What would the growth in Nepal’s tourism sector mean for creating employment?

Nepal’s tourism sector has shown robust growth in recent years to become a major component of the national economy. In 2018, tourism related activities contributed towards 7.9% of Nepal’s GDP while its share in total exports was around 25%. It provided employment to 8.1% of the labor force which is comparatively much higher than other South Asian countries.

A peek at employment generation of areas under tourism (Table 1) shows that food and beverages, related accommodation for visitors, and road passenger transport are the three major employment providing sectors. This is not surprising given that ‘Accommodation and Food Services’ segment has one of the largest concentrations of enterprises in the country .

Table 1: Contribution to employment by various areas of tourism (for Nepal)

Source: ILO (2020) COVID-19 and employment in the tourism sector: Impact and response in Asia and the Pacific

What is perhaps more interesting is that employment in tourism sector is informal, with over 70 percent  or more precisely about 3 in 4 workers in the sector working without access to social security, paid annual leave, or sick leave.

On 1 January 2020, the ‘Visit Nepal 2020’ campaign was officially introduced as it aimed to attract 2 million tourists. This was in line with the 15th five-year plan in which the government had set an ambitious target of attracting 3.5 million tourists by 2025 and generating USD 2 billion in revenues. In 2019, the number of international visitors to Nepal was about 1.19 million, which was 24% more as compared to the year 2018. However, in response to the worldwide increasing case of COVID-19, and with the first case in mid-January in Nepal, the government was forced to suspend the “Visit Nepal 2020” initiative on March.

The government imposed a nation -wide lockdown from 20 March that suspended all national, international flights followed by massive cancellation of hotel bookings, leaving about 10,000 tourists who had entered Nepal before lockdown stranded. Businesses/industries were at a complete halt during March and April. Hotel Association Nepal (HAN) and Restaurant and Bar Association Nepal (REBAN) estimate losses of at least NPR 3 billion and NPR 2.6 billion only for the lockdown period.

For the recovery of tourism industry, the government allowed hotels, restaurants to operate since the first of August 2020 and likewise permitted the operation of domestic and international flights to few destinations since 1^st of September 2020 with highest level of safety and hygiene. Similarly, the people involved in tourism/hospitality sectors are being been provided extensive trainings and orientations to maintain highest standard of sanitation and hygiene.

Nepal typically receives most tourists in October/November followed by February/March, which are considered to be peak seasons in the industry. A total of 220,120 foreign tourists have visited Nepal in 11 months of this year. January, February, and March witnessed the highest footfall in 2020.

Source: https://www.nepalisansar.com/tourism/visit-nepal-2020-tourist-arrivals

In November 2020, a total of 1,957 foreigners visited Nepal. Out of the total, 477 tourists were from the USA followed by 295 from the UK, China (209), India (123), Russia (102), and the rest from Canada, Japan, South Korea, Australia, France and Belgium. The sudden rise in the numbers of tourists since the month of November has pushed the Nepal Tourism Board (NTB) to start preparing strategic plans to attract more tourists into the country.

The resurgence of foreign tourists in recent months can be stable depending upon the severity of COVID-19 restrictions adopted and whether potential visitors can be assured that proper safety measures have been taken. Short term recovery will depend on two sources, Indian tourists coming in via road through the Nepal- India border and domestic tourists. The recent boom in accommodation and food services enterprises in border towns of Nepalgunj and Bhairahawa can purely attributed to Indian tourists while domestic tourists looking for weekend getaways further fill in rooms.

The signs are unfortunately pointing towards a different direction. The new variant of COVID-19, its appearance in the Indian subcontinent, and restrictions taken in response such as a travel ban on flights from the UK make it increasingly unlikely that the tourism sector will get real respite anytime soon. Domestic tourism, though picking up, does not seem like it will suffice which has continued to put well-known tourism sector businesses under.

It means that we might see a deeper employment impact than initially expected by the International Labor Organization and United Nations Development Program as layoffs among formal full-time employees in the tourism sector start to dominate the news[ix]. Worse is the impact on the ‘invisible’ 3 in 4 workers in informal employment within the tourism sector, who not only have lost their livelihoods but do not have access to social security crucial in tiding them over in these times.

There are three things that need immediate attention in the coming days. First, the Government of Nepal in partnership with the industry must do a periodic pulse check. An early survey by the Nepal Tourism Board was a good start; however, this must be followed up so that an evidence-backed picture of current status can drive required adaptive policy and programmed measures.

Second, we can expect informal employment in the tourism sector to go up even when the sector recovers from COVID-19. Nepal needs a comprehensive strategy for formalization, one that looks at enterprises and workers in the sector from a vulnerability perspective and away from one that formalizes for the sake of formalization. Without this, we cannot expect a ‘resilient’ recovery where the sector is better protected in the future from similar shocks.

Third, Nepal’s tourism sector pitch needs a collective pivot in response to COVID-19. We cannot rely on our traditional pitch of trekking, jungle safaris, and homestays to work in a COVID-19 world. The government of Nepal needs to take the lead with the buy-in of Nepal’s tourism entrepreneurs to come up with a pitch that can help the industry pivot out of this crisis. A key example is Dubai, where safety protocols have been established and marketed together with its conference facilities as one of the few places still open for business.