Coronavirus impact: UAE hospitality industry needs a lifeline

With more than 200,000 affected in over 144 countries, the latest pandemic shows no signs of slowing down. The outbreak of the Covid-19 has resulted in people taking extreme safety precautions … and life as we know it has come to a complete standstill.

The authorities have taken drastic measures to prevent the spread, like urging people to stay at home and implementing rules that demand a complete shutdown of offices, schools, and workplaces. While these measures have helped reduce the spread, it has also resulted in an “economic emergency” with small businesses on the brink of bankruptcy.

Arguably, the sector that has taken the hardest fall from the outbreak is the hospitality industry. With travel completely halted, hotels and holiday homes are empty. Moreover, as governments promote the idea of complete isolation, staycations aren’t working either.

Being part of the hospitality industry for many years, I can confidently state that we are in for a tough time if immediate support isn’t provided. For example, this time of the year is generally booming — with occupancy rates at a whopping 85 per cent and with average daily room rates close to Dh1,000.

However, this year it is on the other end of the spectrum, wherein the occupancy rate is as low as 20 per cent and room rates at Dh500.

Systemically important

The UAE economy derives much from its tourism industry. Studies project the travel and tourism industry will contribute about Dh312.4 billion to the UAE’s GDP by 2027. It is apparent that the industry and its employees are the backbone of the economy. But if businesses in this industry don’t receive immediate aid from the government, the chances of them surviving the coronavirus outbreak are slim ... even though they were growing at a commendable rate before the outbreak.

A relief package, specially designed for vacation rentals, may be the most effective tool to ensure the industry thrives and is ready to service tourists after the virus outbreak dies down. Based on my experience and collaboration with multiple members of this industry, such a relief package can include the following:

• The government would provide cash loans equivalent to a minimum of three months of working capital.

• The release of these funds can be micromanaged based on a month-on-month analysis of the budget.

• The government would waive mortgages, loans, and credit card payments for at least three months until the industry recovers from the pandemic. They should also do the same with credit card repayments.

• Companies would be applicable for zero visa cost if they hire any new employees in the next six months. This will be a boon for the looming high unemployment rate.

• The cost to renew licences would be waived off for this year.

• Utility and housing fees could be cut by half for vacation rental homes, which will allow investors to save money to survive these tough times.

Small businesses have played a huge role in creating and maintaining the successful UAE economy, with vacation rentals being in top form. These businesses have not only created memorable experiences for families, but have also been a home to corporate travellers, sportstars, and even some prominent politicians.

Dubai is hosting the Expo 2020 on October 20, 2020. If these businesses aren’t given the support they need, they will most likely not be around. The UAE government has always supported the SME industry, which has helped it soar to great heights of success.

In these tough times, we look up to the government and are sure they will provide the aid needed as they always have in the past. After all, while people have multiple ways to distance ourselves from the virus breakout, businesses need some ammunition to brave this storm and emerge victorious ...

— Vinayak Mahtani is CEO of bnbme.