Tourism & Hospitality: A sector in need

Access to adequate financial support will be critical to the immediate recovery of tourism and hospitality SMEs and in ensuring their post-pandemic competitiveness, writes Elena Kountoura.
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By Elena Kountoura

Elena Kountoura (EL, GUE/NGL) is a member of the European Parliament’s Transport and Tourism Committee

10 Jun 2021

The devastating impact of COVID-19 has left no economy intact. Europe, the world’s leading travel destination, has been hit hard by the standstill in travel, tourism and hospitality for more than a year. Even now, with borders in the EU open for travel and tourism, the prospects for the sector’s recovery remain unclear. Currently, they are at the mercy of the epidemiological situation, which is evolving constantly, and progress of vaccination campaigns progress towards the desired levels of immunity. 

Safety is a critical factor for restoring confidence in travel. The uncertainty that prevails has already seen a late start for the 2021 tourism season. The majority of travellers have been reluctant to book their holidays early, while several EU Member States have encouraged their citizens not to travel far from home.

“Even now, with borders in the EU open for travel and tourism, the prospects for the sector’s recovery remain unclear”

However, it is essential that the tourist season lasts as long as possible and creates the maximum opportunity for destinations, workforces and all businesses that rely on tourism activity to profit. Hotels, restaurants, cafes, shops and their suppliers simply cannot afford a second year of losses. 

To this end, the European Parliament has been calling consistently over the last year for two main prerequisites. First, a coordinated resumption of safe travel and tourism within the EU, with common safety and health protocols in place. Second, the appropriate and inclusive financial support for the reboot of the tourism sector, particularly for SMEs in the wider hospitality chain.

The hospitality industry has very specific needs that require a targeted approach to recovery efforts. SMEs provide the backbone of European tourism. Often family-operated, they are an integral part of European life and culture and are a driving force in social and economic growth. Yet they are extremely dependent on seasonality, the most vulnerable to crises, and have faced long-standing obstacles in accessing finance and markets. 

Despite the support measures announced at EU level and by individual Member States, SMEs in the tourism sector remain in dire straits today. In some countries, the coming financial support is ‘too little, too late’ for them. This is because they face accumulated debts since last year’s financial disaster, and with virtually zero annual turnover due to lockdown restrictions, many now lack the necessary liquidity to reopen at this turning point, exactly when tourism is about to restart. 

Such is the case in several Member States, including Greece. The majority of small tourism businesses could not meet the preconditions set in State Aid programmes, or were eventually excluded by the banking sector that manages the majority of support schemes. Even when they were eligible, they simply could not afford to acquire new debt from loans.

The Recovery and Resilience Facility, while representing an enormous opportunity for SMEs with funding being made available from mid-summer and onwards, will depend on how Member States have prioritised their needs. Moreover, this is focused on mid- and long-term measures for the sector’s future digitalisation and sustainability and less on the immediate need to keep businesses open and running.

“I firmly believe that the political will to support the tourism and hospitality sector should be reflected in the national recovery and resilience plans submitted to the European Commission for approval”

It is a political choice for the EU and Member States to look into the discrepancies caused and to diminish the risk of bankruptcies and job losses, that small businesses still face, and therefore to avoid a domino effect in local economies and communities. I firmly believe that the political will to support the tourism and hospitality sector should be reflected in the national recovery and resilience plans  submitted to the European Commission for approval.

Priority should be to direct funds to SMEs, first of all for their immediate survival and recovery, as well as for their post-pandemic sustainable future, keeping pace with the twin transition to a ‘green’ and digital economy. 

To this end, the Parliament’s Transport and Tourism Committee’s recent report for an EU Strategy for Sustainable Tourism, has called upon Member States to develop national and regional action plans for sustainable tourism, which could be financed by the Recovery and Resilience Facility.

Although tourism mostly remains a policy at a national level, the COVID-19 pandemic provides clear proof that crises must be dealt with collectively. This is also the case for climate change, extreme weather conditions, natural disasters and security issues, to which tourism SMEs are particularly vulnerable.

This is why one of my first initiatives as an MEP was to propose the creation of a European mechanism for crisis management in tourism. My proposal has been endorsed by all political parties and the Transport and Tourism Committee, and has been adopted in Parliament Resolutions. 

By creating strong European institutions for tourism and establishing more permanent support mechanisms, which could be the case for the RRF as well as the crisis mechanism for tourism, we can collectively and cohesively support businesses, workforce and the destinations themselves across Europe, to become more resilient and sustainable in the future.

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