P -ISSN: 1907 – 9419 Jurnal Kepariwisataan 14 (2) (2020)

E-ISSN: 2685 - 9076 Desember 2020

THE IMPACT OF COVID-19 ON HOTEL INDUSTRY IN ASIAN COUNTRIES

Indriyani Tri Agustina1, Rolisda Yosintha2

1,2Faculty of Teacher Training and Education Tidar University Jl. Kapten Suparman No.39, Tuguran, Potrobangsan, Kec. Magelang Utara, Kota Magelang, Jawa Tengah 56116 [email protected], [email protected]

Received: 15 Juni 2020. Approved: 22 Nopember 2020. Published: 30 Desember 2020

Abstract

The spread of Covid-19 has led to a global problem in all aspects of life, including in the tourism sector that directly affects the hotel industry. Asia as a continent with many countries that rely most of their revenue on tourism suffers a severe blow. The purpose of this study was to investigate the impacts of the novel Covid-19 on the hotel industry in Asian countries. Through a descriptive qualitative method, the researchers collected data from journals, research reports, books, government documents, articles, and websites. In analyzing the data, the researchers make a comparison between the Asian continent and other continents such as Europe, America, Africa, and Australia by focusing on the hotel occupancy in those continents. The result shows that the rate of hotel occupancy in Asia dropped by 57% and 63,4 million employees lose their jobs. This condition is mainly caused by the travel ban regulation that is followed by the temporary closure of tourist destinations. The hotel industry in Asia has lost up to US$ 1.041 million due to massive booking cancellations, and employees in this industry are even more severely affected as they have no income to support their life.

Keywords: Asia, Covid-19, hotel industry

© 2020 Direktorat Kajian Strategis

INTRODUCTION contact with an infected person. When an infected person sneezes or coughs, the Covid-19 is an infectious deadly droplet may contain viruses that may disease that is caused by a new type of enter the body of the nearby individual so coronavirus that is never known before. that she or he will be infected as well. The This virus was first detected in Wuhan, infected person will show symptoms like China, in December 2019. Covid-19 is cough, fever, sore throat, chills, muscle not a disease that can be underestimated pain, and difficulty in breathing. as the spread of the virus is very fast and Indeed, Covid-19 is even more aggressive. According to Worldometers dangerous because there are people who (2020), the total case of Covid-19 across do not show the symptoms but can still the world are 5.339.096 cases with transmit the virus to other people; they 340.696 deaths on May 23, 2020. This are called the silent spreaders. These virus can be transmitted through close people carry the virus with them without

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showing any signs of illness, fever, or of Covid-19, the demand for exports and cough. There are three types of silent imports to China has declined spreaders, namely asymptomatic, pre- significantly, and thus damaging their symptomatic, and very mildly economy. When China’s economy is in symptomatic. Asymptomatic carriers are trouble, it is most likely that the other people who carry an active virus in their countries that have a business relation body, but they have never experienced with China will get impacted too. The any symptoms such as fever, coughing, effects of Covid-19 on the economy are breathing issues, or gastrointestinal even more severe for small businesses. issues. It is difficult to identify when Pressure due to being unable to carry out someone has the disease but do not show business activities and the deterioration any symptoms of it. Pre-symptomatic of economic activity make them decide to carriers are people who have been close their business, and thus causing infected and are isolating themselves, but many people to lose their jobs. they have not shown any symptoms. Other than effects on the global People who are in the pre-symptomatic economy, Covid-19 also shuts down phase usually can transmit the virus in public transport since the use of public one to three days before they begin to transport may increase the spread of the show the symptoms. The last, very mildly virus. To prevent this massive symptomatic carriers are those who feel a transmission, many countries have little sick but still do an activity in close enacted rules on the travel ban. For contact with others. The symptoms begin example, the Indonesian government has with mild fever or slight cough, but they implemented a large-scale social always go to public places and indirectly restriction (PSBB) since March 2020. spread the virus. After all, even though Residents are not allowed to leave their the symptoms shown are in a light houses for any unnecessary intentions. category, the virus can still be They cannot travel leaving their district, transmittable and endangers other regency, or province. Bus stations, train people. stations, airports, and ports are all on In addition to the fatal shutdown, making it difficult for anyone implications for people’s health, Covid- to travel from one place to another, and 19 has affected many aspects of life all thus reducing the spread of the virus. around the world, such as in the Similarly, the Philippines government economy, transportation, tourism, etc. On has imposed travel restrictions since the economic side, the spread of March 17, 2020. All of the transportation coronavirus has negatively affected the means in the Philippines, both private and economy of many countries all over the public transport, are suspended during globe, particularly that of developing the lockdown to minimize the countries such as Asian countries. This transmission of Covid-19 (Bisnis, 2020). virus has slowed down the growth of the It also happens in that all flights economy in many ways. For example, the for exit and entry into Thailand are slowing trade between Indonesia and suspended. This regulation is strictly China due to the massive ban on travel implemented by Thai people to push the and the shutdown of transportation number of coronavirus cases, resulting in access has disrupted the distribution, no new cases on May 22, 2020 (WHO, production, and consumption activities. 2020). Indeed, China is the center of the The global shutdown, in a more economy and the main player of export knock-on effect, has disturbed the and import in Asia. Due to the fast spread tourism aspect as well. Limited mobility

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has decreased or even shut down many as this country welcomed 16.3 million tourist destinations across the globe. The international travelers in 2019 ( shutdown of tourism destinations is done Briefing News, 2019). Indeed, the loss to prevent the spread of the virus and caused by the massive impact of Covid- decrease the death caused by Covid-19. 19 on the tourism sector has led to deeper A lot of tourism destinations in Asia are detrimental consequences on many closed for both domestic and tourism sub-sectors, including the international travelers. The government hospitality industry, particularly the hotel around the world prioritizes the health industry in Asian countries. and safety of their citizens and thus According to Travel Agent Central deciding to ban travel. For example, in (2017), Asia is the second most visited Thailand, Legend Siam's amusement continent in 2016 with 19.5% visits, park has announced its closure starting following Europe in the first place with March 3, 2020 due to a decline in visitors. 58% visits. For developing countries like In , Disneyland is also closed many countries in Asia, tourism plays a without any information as to when it will highly important role in three aspects, be on business again. In Indonesia, namely income generator, employment, according to The District Government, and foreign-exchange earnings. The hotel some tourism destinations such as Tanah industry in China contributed to the Lot, Ulun, Beratan, Jatiluwih, Zoo, nation's GDP by 11% in 2017 (China and GWK are temporarily closed on tourism and hotel industry, 2018). March 22-30, 2020. In Japan, some Vietnam, one of the most attractive tourism places such as Tokyo countries in ASEAN, was supported by Disneyland, Cup Noodles Museum, its hotel industry at around €208.1 billion Engakuhi Temple, and others are closed with an annual growth rate of 6.7%. The temporarily (Japan-guide, 2020). In country's nominal Gross Domestic South Korea, the entrance to Seokchon Product (GDP) is estimated at € 248.8 Lake is also temporarily closed until mid- billion in 2020 (UK-ASEAN business April to prevent people from visiting this council, 2018). Meanwhile, the hotel tourist attraction during the coronavirus industry in Lebanon gave $203 in July pandemic (koreatravelpost, 2020). 2018 (Vilis, 2019). In Indonesia, the Besides, public places that have the hotel industry was able to pocket an potential to cause crowds such as income of around Rp 6.73 trillion since restaurants, places of worship, and malls September 30, 2019 (Investor daily are also temporarily closed (, Indonesia, 2020). However, since the 2020). outbreak of Covid-19, activities in the Tourism is a vital source of a hotel industry in many Asian countries country’s national revenue. In some have stopped because a lot of tourists countries in Asia, tourism provides most cannot travel anywhere. The hotel of the government’s revenue. One of the industry is seen to be facing new threats Asian countries that earn high revenue that have never been discovered before. from tourism is Thailand. According to Indeed, even though the hotel industry Knoema (2018), in 2018, tourism in sector plays an important role in Thailand, Indonesia, Srilanka, and Japan supporting national revenues, there is no contributed 21.6 %, 6%, 12.5%, and deep research about that. Therefore, the 7.4% to its Gross Domestic Product researchers try to investigate the impacts (GDP) respectively. Vietnam also of the novel Covid-19 on the hotel benefitted from the tourism sector as industry in Asian countries. much as 15.4% contribution to its GDP

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METHODOLOGY their flights to China and make the hotel room occupancy affected (Hoque, The objective of this study was to Shikha, Hasanat, Arif, & Hamid, 2020). investigate the impacts of Covid-19 on In Japan, hotel occupancy shows a the hotel industry in Asian countries. This considerable decline of 82.4% (Business study was conducted using a qualitative Times, 2020). Meanwhile, in South descriptive method. The purpose of a Korea, the number of hotel occupancy qualitative descriptive study is to experiences the worst and even drops to investigate the quality of relationships, a single digit (Pulsenews, 2020). situations, activities, or materials In South Asia, such as in Srilanka, (Fraenkell, 2012). The data were the hotel occupancy is below 10%. It collected through library research. The happens because a lot of visitors cancel sources of information were obtained and refund their booking as caused by the from journals, websites, articles, spread of Covid-19 (Nikkei Asian government documents, research reports, Review, 2020). In Bangladesh, the hotel and other information from various occupancy hits around 30 to 40% media both electronic and print. The data decrease because of the cancelation of were collected by analyzing literature, arrival visa (The Daily Star, 2020). websites, government documents, Similarly, hotel occupancy in India has research reports, and journals. In decreased by 43% (Str, 2020). analyzing the data, the researchers make In Southeast Asia, the Indonesian a comparison between the Asian Hotel and Restaurant Association (PHRI) continent and other continents such as said that since the outbreak of Covid-19 Europe, America, Africa, and Australia in January, hotel occupancy rates in by focusing on the hotel occupancy in Indonesia had fallen from 30 to 40% with those continents. Bali, , , Sulawesi, and as the worst-hit areas (The FINDINGS AND DISCUSSION Jakarta Post, 2020a). In , the occupancy of hotels decreases by above 50% in March because of a lot of guests The Asian continent consists of facing some issues like flight several regions such as East Asia, South cancellation and quarantine Asia, West Asia, Southeast Asia, and (ETHospitalityWorld, 2020). Next in Central Asia. In the hotel industry, Asia Vietnam, the Vietnam tourism advisory has a huge role in the growth of the council claims that the hotel's occupancy country. Unfortunately, the spread of from south to the north was dropped Covid-19 across the globe makes hotel between 20 and 50% if compared from industries in Asian countries deeply the last year. The number of domestic shaken. This condition has directly tourists in 2020 was reduced by 80% and affected hotel occupancy rates in Asia the international visitors decreased by because a lot of countries around the 60% due to the fears of the Covid-19, and world have implemented a travel ban, this condition makes Vietnam’s tourism physical distancing, and quarantine to in the next three months lose the income stop the spread of the deadly virus. between $ 5.9 to $7 billion (Nguyen, In East Asia, especially in China, 2020). Similarly, in Malaysia, the hotel the rate of hotel occupancy has declined occupancy decreases by 69.4% since by 75% from 14 January 2020 (Hotel March because of the booking News Now, 2020). It is because a lot of cancelations (HVS, 2020). domestic and international airlines cancel

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In West Asia, such as in Lebanon, Saudi Arabia paralyzed (Hotelier ME, the occupancy in the hotel stands at 5%. 2020). To decrease the expenses, around 90% of Furthermore, in Central Asia for hotels in Lebanon have stopped operation example Uzbekistan, the rate of hotel and closed down (Hotel Management, occupancy was below 25% (Eurasia net, 2020). In Turkey, the number of hotel 2020). Meanwhile, for the other countries occupancy dropped by more than 50% in Central Asia, such as Kazakhstan, (TRTWorld, 2020). It is because a lot of Turkmenistan, Tajikistan, and airlines have suspended the flights since Kyrgyzstan, there are no confirmed cases travel restrictions and make the hotel of Covid-19 because since the first of the rooms empty. Then, in Saudi Arabia, the spread corona virus the entry and the exit hotel occupancy dropped by 22%. This is access in those regions were closed the lowest performance in April this year (Kalpak Travel, 2020). and this pandemic makes the industry in

In summary, the hotel occupancy in Asia as represented by some countries in all parts of Asia shown as follows:

The Rate of Hotel Occupancy in Asian Countries

0% -20% -40% -60% -80% -100% Figure 1. The Rate of Hotel Occupancy in Asian Countries

As seen in Figure 1, Covid-19 has and unpaid leave. Hotels in India significantly affected the hotel industry implement a pay cut off up to 40 to 60 in most countries in Asia. The hotel percent for the managers and the occupancy is seen to be impacted due to founders and apply a paid voluntary the travel ban, visitors who cancel and resignation for 400 employees (str, refund the booking hotel, quarantine 2020a). In Vietnam, around 23,000 regulations, and so on. Generally, the workers have been forced to take average decline of hotel occupancy in temporary leave (ILO, 2020). Then, in Asian countries amounted to 58.74%. Lebanon, there is a hotel that shut down Because of the decline of hotel the hotel because it cannot pay the tax occupancy, it also impacted employment and make their employees lose their jobs. in the hotel industry. For example, in The total job losses in Asia have reached Indonesia, more than 150,000 employees 63.4 million. Besides, the Gross have been laid off (, Domestic Product (GDP) in Asian 2020b). Then, since March 4, 2020 in countries also get the impact. Because Malaysia, around 4% of hotel industry most of their income comes from workers have been laid off with pay cuts tourism, they suffer a loss of around US$

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1.041 million (World Travel & Tourism As shown in the data, almost all Council, 2020). countries in all continents experience a Indeed, the decline in hotel dramatic decline in their hotel occupancy does not only happen in Asian occupancy. In Asian countries, the countries. It also happens in most average decline in hotel occupancy is continents such as in Europe, Africa, 58.74%. In Europe, the decline of hotel America, and Australia. In Europe, this occupancy is slightly lower than in Asia declining trend in hotel occupancy has with 57.70%. Africa, America, and started since the first cases of Covid-19 Australia are in a better condition with was confirmed in France on January 24, less than 50% decline in hotel occupancy, 2020. This deadly virus has a devastating i.e. 25.6%, 44%, and 14.60% effect on the hotel industry across Europe respectively. Therefore, it is clear that especially in Italy where the number of Asian countries get the most severe effect cases escalates quickly and drops hotel of Covid-19 on their hotel industry. This occupancy by 85% (Hospitality Net, condition is partly caused by the fact that 2020). Similarly, Swiss and France most Asian countries rely on tourism a experience the same decline by 52.4% lot. When there is no tourist due to the and 35.7% respectively (Hospitality Net, global travel ban, no hotels will have 2020) with job losses of 13.0 million. guests to fill their rooms. Consequently, Like the other continents, Africa a lot of their employees must experience also gets the impact of Covid-19 in the lay off or salary reductions. hotel industry. On March 16, 2020, the hotel occupancy in some regions such as CONCLUSION Mauritius, Nairobi, and Marrakech dropped by 70%, 80%, and 73% The findings of this study show respectively (str, 2020b). In general, the that the spread of Covid-19 has greatly rate of hotel occupancy in Africa is now affected the hotel industry all around the below 30%. It happens because there is world, not only in Asia but also in the a lockdown regulation that makes the other continents such as Europe, Africa, hotel occupancy get the heavy blows. It America, and Australia. However, the disadvantaged those countries for before continent that gets the most significant the Covid-19, the hotel industry impact is Asia. Most Asian countries are contributed 8% to the economy in Africa depending on their tourism industry, (Statista, 2020). which directly affects their hotel Moreover, in the United States, industry. With an average of 57.70% of the level of hotel occupancy is slightly decline in hotel occupancy, as many as above 40%. For example, in New York, 63.4 million employees in this industry the number of hotel occupancy is only are losing their income, leading to a more 47.6%, Georgia 40.7%, and Florida knock-on effect on employability. To 44.0% (str, 2020c). Next, in Australia, minimize the negative impacts, some especially in Darwin and Sydney, the measures be implemented. Giving hotel occupancy dropped by 15% in promotion packages with adorable prices February (The Sydney Morning Herald, can attract visitors to stay in the hotel. 2020), and for Queensland in April, the Promoting Flexi-rate can also increase occupancy on hotels decreased by 13.8% hotel occupancy for visitors can flexibly (Tourism and Events Queensland, 2020). change the date of booking to the other Therefore, the average level of hotel day if there is an unpredictable moment occupancy in Australia as the impact of like this pandemic. More importantly, Covid-19 is below 15%. increasing hotel service in terms of

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