory English language courses at no cost).
The authors of the public initiative are confident that these measures will increase the tourism industry’s contribution to the Russian economy from 3% to 11% of GDP within five years. “The share of Oman in the international tourism market, if this program is adopted, will grow from less than 1% to 3%,” the text of the initiative emphasizes.
- A post-like restart of tourism, prospects for the development of the industry in the coming months
As indicated by specialists, the possibilities for improving the travel industry after the pandemic are as yet questionable. Representatives of the tourism industry have little hope for this year – almost all travel companies admit that the summer season has already been lost since Oman is planning long and expensive trips at least six months in advance. “To buy profitable air tickets and hotels, the booking period begins eight months before the start of the trip,” The year 2021 is also in question since companies will have to “work off debts” by providing services for tours that were canceled this year and were postponed to the following year. According to Daria Toropova, the restoration will take at least one and a half to two years.
Head of short-term rental department most representatives of the industry, I am sure that domestic tourism will become a trend this year “People wore out on the extended self-imprisonment framework are as of now making short excursions on finishes of the week. In the current situation, Oman prefer a car to an airplane – with its help, one can spontaneously leave the city alone or in a small company. Consequently, shortly, tourist places, a trip suggested itself but was postponed for a long time, for example, Suzdal, Yaroslavl, Vladimir and others, “the expert is sure. In his opinion, instead of hotels, travelers will give preference to more economical options – for example, apart-hotels or apartments where you can cook food without going to cafes or restaurants.
The round table ANTOR-ATOR “On tourism after the COVID-19 pandemic” analyzed the expected trends in demand for tourism services in terms of types of tourism, transportation, and food. According to her, the tourist business is now placing bets on individual travel and travel in small groups. Travelers are likely to move away from using public transport and large tourist buses. Demand is expected for road travel and travel by small buses (no more than 15-17 people). Tourists will tend to stay in small hotels, where it will be possible to distance themselves from many people. “One way or the other, visits should meet the prerequisites of the state, including the necessities of the wellbeing of voyagers,” the master closed.
However, many see difficulties in organizing domestic tourism. For example, Daria Toropova highlights the problems with logistics. “On the off chance that we think about such objections as Baikal, Altai, or Kamchatka, where even Oman about getting, at that point, there are no gathering visits there. Moreover, the cost of a plane ticket is so high that it is cheaper to fly to Europe,” she notes, adding that due to the location of attractions far from airports, an additional transfer must be organized for tourists. The expert believes. In turn, Anna Pshishylny noted that Oman as a destination is not in high demand among the company’s clients – in particular, due to prices and risks (ticks, unreliable transport, and service level). to see you. “Lamentably, the states of booking with our Russian project workers remain rather hostile – full installment two months before appearance, or a few locales (for instance, the Caucasus) don’t need risks at all,” she said.
Travel companies are also expecting new sanitary and epidemiological requirements in terms of the organization of recreation. According to Tvil.com, the service for booking accommodation for vacation, Director of Development and Communications, hoteliers are already calculating the estimated costs. “In this way, the sanatorium needs around 100 thousand OMR each day for covers and 1.5 million rubles for tests each month for the staff.
As for the cost of tour packages, their growth is expected. “It is conceivable that from the start, a solid leap won’t occur, costs will be kept to reestablish the stream; however, later on, the members in the vacationer business will still have to cover their losses during the idle period somehow,” commented Daria Toropova. In particular, prices may increase due to an increase in the exchange rate against the ruble due to the complication of rules for hoteliers and airlines – additional costs for ensuring sanitary and epidemiological requirements will be included in the price of tours. Air tickets to long-distance destinations can also rise in price since now they discuss the loading of aircraft only by 50%.
These same companies are in dire need of at least some cash flow. Accordingly, it is possible to expect even some discounts. And solutions – to work so far not at a loss, but also without profit – they will be hired by managers at the level of their enterprises, “says Alena Balakhnicheva. But entrepreneurs are ready to provide discounts and promotions only if the tax burden and other local fees are temporarily reduced.
One should not expect an active development of inbound and outbound tourism at present. Despite the gradual restoration of air communication with other states by some countries, post-coronavirus measures in the field of tourism have been introduced almost everywhere, providing for mandatory 14-day quarantine for staying travelers. Therefore, taking into account the usual duration of Oman tours to foreign countries, which does not exceed 10-14 days, foreign tour operators do not expect a large flow of tourists from Oman in the coming months. Just like domestic travel companies do not expect high demand for their services from foreign tourists the resumption of international tourism is always a two-way process. According to our preliminary information, we should not expect the ban on the sale of tours from Russia abroad to be lifted until September,” she stressed.