6 March 2021

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CURRENCY

SLOWLY BUT SURELY

Initially, the tourism sector will be focused mainly on domestic market in the post-pandemic period

Author:

01.10.2020

The crisis in the sectors of tourism, entertainment, and passenger aviation caused by the COVID-19 pandemic is unparalleled in scale and long-term consequences since the Second World War. According to the UN World Tourism Organization (UNWTO), due to lockdown, the global tourist flow in the first half of 2020 decreased by 65%, and direct losses of the tourism sector reached $460 billion.

Situation slightly improved in the second half of the year, when more than half of the countries eased travel restrictions. However, the pace of recovery is extremely slow, as it directly depends on the resumption of airline flights.

After easing the lockdown regime in Azerbaijan September, steps were also taken to rehabilitate the recreational sector through the expansion of domestic tourism.

 

Uncertainty in the world

According to UN experts, the damage caused to the tourism industry by the pandemic is more than five times the amount of losses in 2009. Then, for the first time in the past several decades, the recreational sector faced a drop in performance due to the global financial crisis. The Asia-Pacific region was hit the hardest with tourist flows falling by 72%. In Europe, the decline was 66%. According to expert forecasts, in the worst-case scenario, reduction in international tourist flows in 2020 may reach 78%, and direct losses may exceed a trillion dollars. Return to the pre-pandemic level, or the indicators of 2019, may take from two to four years.

Of course, the situation slightly stabilised in August-September when a total of 115 countries (53%) eased or lifted travel restrictions. According to UNWTO Secretary General Zurab Pololikashvili, coordinated work between the authorities of different states suggests that tourism is slowly but steadily restarting in many countries of the world. However, the areas in which restrictions have been lifted tend to have a high or very high level of sanitation infrastructure, as well as relatively low rates of COVID-19 infection. It often concerns lifting restrictions on domestic tourism or the exchange of travelers with neighboring, mainly developed, countries with a positive trend in reducing the level of infection. Only a few countries, including Turkey, Egypt, Bulgaria, Montenegro, Cyprus and partly Switzerland and the United Arab Emirates, are pursuing a relatively liberal policy of receiving tourists from all over the world. Whether this list expands or shrinks by the end of the year depends largely on the current epidemiological situation. In the meantime, the authorities of many countries fear that in October-November they will have to close their borders again due to the expected second wave of the pandemic.

 

Lost season

An equally ambiguous situation in the tourism sector is developing in Azerbaijan, where, after five months of strict lockdown, restrictions on travel to regions of Azerbaijan were lifted on September 8 and some recreational facilities in the periphery were opened.

According to the State Statistics Committee, the losses of domestic tourism were quite impressive. In January-August 2020, 649,700 people from 155 countries of the world arrived to Azerbaijan, which is 3.3 times less than in the corresponding period of last year. The largest decrease in the flow of tourists in January-August 2020 fell on the share of tourists from China and the Republic of Korea - 11.7 and 10.6 times, respectively. The number of tourists from Israel has also significantly decreased - by 7.9 times, from Japan - 7.5, from Canada and the United States - 5.7, from EU member states - 5.2, from the Persian Gulf countries - 4.3 and from countries CIS - 3.5 times. In fact, this data reflects the statistics of incoming tourism in January-March, before the introduction of quarantine, and an extremely small number of guests who arrived in Azerbaijan at the end of the summer season.

Domestic tourism also suffered comparable losses, which decreased by 2.5 times in the first half of the year compared to the corresponding indicators of the previous year. According to independent experts, in the first half of 2020, the number of domestic tourists slightly exceeded 840,000, while in January-June 2019 this indicator reached 2 million people. Trips from Baku, Sumgait and Ganja to the regions of Azerbaijan also dropped significantly due to the introduced lockdown measures. Moreover, the residents of big cities were limited to 1-3 days in the resorts, beaches, seaside recreation areas, dachas, etc. of the Absheron Peninsula.

However, even during more than five months of the lockdown, some of the regional recreation areas did not lack guests. This was partly observed in regions without strict lockdown rules in force, where local residents had relatively greater freedom of movement.

On August 24, just before lifting off travel restrictions from Baku to regions, specialists from the State Tourism Agency (STA), Food Safety Agency (FSA), State Tax Service and Ministry of Health monitored hotels and recreation areas. By mid-September, about 230 hotels and hotel-type facilities were checked in Baku and the country's regions for compliance with sanitary and hygienic standards, food safety, taking into account the "Rules for organizing hotel activities during the COVID-19 pandemic" developed by the Cabinet of Ministers. Hotels that meet the relevant requirements are awarded the SAHMAN label.

The special program SAHMAN, developed by STA at the beginning of 2020 provides for a number of effective methods of observing sanitary and hygienic rules and increasing competitiveness in the tourism industry. The document sets out all the rules according to which travel companies, hotels, guides, tourist transport employees should work during the pandemic. According to experts, the increase in the number of tourist sites checked during the monitoring contributes to the activation of hotels in the regions, and also revives the activities of numerous roadside catering establishments. The implementation of the rules will make it possible to actively promote recreation business in the domestic market, and the marketing component of the program will raise Azerbaijan's status as a safe tourist destination on international arena increasing its competitiveness in the post-pandemic period.

 

Prices didn’t increase but...

Taking into account the end of the summer vacation season and the beginning of the school year, it would be wrong to expect a significant increase in tourist flow to regional recreation areas. Nevertheless, according to the chairman of the council of experts of the Association of Travel Agencies of Azerbaijan, Goydeniz Gahramanov, after lifting of restrictions on September 8, many hotels attracted staff and resumed work on servicing guests. There were practically no empty seats on weekends. “Currently, bus transportation is temporarily limited, and you can only go to the regions from Baku by private vehicles and taxis. Although hotels resumed operations, due to the remaining transport restrictions local travel companies cannot organize group tours. Domestic tourism companies prefer group tours, as it is cheaper for tourists. We hope that these issues will be gradually resolved," Gahramanov said.

As for price parameters, according to independent experts, despite the long downtime and loss of income, there is no noticeable increase in prices at tourist sites. Slight increase in prices was noted only at the end of the week - from Friday to Sunday with the largest inflow of tourists from Baku. The head of the Association of Hotels and Restaurants Samir Dubendi believes that prices for hotel rooms will not increase and admits that the current prices are even lower than last year. Daily accommodation at a budget tourist facility starts at ₼30, and in 4-5-star hotels it is kept within the range of ₼100-120, which is significantly less than the rates before the pandemic.

Since the opening of external borders for foreign tourists and the resumption of air traffic is postponed until the end of the year and even later, travel companies rely mainly on the visits of Azerbaijani citizens. Accordingly, they develop their budget pricing policies. Taking into account the quarantine factor, companies have to limit a variety of their entertainment programs that include sports, water, SPA and other types of activities. Hotels operate subject to all quarantine standards: disinfection is periodically carried out in the buildings, hotels massively refuse the buffet system, service personnel must use medical masks and gloves, social distance is observed, etc.

Unlike regional tourist zones located in picturesque places, the situation in the hotels of Baku is much less successful. Originally designed for foreign guests, they are now practically empty: most residents of the regions simply cannot afford the cost of rooms and services, while the swimming pools, gyms, cinemas, children's zooms are still closed for residents of the capital due to quarantine.

According to experts, full restoration of the tourism sector of Azerbaijan, which includes 642 hotel-type facilities with 50,000 rooms, will be possible only after the resumption of external flights and a gradual increase in the flow of foreign tourists. This process is very difficult and will proceed in the conditions of intense regional and global competition. According to the most optimistic expectations, it will take at least two years to reach the indicators of 2019, when 3.17 million foreign tourists visited Azerbaijan.

 

Despite the pandemic

In the meantime, within the framework of the four-stage program for the restoration of the tourism industry developed by the Azerbaijan Tourism Bureau, it is planned to shift the emphasis on the development of domestic tourism. In particular, the priority of nature tours has already significantly increased, as well as to similar destinations that do not imply a significant concentration of tourists. Initially, small accommodation facilities such as cottages, boutique hotels and daily rentals will be in great demand.

Azerbaijan Tourism Association (ATA) with offices in the north-eastern, north-western, western and southern regions of the country, is intensifying its activities in approximately the same direction. New offices will better study the tourism potential of respective regions, as well as support the development of rural green and agricultural tourism, which makes it possible for tourists to visit rural areas. In addition, ATA also plans to open its offices in 25 countries of the world to advertise and promote the tourism potential of Azerbaijan. Another promising initiative of ATA is the creation of the Tourism Organisation of Turkic-Speaking States (TOTSC). The idea has already been supported by leading tourism organisations in Turkey. The main goal is the joint promotion and development of the tourism potential of the Turkic world, the development of joint tourism products and end-to-end tourist routes.

Currently, along with measures to support domestic tourism in Azerbaijan, steps are being taken to develop tourism transport infrastructure. A number of villages in Absheron are reconstructed. It is also planned to organise sea cruises in the Caspian.

As an example of investments in the development of tourist infrastructure in the future, we can cite the construction of the Laki-Gabala railway (44.5 km), which is nearing completion. The launch of the new railway expected by the end of this year will significantly simplify and accelerate access to the hotel and recreational potential of Gabala. There are already about two dozen high-class hotels (including several five-star hotels), as well as a unique children's amusement park, an ATV center, the country's largest golf club, an indoor water park, as well as the Tufandag ski resort located 4 km away from the city centre. Since the comfortable Kiss electric trains of the Swiss company Stadler Rail Group will run on the Laki-Gabala line, tourists from Baku will be able to get to Gabala in less than three hours, which is significantly faster than a bus service.

Projects for the restoration and reconstruction of Absheron villages look no less ambitious, with an emphasis on the creation of a historical and recreational zone here and the development of tourist routes. Recently, as part of the Blooming Absheron project jointly implemented by the Agency for Development of Small and Medium Business, Bakı Abadlıq Xidməti LLC and STA, large-scale restoration works have been carried out in the village of Balakhani, historical and cultural monuments were restored, streets were paved with cobblestones, walls painted with facades  decorated in authentic design, landscaping, etc. In the village, it is planned to create workshops for carpet weaving, pottery, sewing national clothes, as well as the opening of shops selling souvenirs, ceramics, carpets, paintings, musical instruments, etc., which will eventually turn Balakhani into a tourist attraction for locals, and foreign tourists. Similar projects are implemented in the village of Amirjan, Novkhany and Zira. At the next stage, the Blooming Absheron project will be implemented in the villages of Ramana and Shuvalan.

Another new and very promising direction of domestic tourism may be the development of sea cruises in the Caspian Sea. Negotiations on this have been going on for several years between Azerbaijan, Russia, Kazakhstan and Turkmenistan, and recently the prospects for the implementation of this undertaking were discussed during the meeting of the Governor of the Astrakhan Region Igor Babushkin with the ambassadors of the countries of the Caspian region in Moscow.

Experts believe that this project will become possible after the abolition of quarantine restrictions and the resumption of full-fledged passenger traffic between the Caspian ports, which is not expected earlier than next year. At the same time, it is encouraging that approximately in April 2021, at the Lotos shipyard in the Astrakhan region of Russia, a river-sea class passenger ship of the PV300 project - Peter the Great will be put into operation, which will cruise across the pools Caspian and Black Seas.

Thus, in the medium term, the tourism sector of Azerbaijan can be replenished with new creative solutions and products. We hope that the epidemiological factor and other external negative factors will not prevent the implementation of the projects.



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