During the recession and drought, tourism was one of the last sectors that gave impetus to the economy of Namibia. Measures against the spread of COVID-19 are flooring this sector. When it will rise again is written in the stars.
After the main flight connections to Europe had been blocked in mid-March, thousands of tourists in the country were rebooked for remaining flights via South Africa and Angola or returned to their home countries via return campaigns. For everyone involved, whether tourist, accommodation, car rental company, tour operator or airline, this meant a high degree of stress, time and costs.
In addition, the crisis uncovered huge depths in the travel business, which now prove to be devastating. The main market is still Europe. There the customer is backed by the travel law of the European Union (EU). If he is unable to start his trip due to circumstances beyond his control, such as travel restrictions, he is entitled to a full refund.
Expenses without income
What appears to be justified in normal everyday life, has fatal consequences for the entire industry in the event of a global travel freeze. The tour operator in Europe has to reimburse the full amount despite the work done. In one fell swoop, he hardly has any income because, due to the uncertain situation, practically no new trips are booked. However, operating costs such as rent and salaries must continue to be paid.
His partner in Namibia is in similar trouble. The local tour operator is not paid for his work, such as booking, organising and cancelling the trip, and has ongoing expenses, but little prospect of new income. The company might even face cancellation fees if cancellations are made less than 30 days before the customer’s arrival. Not to mention the additional costs due to the lockdown, which requires an adaptation of work processes to the work of staff from home. Large tour operators with many employees and their own vehicle fleet are more severely affected than small companies that only organise self-drive tours and book rental cars.
The accommodation establishment, as the last link in the chain, also has no income anymore to cover the running costs. Cancellations cause additional unpaid work. The property is usually waiving cancellation fees to help the tour operator or not to lose his favor for the time after Corona.
Fight for survival
The tourism industry, free falling, is desperately looking for foothold. The most pressing problem is the lack of liquidity. Tour operators in Europe appeal via video clips to their customers to rebook instead of cancel. Since nobody can say when it will be possible to travel again, they also offer vouchers with a validity of up to 18 months. EU countries like France and Belgium tolerate this, even though it violates EU travel law. Other countries like Germany ask the EU to approve the voucher system.
Rebookings and vouchers may prevent immediate repayments, but do not generate new income. In addition, tour operators must reorganise and book the tour for the later period without getting paid. The same applies to accommodation establishments. And should the customer not be able to redeem the voucher within the validity period, for whatever reason, operators, rental car companies and accommodation finally must reimburse the amount.
Some countries, including Germany, provide billions in loans. But even this cannot compensate for the losses. The developing country of Namibia, marked by recession and drought, has hardly any resources and must first think of the thousands of citizens who are losing their income across sectors due to the now nationwide lockdown: For many recession-weakened companies Corona is the kiss of death.
The travel restrictions are also likely to have catastrophic consequences for the wildlife of Namibia. State parks such as the Etosha National Park lose income from park entrance fees, conservancies lose revenue from hunting and accommodation concessions. Private nature reserves must fund the protection of their game without the income from their lodges and game drives. The surge in unemployment is likely to lead to a boom in poaching. The win-win-win concept “tourism finances nature conservation and creates jobs” collapses like a house of cards.