Without a doubt, the tourism industry is among the sectors that have been

greatly affected by the COVID-19 pandemic. The closing of borders, airports,

and hotels as well as restrictions on mass gatherings, land travel and related
services across the world put around 100 to 120 million jobs at risk, as
estimated by the World Tourism Organization.

In the first quarter of 2020, the period when the travel restrictions and lockdowns
in most countries started, international tourist arrivals declined by 22% resulting
in an estimated loss of US$80bn in global tourism receipts. In such period, 97
destinations have totally or partially closed their borders for tourists, 65
destinations have suspended international flights totally or partially, and 39
destinations were implementing the closing of borders (i.e., banning the arrivals
from specific countries).

International tourist arrivals by region in Q1 2020

In the Philippines, the government closed the airports in Luzon on 20 March as

part of the Enhanced Community Quarantine (ECQ) that started in the island on
16 March. The tourism sector has already felt the negative impact of the
pandemic on its performance much earlier. In other countries, travel restrictions
and measures have started as early as January of this year, and have impacted
the Philippine international tourist arrivals. Domestic tourists, on the other hand,
also limited their travel for fear of contracting COVID-19. The Department of
Tourism reported that international tourist receipts in the first quarter of the year
declined to PHP85bn, 36% lower than the revenues in the same period last
year.

To understand the impact of COVID-19 on the Philippine tourism industry, PwC

Philippines, together with the Department of Tourism, surveyed 247 decision
makers across the different subsectors in May 2020.
Forty-four percent of the respondents are from the tourism services sector (i.e.,
travel agencies, bookings, tours, etc.), and 34% are from the accommodations
sector. According to the survey, 97% say that COVID-19 has the potential for
significant impact on their business operations, and is causing them great
concern. Such finding is not surprising given that only businesses related to
essential services and products were the only enterprises allowed to operate
during the ECQ. Because of the low demand and restrictions, majority of the
respondents say that they temporarily stopped offering a service/product,
reduced their level of operations, and reduced the employee headcount.

Over 70% of the respondents belong to the tourism services and

accommodations subsectors

Tourism-related businesses have opted to temporarily stop offering their products/services during the ECQ, either due

to restrictions or low demand

78%61%44%43%33%22%22%20%14%11%8%7%3%13%Temporarily stopped offering a product/service due to the

currentrestrictionsTemporarily stopped offering a product/service due to lack of demandReduced the level of
operationsReduced the employee headcount to save on costsImplemented cost reductions aside from employee
costsPrepared a business continuity plan Deferred expansion plans Cancelled a planned investment Availed
loans/funds from external sourcesStarted offering a new product/service to adapt to the consumers'
currentneedsTemporarily offered goods and services through a different platform forwider customer reachUsed the
company's property/ies for other purposes to generaterevenuesAvailed loans/funds from existing
shareholdersOthers0%10%20%30%40%50%60%70%80%90%

Impact of COVID-19 outbreak on the Philippine

Tourism industry

Given the travel restrictions and closure of businesses, 88% of the respondents
expect losses of over 50% of their 2020 revenues. Sixty-three percent of the
respondents also say that they expect their businesses to normalize within six
months to over a year. Such findings are worrying because the tourism industry
contributed 12.7% of the country’s GDP in 2019, and provided 5.71 million jobs
in the same year.

Globally, the World Travel and Tourism council estimated that it could take up to
ten months for the industry to recover.
Nine months since the virus was first detected in China, there is still no sign that
the spread is slowing down. The road to recovery can take longer than initially
anticipated. Fitch forecasts that tourist arrivals and tourism receipts will not go
back to pre-COVID levels even five years hence.

The country had a stellar performance in 2019 with 8.3 million tourist arrivals
and PHP550.2bn in international tourism receipts. Latest estimates show that
2020 tourist arrivals and international tourism receipts will go down to 3.9 million
and PHP279.5bn, respectively.

Note: f - forecast Source: Fitch

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

Sources of funds to be obtained in the next 3 to 6 months

Most businesses need funding to normalize their operations. It will be

mainly used for working capital, and marketing and promotions. 
 Around 78% need up to PHP5m in additional funding to normalize their operations after ECQ

Over 50% of the respondents plan to use their new funding to support working capital requirements, and rebuild their

brand

61%54%41%33%32%22%19%4%4%Working capital requirementsMarketing fund to promote the

brand/businessRefinance existing obligationsImprove the company's facilitiesRehire the employees that had to leave
duringthe ECQImprove the company's technologyInventories/materialsHire additional
employeesOthers0%10%20%30%40%50%60%70%

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.” 

Government assistance is needed to help businesses survive the impact

of the pandemic

Many tourism-related businesses can sustain their operations and cash up to 6 months only.

11%32%24%10%23%32%35%21%6%7%21%37%21%9%11%Company runwayAbility to sustain the business if the

ECQ is extendedAbility to stay solvent1 month2 to 3 months4 to 6 months7 to 12 monthsOver 12 months010203040

How the government can help tourism-related businesses

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

The industry expects a significant decline in international tourist arrivals,

and almost all consider insuring their businesses for pandemics

International tourist arrivals are expected to dramatically decline in 2020.

Including pandemics as part of insurance coverage

of respondents say pandemics should be included in the coverage

Insuring businesses for any eventualities/crisis that may arise

of respondents consider insuring their businesses for crises events such as

COVID-19 pandemic

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.

COVID-19 and Transportation in the

*Philippines
James Gonzales Uncategorized July 28, 2020

Since the appearance of the first case of COVID-19 on Philippine shores, the
country has seen a rapid shift in attitudes and cultural norms. The presence of
a pandemic has created a need for increased health and safety measures
across the country, many of which have changed the fabric of Philippine
society completely.

We’ve previously discussed the beginning and impact of COVID-19 in

previous articles on this site. We had a brief introduction to the novel
coronavirus in our article titled ‘The Worst Pandemics to Ever Hit the
Philippines’. As the spread of the virus progressed all over the world, norms
around working have changed, as you’ll find in our article ’30 Tips for
Professionals Working from Home During the COVID-19 Pandemic’. And
finally, post-Enhanced Community Quarantine, we’ve taken a look at COVID-
19’s impact on the Philippines’ tourism industry.

We’re only just beginning to understand the breadth of the impact of the virus
on our daily lives. On the whole, the Philippines has begun working towards a
return to normalcy, but there are some things that have turned out different. In
today’s article, we’ll take a look at one of these changes: what COVID-19 has
done to the transportation sector in the Philippines.

Transport in Community Quarantine

Not long after local transmission of the virus was confirmed, the Philippine
government instituted an Enhanced Community Quarantine (ECQ) to combat
the spread. ECQ was first declared for Metro Manila beginning March 15, but
was soon extended to the rest of Luzon. Lockdown measures were also
implemented to varying degrees in other locations in the archipelago.

The institution of ECQ caused a major shift in business and daily life. All non-
essential production and manufacturing was shut down, with malls and
businesses following suit. The transportation industry in the Metro also had to
take a pause, with mass public transport shut down and private transport
restricted to local areas only. For companies that remained open out of
necessity, Nikkei Asian Review reports, transport arrangements had to be
made for essential employees in order to ensure they could make it to work.

As the lockdown extended and became a Modified Enhanced Community

Quarantine (MECQ), more private establishments and businesses began to
open up. However, according to AutoIndustriya, despite the gradual opening
up, mass public transportation remained closed.

This again put the burden of transportation on private companies, which

according to Presidential Spokesperson Harry Roque were required to
arrange for private shuttles for their employees. If the shuttle was registered to
the company, there would be no need to apply for a permit. However, if the
company rented the services of another shuttle or van service, they would
have to obtain a permit from the LTFRB in order to continue operations.

Transport Post-Community Quarantine

The Enhanced Community Quarantine eventually came to an end on May 31,
2020. However, this didn’t necessarily mean a return to normalcy. Metro
Manila transitioned into General Community Quarantine (GCQ) on June 1,
while other areas in the country were placed under GCQ or Modified GCQ
(MGCQ) depending on the local situation. The Philippine government
declared that public transport would resume in two phases, with new normal
protocols including mandatory face mask-wearing and use of cashless
payments.

As the transition to GCQ began and more businesses prepared to open

up, Rappler reported that the country could soon see an intensification of the
public transport crisis. In order to follow social distancing guidelines, transport
in Metro Manila would have to be stretched beyond its limits.

The Metro Rail Transit 3 (MRT-3), one of the country’s busiest train lines, was
set to operate at only 13% capacity due to new guidelines. Light Trail Transit
(LRT) Lines 1 and 2 would only see around 160 passengers per trip.
Additionally, the Philippine National Railway (PNR) connecting other areas in
Luzon to the Metro would only serve 500 people in its 3 to 4-car trains.

Other modes of transportation saw similar reductions in capacity. Buses,

Public Utility Vehicles (PUVs), and Public Utility Jeepneys (PUJs) were
instructed to operate at less than 50% capacity. UV Express shuttles were
permitted to operate only if they served up to 9 passengers per trip, while
jeepneys could only serve around 10 passengers per trip, or half their
capacity.

Reporting by CNN Philippines revealed that 90 buses employed for MRT

augmentation would only have four pick-up and drop-off points along EDSA,
the capital’s major thoroughfare. Taxis and P2P buses were also allowed
under certain restrictions, as well as operations such as GrabCar.
However, despite relaxed restrictions the public transport situation in the
Metro is far from adequate. Perhaps the most tragic example of this
inadequacy is the death of single mother Michelle Silvertino, who passed
away after waiting several days for a bus to take her to her home province.
While an extreme case, Silvertino’s death is only one of the many
consequences of a failing transport system.

Still, Filipinos have been forced to turn to other options for transport. The
GCQ has seen an increased use of bicycles, which the Department of Interior
and Local Government (DILG) permits only on secondary roads and not on
national highways. In order to accommodate this growing sector, the
Department of Transport (DOTr) has begun installing bike racks at major train
stations across the Metro.

While the Philippine government has declared a transition to the new normal,
this new normal has presented the Filipino transport sector with new
dilemmas. Following health and safety protocols has led to a reduced capacity
and stranded commuters. As the rest of the world begins moving into a post-
COVID-19 era, it remains to be seen whether the transport industry in the
Philippines will manage to catch up, or fall behind.