Travel, Tourism Association says Kredex measures not very useful

Finnish tourists in Tartu's Town Hall Square.
Finnish tourists in Tartu's Town Hall Square. Source: (Lauri Kulpsoo/Postimees/Scanpix)

The Estonian Travel and Tourism Association said that there will be no significant benefit from the measures of the Kredex Foundation, including a loan guarantee specifically designed for the tourism sector, as the loan measure can help in the event of a recovery in business activity.

Mariann Lugus, secretary general of the Travel and Tourism Association, said: "The biggest support for the sector would be to encourage a rapid resumption of travel. Travel companies are at the forefront of the whole sector, and the right operating model must be found so that our people's travel passions can be satisfied again as soon as possible, but also that the export of tourism services can be relaunched.

"If no further action is taken, we forecast a new wave of redundancies by the end of the summer at the latest, this time for more than 50 percent of workers."

The association estimates that it will take a year and a half to two years for the local travel sector to recover from the coronavirus crisis, which is why the association has asked the government to extend its exit measures.

In a letter sent to Prime Minister Jüri Ratas (Center), the association said that due to the impact of the coronavirus, the market volume of the Estonian travel sector will be almost ten times smaller this year compared to €333.3 million last year. Even with an optimistic forecast, no new revenue is expected before the end of the third quarter of this year at least. The direction of inbound tourism, that is exporters of tourism services, will not see new revenue before the spring of next year.

"By now, it is clear that the crisis situation will last for a longer period of time, and therefore it would be necessary to plan the activities of the sector further in advance in order to make sensible decisions. The sector, with 1,700 employees, will not be able to survive without additional state aid in the event of a complete suspension of the sector," Lugus said.

According to her, the initial Unemployment Insurance Fund aid measure has helped to postpone major redundancies for a few months and about a quarter of travel companies will receive short-term aid from the soon-to-open tourism measure of Enterprise Estonia, which will help keep about 400 specialists employed for a few months. During April, an estimated 15 percent of the current employees of travel companies have been laid off.

The association's proposals for supporting the travel sector in exiting the crisis are as follows:

- An extended Unemployment Insurance Fund measure. Given the current knowledge of a possible market recovery, additional action is needed to maintain jobs for at least 12 months after the end of the emergency situation. The measure should be available to companies that have seen revenue decrease by at least 70 percent compared to the same quarter of the previous year and increasing quarterly. Given that the sector has paid 12.5 million euros in labor taxes for 2019, it is reasonable for the state to secure jobs and future tax revenue so as not to pay benefits to redundant workers.

- Extension of the deadline of clause one of section 37 of the Employment Contracts Act to a period of six months for sectors critically damaged in the crisis, including the tourism sector.

- A moratorium on labor taxes until the end of 2021.

- Supplementing the loan guarantee measure of Kredex for the tourism sector. In the current circumstances, the measure is not suitable for use in the travel sector. The sector needs a real 100 percent guarantee for commercial loans and guarantees, which is not ensured by the measure. Experience to date in applying for a loan under the measure shows that commercial banks are not ready to issue loans with the announced guarantee measure.

- Compensation for additional and unplanned costs incurred by tour operators for the early repatriation of passengers due to the imposition of an emergency situation and urgent state recommendations, which are not covered by package travel fees.

- Preparation of a program of additional state marketing measures in cooperation with Enterprise Estonia and their financing for the rapid resumption of the export of tourism services in the 2021 season.

- Cooperation with neighboring countries and governments of target markets important for Estonian tourism exports, preferably the entire EU, to establish common measures and procedures to enable the opening and use of passenger transport connections and tourism services under similar conditions and to acknowledge Estonia a safe destination country.

The Estonian Travel and Tourism Association is a voluntary association of the tourism industry's employers with 78 members. Members include travel agencies and tour operators, the associated members are transport companies, tourism organizations, educational institutions, hotels, insurance companies, foreign tourism organizations and other organizations that offer supportive services for tourism industry.


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Editor: Helen Wright

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