Mr. Marcus Cotton
Managing Director, Tiger Mountain (P) Ltd.
Tourism is one of the world’s largest industries and a massive global employer. For Nepal, tourism is an important source of foreign exchange reserve as well as employment with the sector contributing around 8 percent to the nation’s GDP. However, the recent coronavirus pandemic has pushed the sector to the brink of closure. Since the commencement of the nationwide lockdown and other travel restrictions, the operating margin for the sector has drastically reduced. In this backdrop, to understand the impact and predict the possible future for the sector post the pandemic, NEF reached out to Mr. Marcus Cotton, Managing Director at Tiger Mountain (P) Ltd. to gain more insights and prepared a brief neftake as below.
Impact on the tourism sector
The impact of the pandemic on all business activities and sub-segments within the tourism sector has been massive. The global nature of the pandemic coupled with limited knowledge of the virus is further exacerbating severe repercussions on the domestic economy. In a realistic assessment, there will be little to no international travel in 2020 as the pandemic is far more severe than any other national adversities of the past. Thus the industry will lose a year’s business. Few companies globally are designed to operate or survive such circumstances.
That said, Nepal has had many adversities in the past and any well-established business that has hollowed out its balance sheet or borrowed excessively and failed to retain significant reserves has made a grave error of judgement.
Tiger Mountain intervention
Tiger Mountain is closed in line with government orders and has 33% staff on duty for maintenance, training – the major focus being on re-opening and new protocols for hygiene and health, security and fire piquet duties. All are kept in isolation from the community and vice versa. The rest are on leave or working from home. Having seen the past political and social disruptions that emergencies have on cash flow, our company maintains strong cash reserves which enable us to keep all our staff on full pay for an initial six months (i.e. Chaitra to Asadh).
Our back office systems were designed to be resilient both in support of the New Zealand Consulate hosted in our Kathmandu Office and due to the semi-remote nature of our property; this has worked well – we have done many drills for just this sort of eventuality, but hardly expected a viral pandemic to trigger operations ‘for real.’
The global pandemic comes at a vital time for Nepal’s tourism sector. The pause is actually a blessing in disguise for the industry to introspect, think, recalibrate and assess why tourism? what tourism? how tourism? For too long the country has not taken stock of the tourism potentials, pitfalls and approaches. This is a God-given time where we can lift sustainability from a niche to the heart of the industry. The days of lip-service and greenwashing are over.
Since international, especially long-haul and multi-point, travel is going to be negligible in 2020 we must focus on domestic and immediate region tourism. This means Nepal, China and India principally; two vast markets with point to point air access and Nepal’s domestic market has grown significantly in recent years.
Similarly, drafting practical, eco-friendly, and appropriate standards and guidelines for industries will also be needed in the post crisis period. The government has limited ability to offer bailouts or similar financial incentives. However, allowing greater flexibility for interest payments, tax submissions and other reporting dates could assist. Moreover, merging the current and next fiscal years is a possible option for the government to consider.
Business must stand on its own feet and stand tall – shareholders need now to inject capital rather than extract it and to protect their employees. It is time also for Nepal to take fully on board that the tourism industry is global and Nepal competes on a global stage – will we really be ready when travel regenerates?
The above Expert Speak edition is written by Mr. Marcus Cotton. He is the Managing Director at Tiger Mountain (P) Ltd.