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Kosovo: estimating the economic impact of COVID-19 on the hospitality sector

Measures to contain the spread of COVID-19, such as lockdowns, have paralysed the tourism and travel sector in many countries around the globe. In Kosovo, Swisscontact supported the government with an analysis of the economic impact on the hospitality sector. The paper supported the Ministry of Finance and Transfers as well as sector representatives in planning their next steps.

In Kosovo, containment measures taken by the government to delay the spread of coronavirus include travel restrictions and closures of all non-essential businesses such as tour operators and travel agencies. The team of the “Promoting Private Sector Employment (PPSE)” project compiled a paper outlining the potential impact of COVID-19 on Kosovo’s hospitality industry and possible measures to mitigate the economic costs. PPSE is an SDC-project, implemented by Swisscontact, which fosters economic growth in the hospitality sector. Therefore, the team has extensive expertise in the field of tourism development.

 

The tourism and travel industry is one of the sectors hit hardest by the effects of the current pandemic. Tourism and travel are part of the hospitality sector, which includes accommodation and food service activities. The paper quantifies the economic impact of the containment measures on the sector: hospitality enterprises make up 10% of the overall number of active SMEs in Kosovo. It is estimated that the termination of business activity during April and May could cause the sector to lose around 15% of the annual turnover. If the lockdown will be extended to the summer, the peak season for the tourism industry in Kosovo, these figures will rise further.

 

Swisscontact’s analysis supports planning of economic mitigation measures

 

At the end of March 2020, the project “Promoting Private Sector Employment (PPSE)” put together a paper on the potential impact of COVID-19 on the hospitality sector in Kosovo. The analysis is based on data from the Kosovo Agency of Statistics as well as partly on the ‘Tourism Supply Side Survey’ of the PPSE project. The paper summarises the economic measures recommended by the Organisation for Economic Cooperation & Development (OECD) and World Travel & Tourism Council. For example, one of these measures is the implementation of short-term employment schemes and special support packages for SMEs.

 

PPSE’s report can help policy-makers like the Ministry of Finance and Transfers as well as other organisations to plan their economic mitigation measures for the hospitality sector. The Minister of Finance and Transfers thanked PPSE for the paper; he used the data elaborated on in the paper when he spoke to journalists about the impact of COVID-19 in the Hotel/Restaurant/Catering sector. Moreover, private sector actors from the tourism industry referred to the paper when interviewed in the national media to elaborate on the losses in the sector.

 

Assistance for SMEs announced

 

On 3rd April 2020, the Ministry of Finance and Transfers of the Republic of Kosovo published an operational plan on an emergency fiscal package. The measures include financial support for companies in financial difficulties as a result of a decrease in their activity due to the emergency public health situation. In their COVID-19 assistance packages for the private sector, the Ministry has decided not to go by sector, but has taken the approach of assisting SMEs across the board by partially subsidising their losses and the salaries of their workers for March and April. 

 

Read the full paper here.