Tourism is one of the worst-hit industries due to the COVID-19 pandemic.
The sector relies on a steady inflow of tourists who are able and willing to spend on attraction and experiences.
For small countries such as Singapore, which relies heavily on tourists from China, Japan and Indonesia, the drastic fall in tourist numbers has dealt a heavy blow to many attraction operators.
For the first quarter of 2020, international visitor arrivals declined by 43.2% year on year at 2.7 million visitors, while tourism receipts fell by 39% year on year.
Unfortunately, the period above was merely the start of the pandemic, as conditions deteriorated considerably in the second quarter.
International tourist numbers plunged 99.9% year on year from 4.6 million to just 3,800.
With such dreary numbers and no let-up in the spread of the pandemic in many countries, is there hope for tourism companies?
Companies that are heavily exposed to tourism have reported a downbeat set of earnings.
For Genting Singapore Ltd (SGX: G13), the first half of 2020 saw total revenue plunging 65% year on year from S$1.3 billion to S$448 million.
The integrated resort operator reported both an operating and net loss of S$120.5 million and 116.7 million, respectively.
In its prospect statement, the group mentioned that air travel in Asia is only expected to reach 50% of pre-COVID levels by June 2021.
As a result of the challenging environment, the casino operator had to conduct a retrenchment exercise in July to cut costs.
Another tourism operator, Straco Corporation Limited (SGX: S85), reported a sharp 88% year on year fall in revenue for the first six months of this year.
Net loss came in at S$6.7 million, a far cry from the net profit of S$17.5 million reported during the same period last year.
The group operates aquarium attractions in China as well as the Singapore Flyer attraction, and these assets were forced to temporarily shut due to COVID-19 containment measures.
Even though attractions such as the Singapore Flyer have resumed operations, it has to contend with shorter operating hours and restricted capacity as safe distancing rules still apply.
Government support measures
The Singapore government has not stood idly by, though.
It has announced a total of four Budgets to alleviate the financial pressure weighing on the affected sectors.
One key feature of the budgets is the Jobs Support Scheme or JSS.
This scheme provides wage support for affected local employees for the first S$4,600 of gross monthly salary.
For the tourism sector, the wage support level is at the maximum tier of 75% and initially was supposed to last from April 2020 till August 2020.
However, the JSS was extended in August for up to seven more months till March 2021 as the pandemic situation had not improved.
Businesses in the tourism sector will receive 50% wage support for this period to tide them over.
Besides the JSS, a S$45 million campaign was launched in early August by the Singapore Tourism Board, Enterprise Singapore and Sentosa Development Corporation called SingapoRediscovers.
And just yesterday, it was announced that every Singaporean aged 18 and above will receive S$100 in digital vouchers that can be used on staycations, leisure attractions and local tours.
These vouchers, known as SingapoRediscovers Vouchers, will be made available via SingPass in December and can be utilised to offset ticket purchases for attractions and hotel stays with a validity that lasts till June 2021.
This new scheme, which will cost the government S$320 million, is yet another measure by the government to help prop up the ailing tourism sector and must come as a breath of fresh air for beleaguered players.
The government’s push for domestic tourism will allow pandemic-weary Singaporeans to explore more of their own country while helping tourism businesses to stay afloat.
Tourist attractions can, from 18 September onwards, apply to increase their operating capacity from the current 25% to 50%.
Permission can be sought to scale up capacity for outdoor shows to 250 people from 50 currently, but with some restrictions in place.
This move is yet another sign of some form of normalcy slowly returning to the sector and is a positive development for all players.
Get Smart: A sliver of hope
There’s more than a glimmer of hope for the tourism industry as the government chips in to provide financial support.
Fortunately, companies such as Straco and Genting Singapore have robust balance sheets flush with cash accumulated from the good years.
The cash will allow them to tide over these tough times and slowly regain their former glory.
Investors, however, should be aware that a full recovery may still be years away, but the good news is that tourism companies will still chug along with all the support they are receiving.
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Disclaimer: Royston Yang owns shares in Straco Corporation Limited.