Tourism-dependent small businesses are suffering from long covid

Thamel is a crowded, noisy place these days. But not from taxis honking their way through its narrow streets, rickshaws and street dogs searching for food. Rather, the place is once again teeming with tourists after nearly two years of slump in tourism, because of the pandemic. Nepal’s borders creaked open for international tourists in March. It recorded 58,348 tourist arrivals in April, about 160% increase, year over year. This should be good news for a country that depends heavily on tourism for revenue.

Yet talk to the tourism-dependent small businesses in Thamel, a theme starts to emerge: the pandemic-induced hangover has not yet fully subsided. Among others, the pandemic hammered from big to small shops, travel agencies and hotels so hard. Hotels and travel agencies are beginning to recover slowly as tourists return. But small businesses that sell woollen clothes and trekking gears and antics are stuck with no sales, heavy losses and demand from tourists stalled like a vehicle in Koteshwor traffic jam. Bouncing back for them has been more painful than for others.

“A lot of business owners like me have lost out on our income,” says Deepak (not his real name), who runs a shop that sells self-manufactured woollen clothes which have high demand from tourists–mostly from Europe. Before the pandemic, his income used to help him pay for rent and raw materials that he imported from India. The business was running smoothly. But things have changed now. He says, “It’s been 14 days since the last time a customer bought something from my shop.” “Tourists are coming back, but they are not buying anything.” 

25 years into the business, he says this is the first time he has been forced to borrow from friends and relatives to pay for the rent. He has stopped importing raw materials for now. 

Next consider a posh shop that sells high-quality trekking gears in Thamel. Its owner shares the same story: low sales, heavy losses still. He says that most of his customers are international mountaineers. “This time we have fewer customers because there are fewer climbers.”

He is paying around 1 lakh in rent even though the sales are generating less than half of the rent’s amount, adds the owner. Last month he pawned his wife’s jewellery to make up for the shortfall after burning through his fixed deposit to sustain the business. “I don’t know how long I can afford to go through this.”

One of the reasons for the dearth of mountaineers aiming for the top is the result of the Ukraine war that has wreaked havoc on both Russians and Ukrainians’ income. About 30% of mountaineers who come to climb Mt Everest are from Ukraine, Russia and some European countries. So far, the tourism department has issued climbing permits of less than last year’s record figure of 408. 

This is bad for those who rely heavily on foreigners attempting to summit the country’s tallest mountains. Because climbers from around the world are their lifeblood. What makes Nepal enticing for international mountaineers is the fact that eight of the world’s 14 peaks above 8,000 metres are here. Tourism provides more than one million jobs to Nepalis. Before the pandemic when people could travel freely to wherever they wanted, tourism contributed to 8% of GDP.

During the downturn that ensued following the country-wide lockdown in March 2020, the government did little to help small businesses that were dealt a heavy blow by the pandemic. They were left to fend for themselves. Little relief that small businesses received was from their landlords, who let them stay rent-free for a few months during the lockdowns.

In 2020 as a result of Covid-19 related travel restrictions, the share of tourism to Nepal’s GDP plunged by a record 46.6% from the previous year, according to ​​the World Travel and Tourism Council. This left thousands of businesses and people jobless. Tourism-supported employment shrank by 19.9%. 

“We have leaders that go into hiding when troubles arise”, laments an employee at a travel agency in Patan. “I still have my job at least. I have been working here for more than five years, and my boss and I have a good relationship.” Others who joined just before the pandemic had to be laid off due to falling demand for the agency’s services, she says. 

Cash-strapped visitors 
Though you could see foreigners swarming the streets of Kathmandu, “you cannot expect much from them”, she bemoans. “Many of them are broke because they lost their jobs during the pandemic, and what little they have from the cash handouts their governments gave them is being spent here–frugally.” Anecdotal evidence corroborates this. The ones that came there looking for tour packages could be heard haggling for a discount. 

Though this year’s data on spending by tourists is yet to be published, in 2020 international tourists spent $267 million, down from $713 million in 2019 – a drop of 62.5%, reckons Knoema, a New York-based data company. In 2021 the figure must have been lower still as it was the year foreign arrivals plummeted by nearly 35% from the previous year. 

Start me up
Even if international tourists returned in their pre-pandemic numbers in the coming months, the immediate relief for tourism-reliant businesses would be hard to come by unless tourists are willing to spend. The chronic uncertainty about when they will recover full-fledgedly is here to stay. Some owners have given up and left the business for good. Others continue with their business, hoping losses will be covered one day. Unfortunately, good days haven't arrived just yet.