Table of Contents
Background of the study
Initial Literature Research
Research problems and Question
COVID 19 as threat to Hospitality, Tourism and Economy
Effect of COVID 19 in Hospitality and Tourism and Response from Australian Market
The Coronavirus is crown shaped virus when looked upon with microscope, is one of member from the coronavirus family like SARS and Syndrome-COV. The most apparent symptoms include Fever, Cough and Shortness of breath in infected person. There can be other symptoms associated as sore throat, tiredness, kidney failure as well as diarrhea. The traditional methods and medicines do not prove to cure the coronavirus infection. Up to the date, the vaccinations has not been invented for the COVID19, the social distancing, self-isolation and contact tracing is being used to reduce the spread of the virus (Kulkarni, et al., 2020).
The catastrophic effect of COVID-19 has caused the severe health issues, deaths, unemployment, recession on economy, steepness in tourism activity. The World Health Organization (WHO) has announced COVID-19 as pandemic on 11th March 2020 (WHO,2020). This Business research report will further discuss and present the unemployment caused on tourism and hospitality sector in Australia along with effect on tourism sector due to coronavirus. Furthermore, this report will discuss for what will be the solutions for no of job losses in this sectors and possible recommendation for survival.
As per the Australia Tourism Report Q4 2015, there is a high growth rate in Tourism activity in domestic as well as international tourism activities. The Australian tourism attraction is mainly associated with water activities, sea holiday destination for tourists along with the much re-known the great barrier reef. The Australia is multi-cultural country and now it is adding a benefit in to the tourism with its reputation and great diversity.
The hospitality business has great contribution in the Economy with Various job opportunities to help to reduce unemployment. The growth in Hospitality industry and economic benefit goes hand in hand. In context of hospitality industry, between the small-medium and large business organisations it is found that, the small sized hospitality organisation provides larger benefit to its local economy (Konstantinos, 2002).
As on May 2020, the unemployment rate increased to 7.1% in Australia. Since, business running is being heavily affected by the lock-down. The unemployment added case are 835,000 from March,2020. The banks in the Australian market has revised the growth in domestic product estimation, the V shaped recovery is also expected. The Coronavirus impact on global basis and in Australian market has caused recession in first 29 years in the economy (Dow Jones Institutional News, 2020).
The Australian Federation of Travel Agents also known as (AFTA) established on 1957 represents major travel agency and travel agents in Australia. It has 3000 agents and 40,000 staffs employed by them. The AFTA member survey has demonstrated that, the pandemic will result about 42% percentage of business to be inactive or shutdown. The AFTA member’s survey also revealed that, 82% of agents presented 100% and remaining 16 % reported 90% decrease in income generated via travel business (Australian Federation of Travel Agents (AFTA), 2020).
To reduce the quick spread of Coronavirus, people have been travelled to overseas needs to self-isolate themselves for 14 days. The Australian Prime minister, Mr. Scott Morrison has declared that, Hotel industry in Australia would get necessary support to make hotels Quarantine space for self-isolation provisions for all incoming visitors. The Australian Hotels Association (AHA) in western Australia is working with governmental and state level in collaboration to give extensive and practical help to endure this pandemic situation. The take away or delivery facilities are provided in hospitality sector to support employment and economy. The Alcohol take-away service along with delivery service is also offered to support the whole economic system and letting business to survive. The Australian Hotel Association (WA) also reported that, the lockdown in All over Australia has caused pressure for business owner and employees. Just in Western Australia about 50,000 employees who works in restaurants, pub or bars and hotels has been affected by Coronavirus and lockdown regulated by government (Australian Hotels Association (WA), 2020).
With the early start of 2020, the country has been strucked by massive bushfire caused damage for economic development on the other hand, coronavirus lockdown effects and consequences of lockdown can be clearly seen on tourism and hospitality sector. Both these sectors are main pillars for revenue generation for Australian government thus, Australian economy.
The job market in Australia is trying hard to keep people employed, the biggest Supermarket company Woolworth group has announced that 20,000 vacancies will be placed to meet up with demand of Supermarket’s basic need products. Whereas, The Coles group has opened 5000 new jobs to make relif on economy, unemployment and stock shortage due to panic buying. The clothing Brand known as Kathmandu with 170 stores altogether in Australia and New Zealand has decide to cut 2000 employee’s 1 months pay as a result of Corona virus and impact on retail outlets
The impact of Coronavirus has not created pressure and economic loss on Tourism and Hospitality, it has affected whole economic system including, government, project plans, share market, retail industries, small, Medium or large-scale industries and business.
The Market has been showing shift more than expected previously it was quoted as 7% probability of rate cuts with reserve bank of Australia but with recent effects markets by coronavirus its has gone to 97% announced by Stephen Halmarick head of Commonwealth Bank of Australia. The Coronavirus has impacted global economy and market and business higher than effect SARS outbreak in 2003
Policy measures taken by the Australian government to boost the economy
The Australian government has adopted various policies to support the economy; it has used both the expansionary fiscal policy as well as expansionary monetary policy. The Australian economic support package amounts to $259 billion as part of fiscal and balance sheet support (IMF 2020). The direct fiscal measures are approximately 6.9 percent of the Gross Domestic Product (GDP) of Australia.
As a part of the fiscal stimulus package the government is providing (Australian Government 2020);
Job keeper payment: This program will support the organizations to provide employees their wages. As a result, the employees will not be laid off and will have a source of income.
Income Support for individuals: There has been an expansion in eligibility for income support payments, now more and more people can enroll themselves in this program. The government has fixed a rate of $550 per fortnight to be given under jobseeker payments, youth allowance, farm household allowance, parenting payments, ABSTUDY living allowance, and other special benefits (International Labor organization 2020).
Payments to support households: In this aspect, the government is administering separate payments worth $750 each for veterans, social security and other recipients of income support packages.
Boosting Cash Flow for Employers: The government of Australia is helping the small and medium enterprises as well as non-profit organizations by providing them with temporary cash flow support (IMF 2020).
Temporarily relief for financially distressed business: Many profit earning businesses are now under distress after the pandemic outbreak. In order to support these businesses and safeguard them from being bankrupt, the government is providing them with necessary safety nets.
As a part of the fiscal stimulus, the government is enabling it by the means of tax deferral and relief, cash payments, and other income support subsidies (Australian Government 2020).
Moreover, the government is aiding the airline industry by easing the tax policy; they are released from paying a number of taxes. Also, people who are affected by the coronavirus will not have to pay tax; they can access u to $10,000 of their superannuation in 2019 and 2020-21 (Australian Government 2020).
Jobseeker policies: People who are eligible for income support payment can avail coronavirus supplement fortnightly. The plan is extended to December and the coronavirus supplement will be $550 per fortnight is till September 24, 2020, while it will be revised post that and will remain $250 per fortnight till December 31, 2020 (Australian Government Services n.d.) .
The Reserve Bank is supporting the economy by using various monetary policy measures, that comprises of (RBA n.d.):
In the month of March 2020, the Reserve Bank of Australia, the cash rate was reduced to 0.25 percent. This is to promote cash flow among businesses and households. In addition to this, the government is targeting a 3-year Government Bond Yield to approximately 0.25 percent: The central bank of Australia has targeted the overnight cash rate. Further, the bank has targeted a risk-free interest rate along the yield curve. Moreover, to reduce the funding cost across Australia the target for the yield on 3-year Government and to 0.25 percent. The bank is using quantity easing of monetary policy, thus the RBA is buying the Government bonds in the secondary market (RBA n.d.).
In addition to this, the RBA is providing the term funding factory for the banking system in order to help to lend to businesses. The main aim of proving the Term Funding Facility in order to reduce the funding cost as a result of the business and household can take credit from banks easily (RBA n.d.).The Reserve Bank of Australia and the United States have set the temporary swap line to provide the US dollar liquidity. Though this the RBA can have access up to the US $60 billion in exchange for Australian Dollars. (RBA n.d.).
The Australian government has undertaken various policy measures to recover the tourism industry, in order to facilitate this, the government has incorporated the Next national long-term tourism strategy which is Tourism 2030 (Australia Trade and Investmenet Commissiion 2020). The main objective of this plan is to strengthen the tourism industry and make it resilient to uncertainties in the long run.
The Australian government has established The National Tourism Incident Communication plan (NTICP) to administer the effect of bushfire on tourism, however, it has now included the effect of the COVID-19 crisis on the tourism sector. This committee collaborated with the Department of Health (OECD 2020) and keeps a regular check on the cases so as to foster safe tourism.
In addition to this, the short term measures are associated with making sure the survival of businesses small and medium scale mainly in this industry by providing them with credit and liquidity. Furthermore, the domestic Airline industry which is the allied industry to both hospitality, as well as tourism, is allowed to tax deferral amounting AUD 715 million tax and other fees (OECD 2020b). The government has decided to waive of AUD 11.2 million worth of entry fee for the common national parks namely, Uluru-kata Tjuta, Booderee, and Kakadu National parks till December 31st, 2020 (OECD 2020b). More number of people domestic as well as international will be motivated to travel to these national parks as there are no entry fees.
Tourism will push the hospitality industry. In the first two-quarters of 2020-21, Hotels, and other services apartments can claim rebate in their water and sewer fixed charges (ACT Government 2020). Moreover, the cafes and restaurants can claim a rebate of $1,000 on their respective electricity bills. The application fee pertaining to liquor license is also waived fro till December 3, 2020 (ACT Government 2020).
The Australian banking Association (n.d.) provided the business loans up to $ 10 million. The commercial landlords from the hospitality industry can participate in it. A payroll tax waiver for small to medium-sized businesses. Moreover, credit for small synergy as well as Horizon power customers worth $ 2,500 (Australian Banking Association n.d).
The government should work closely with tourism as well as the hospitality industry to provide people with relevant trainings to augment the skillset and widen the knowledge base of the workforce in these industries. Moreover, this will help them to acquire jobs. The employment can be increased by promoting skills enhancements through adult education as well as a rapid job search program (OECD 2020).
Another solution to increase the jobs and boost the hospitality industry is by providing a structure for revenue pooling for hotels (Constantin, Saxon, and Yu 2020). The pooling will support small and medium enterprises to manage their variable cost and pooling of investment to cover the losses. This will help to reduce losses in the hotels as a result they will not lay off workers. The opening up of domestic tourism is a great measure as it will provide jobs and income to the local people (Tourism Research Australia 2020). The focus should be on supporting the local manufactures as they can provide jobs as well as this will contribute to the holistic growth of the region.
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