Challenges in the Tourism Industry During COVID-19 Pandemic in Kosovo

Challenges in the Tourism Industry During COVID-19 Pandemic in Kosovo

Bekë Kuqi Bedri MillakuAdem Dreshaj Elvis Elezaj Lirak Karjagdiu 

Faculty of Management in Tourism, Hospitality and Environment, University “Haxhi Zeka” Pejë, UÇK 30000, Pejë, Kosovo

Faculty of Business, University “Haxhi Zeka” Pejë, UÇK 30000, Pejë, Kosovo

Faculty of UP, University “Hasan Pristina” Pristina, UÇK 10000, Pristina, Kosovo

Corresponding Author Email: 
bedri.millaku@unhz.eu
Page: 
765-770
|
DOI: 
https://doi.org/10.18280/ijsdp.160417
Received: 
22 February 2021
|
Revised: 
22 May 2021
|
Accepted: 
1 June 2021
|
Available online: 
26 August 2021
| Citation

© 2021 IIETA. This article is published by IIETA and is licensed under the CC BY 4.0 license (http://creativecommons.org/licenses/by/4.0/).

OPEN ACCESS

Abstract: 

From March 2020 to early June 2020, Kosovo introduced various travel restriction measures for foreign nationals, including entry bans, closure of land and air border crossings, two-week quarantine, and self-isolation. From March to May, the country was almost completely blocked, where the activities of the tourism industry were strictly prohibited while businesses encountered great difficulties to operate and provide services, the number of jobseekers in the country increased significantly, precisely because of the cessation of activities, because this sector is considered to be one of the sectors that contributes the most to employment in our country, despite the fact that some of these businesses are family businesses. A significant number of employees in these sectors in our country may lose their jobs, as a result of the situation created, and this will further deepen the tourism industry, mainly due to the decline in the volume of remittances and tourism diaspora in Kosovo. While restrictive measures may have had a positive impact on curbing the spread of the virus, and preventing the escalation of the health crisis, the effect and consequences of closing the economy for months is severe for the tourism industry.

Keywords: 

pandemic, tourism, economy, gastronomy

1. Introduction

The new coronavirus pandemic (COVID-19), in addition to causing a health crisis, has also affected people’s behavior and their daily habits, causing changes in the tourism industry. The outbreak of Coronavirus Covid-19 pandemic caused global economic gloom in the first quarter of 2020. This crisis has particularly impacted tourism. COVID-19 started its worldwide spread at the end of 2019. Initially it was present only in China; however within a few days it reached other Asian countries such as South Korea, Thailand and Japan. Infection was spread by people travelling from Chinese city of Wuhan [1] and the pace of its proliferation resulted in WHO’s announcement on a critical situation regarding public health [2] followed by a notice on an epidemic becoming a pandemic on Wednesday, March 11 [3]. The first confirmed infection in Kosovo was on: 11.03.2020 a 77 year old man who came from Italy sources arbresh.info within the Infectious Diseases Clinic have told arbresh.info that already based on the analysis has resulted a positive case in the Laboratory of Molecular Microbiology in IKSHPK with the method RT-PCR [4] The crisis caused by COVID-19, in the world, but also in the countries of the region, and in our country has mostly affected the tourism industry, as well as other sectors related to tourism, namely hospitality, crafts and transport, but also investments in numerous other projects, both in the public and private sector. On the other hand, what stands out in the context of changes in the economy is the growth of e-commerce, so online sales during the pandemic while other sectors had only losses. Measures recommended by the Government of the country to prevent the spread of coronavirus have greatly affected the situation, which even under normal conditions was not good enough. The consequences of the pandemic mainly affect small and medium enterprises, especially the tourism industry. Only pharmacies and grocery stores have been open all the time, but the purchasing power of citizens has decreased, both due to reduced wages and layoffs. Gastronomy sector or HoReCa, which is the abbreviation of "Hotel, Restaurants and Catering", have suffered heavy losses due to measures put in place to prevent the spread of COVID-19. According to the Association of Gastronomes of Kosovo, it is estimated that the losses are significant for the sector directly, but also for other sectors that are in some way related to this sector. The only permitted form of activity was the provision of food on delivery, which brought symbolic money circulation to their survival in the market. While tourism in many countries contributes a large share of Gross Domestic Product (GDP), it is not surprising that this industry has become a priority for governments and businesses as one of the most reliable sectors to invest in and develop. The growing importance of tourism and its effects on the economy, job creation and local community development, has led to a more serious approach by different countries around the world to develop sustainable policies and adapt more practices good from this sector. The economic loss globally is estimated to be 3-6 trillion USD by the Asian Development Bank [5]. As a result of the coronavirus epidemic, new tourism [6] takes on a new dimension in the 21st century. The COVID 19 outbreak has been declared as a global pandemic by WHO and has arrested almost every economy at present in the globe.

2. Methodology

COVID-19 coronavirus pandemic worldwide [7-9] has a negative impact on the tourism industry and the economy after every epidemic catastrophe worldwide [10, 11]. This impact is also evident in the tourism industry in Kosovo since March 2020. To describe the changes in this area, data based on established sources (research), obtained, inter alia, from the Kosovo Agency of Statistics were used. Government of the Republic of Kosovo, research, works, etc. The collected data are compared with the data of March last year [12]. The current paper is a critical summary of the simultaneous developments of the tourism industry in Kosovo.

3. Effects on the Municipal Budget from the COVID-19 Pandemic

Municipal own source revenues will fall significantly in the first half of 2020. The decrease in own source revenues will be followed by the decrease in expenditures in all budget categories, especially capital investments because own source revenues are used mainly for capital investments. Based on the reports of the municipalities in the Ministry of Finance and Transfers, in March and April 2020, all municipalities of Kosovo have collected revenues in the amount of about 5.8 million euros, or about 9.3 million euros less compared to the same months last year 2019 that was upper 14 million euros.

Revenues generated by municipalities in the four months of 2020 compared to the same period last year according to data from the Ministry of Finance and Transfers (value in euros).

The biggest effects will be on the decline in property tax revenues. The Ministry of Finance and Transfers has removed as an obligation the payment of property tax as a condition for registering the vehicle in the municipality. For the period from mid-March to June 2020, vehicles can be registered only with the payment of the insurance policy. Property tax is the main source of income for most municipalities. In addition, other revenues generated by the municipality will fall significantly, as all sectors from which local government revenues are collected are affected by the measures taken to curb the COVID-19 pandemic. In the first half of 2019, 27 municipalities have generated revenues in the amount of about 40 million euros. While 38 municipalities of Kosovo for 2020 have planned own source revenues in the amount of about 83 million euros. After the property tax, another entry that has filled the coffers of the municipalities has been the penalties imposed by the police on local roads for traffic violations. Prior to taking measures to curb the COVID-19 pandemic, the Kosovo Police imposed up to 1,500 fines within 24 hours. Following the measures taken against the pandemic, the number of fines imposed ranged from 70 to 130 overnight nationwide. In addition, the courts did not deal with administrative or civil cases (such as cases filed by the municipal inspection or the police) that were of a contentious nature, some of which usually end in favor of municipal revenues.

Number of fines imposed by the police at the national level before and after the measures taken to curb COVID-19.

Significant third own source revenue from most municipalities is considered revenue from the use of public property. Municipalities will have to collect revenues at least for the months of March-June 2020 (see Table 1). Some municipalities, such as Prishtina, Drenas, Ferizaj, have issued relevant decisions to exempt businesses from paying the use of municipal property for the above period. Some municipalities, such as Prishtina, Drenas, Ferizaj, have issued relevant decisions to exempt businesses from paying the use of municipal property for the above period. These payments cannot be canceled (except when the company applying for a permit may go bankrupt) but Prishtina, Prizren and Gjilan have already issued decisions to postpone the payment of the installment, which means that the initial planning of municipalities for municipal revenues will undergo substantial changes.

Table 1. Impact of the COVID-19 pandemic on local government, Institute GAP, 2020

Period 2020

 First week

Second week

Third week

Fourth week

Total

 

February

9,852

11,411

10,563

11,230

43,056

 

March

10,769

10,346

859

689

22,663

 

April

1,357

1,382

658

1,065

4,462

Source: Impact of the COVID-19 pandemic on local government, Institute GAP, 2020

4. Discussions about the COVID-19 Pandemic

Based on the recommendations given by the NIPHK evaluated by the Committee for coordination and assessment of the emergency situation with corona virus COVID-19 to take the necessary measures to prevent, manage and control COVID-19 infection in the territory of the Republic of Kosovo, received considering the provisions of the law on Prevention and Combating the Covid-19 Pandemic in the territory of the Republic of Kosovo, according to the recommendation of the IKSHPK, measures and obligations of institutions are proposed for the implementation of general and specific measures for protection against the Covid-19 pandemic. The relationship of the measures taken by the Government of Kosovo represents another challenging moment for businesses and their operation, which were faced with a situation which was isolated and some essentials continued to operate under strict conditions and according to the rules set by state health bodies. The crisis caused by COVID-19, in the world, but also in the countries of the region, has mostly affected the tourism sector, as well as other sectors related to tourism, namely hospitality, crafts and transport, but also investments in construction and in numerous other projects, both in the public and private sector. On the other hand, what stands out in the context of changes in the economy is the growth of e-commerce, online sales during the pandemic.

Measures on foreign and local citizens entering Kosovo:

1. Foreign nationals entering Kosovo, including those with temporary or permanent residence permits in Kosovo, coming from high-risk countries according to the official ECDC list, must have a negative RT-PCR test for Covid-19 done in the last 72 hours;

2. Exception to point 1 above make:

2.1. If a foreign citizen enters Kosovo through the airport or through land border points and leaves Kosovo within 3 hours through the airport or land border points, provided that at the entrance they sign the declaration that he will leave Kosovo within 3 hours;

2.2. Foreign nationals working as professional transporters (drivers), provided they comply with the international transport protocol for protection against Covid-19;

2.3. Foreign citizens passing through Kosovo through organized transport by bus or regular international transit line, provided that a declaration is signed that they will leave the territory of Kosovo within 5 hours;

2.4. Foreign diplomats accredited in Kosovo and their families;

3. All citizens of Kosovo (including those residing in another country), upon entering Kosovo must present a certificate for a negative RT-PCR test made no later than 72 hours before entering Kosovo, otherwise they must self- isolated for 7 days.

4. Exceptions from point 3 above are Kosovo citizens (including those residing in another country) who have left Kosovo in the last 24 hours.

5. Municipalities are required to provide technical medical teams to MFMCs (Main Family Medicine Centers), with the support of the Kosovo Police, to control passengers entering the border crossings: Merdar, Vermica, Kulla, Hani i Elezit, Jarinje, Dheu i Bardhë and PIA "Adem Jashari", including first of all temperature measurement.

Organizing the work of public institutions and private organizations / businesses.

6. Public institutions and private organizations / businesses without exception are obliged to monitor on a daily basis the health of staff in accordance with the "Manual for protection against the spread of Covid-19", including mandatory temperature measurement for all when entering the premises.

7. As long as it does not affect the performance of services and tasks of institutions, public institutions are instructed to work only with essential staff.

8. Workers with chronic diseases (according to the official circular issued by the Ministry of Health prepared for this purpose), pregnant women and breastfeeding women are exempted from appearing at work, both in public and private institutions, while employers are instructed, as far as possible, create the conditions for their engagement at work from home.

9. Public and private institutions are obliged to keep disinfectants for hands and face masks in accessible places at the entrance of the facility, which can be used by employees of institutions and visitors.

10. Public and private institutions are obliged to place visible signs of the rules of conduct for protection from Covid-19 at the entrance of each object (including the sign prohibiting entry into the object without masks, respecting the distance, etc.) in accordance with the Manual for protection against the spread of Covid-19”.

11. Obliged officials of public institutions, private enterprises and any other entity, to take strict measures to prevent the spread of infection within their institutions, by conducting continuous disinfection and taking all necessary measures in accordance with the "Manual for protection from the spread of Covid-19”.

12. All public institutions (central and local) as well as organizations, businesses and private entities without exception, are prohibited from organizing any festive ceremony for the end of the year.

Organization of the educational process

13. The educational process in pre-university institutions, public and private, for the second semester begins on January 18, 2021 and is organized according to the plan of the Ministry of Education and Science.

14. The educational process in all institutions of higher education, public and private, is organized according to the curriculum of the respective institutions in the online form, except for exams, practical and laboratory work that must be organized in accordance with the recommendations of National Institute for Public Health and Ministry of Health.

15. The activity of public and private kindergartens continues according to the assessment and supervision by the municipal authorities, based on the "Manual for protection against the spread of Covid-19", including measuring the temperature of children and staff on a daily basis when entering the premises.

16. Dormitories and canteens operate in compliance with the Covid-19 protection and propagation manual.

17. All educational institutions at all levels of education, public and private, are prohibited from organizing extracurricular activities, such as excursions, group walks, various parties of teaching staff and students and the like.

Organization of municipal emergency headquarters and municipal health services.

18. Municipalities are required to keep fully activated municipal emergency headquarters to oversee the implementation of measures, the health status of Covid-19 infected citizens and other issues, as well as to coordinate with the relevant central level.

19. Municipal emergency headquarters, health directorates and MFMCs are required to supervise and provide the necessary health services for at least 2 weeks for persons infected with Covid-19 and will report on a daily basis to CRRF-NIPHK.

20. Municipalities are required to provide home health services for all chronically ill and over 65 years of age.

21. Municipalities are required, in cooperation with the Kosovo Police, to provide technical medical teams to perform routine check-ups of foreign and local citizens entering the territory of Kosovo as specified in point 4 above in this decision. Measures for persons over 65 years of age,

22. Persons over the age of 65 are allowed to leave the house only during the hours 6: 00-10: 00 and 16: 00-19: 00, while outside this time they can go out only for emergency and health needs, proving with the relevant document the need for exit outside this schedule to the competent control body.

23. The Ministry of Labor and Social Welfare, in accordance with the created situation and according to the recommendations of NIPHK and MoH, is instructed to release all beneficiaries of social and pension schemes managed by MLSW from regular submission to the relevant offices for purposes of evidence as required by the relevant laws.

24. Citizens staying in nursing homes are provided with all health services, social services and regular health check-ups by MFMCs.

Measures for public activities,

25. It is forbidden to gather citizens in number of more than 4 people in public squares, parks, public places, winter recreation centers and the like, except for the cases allowed by this decision.

26. All public gatherings in public spaces of all forms are prohibited, except for the cases allowed by this decision.

27. Seminars and workshops of all public and private institutions are prohibited.

28. It is forbidden to organize weddings and family parties.

29. Religious ceremonies and activities are prohibited, except with the participation of close family.

30. Exceptions from point 29 above are the special religious ceremonies that are organized with the special permission of the Ministry of Health based on the recommendations of the NIPH.

Measures for business activities

31. The activity of public markets of vehicles and animals is prohibited.

32. Slaughtering of animals is allowed only in the premises authorized for this purpose.

33. Only the following activities are allowed (according to NACE codes defined by KBRA - Ministry of Trade and Industry):

33.1. Health sector,

33.2. Security and justice sector,

33.3. Public sector (central and municipal administration),

33.4. Production sector,

33.5. Agriculture and livestock sector,

33.6. Construction sector,

33.7. Freight,

33.8. Food products sector,

33.9. Service / distribution sector.

The measures implemented to prevent the spread of the coronavirus have greatly affected the situation, which even under normal conditions was not good enough (see Table 2). The consequences of the pandemic mainly affect small and medium enterprises, especially the gastronomy sector and real estate. Only pharmacies and grocery stores have been open all the time, but the purchasing power of citizens has decreased, both due to reduced wages and dismissal. According to the data of the Tax Service, 320 thousand workers are employed in Kosovo, of which 85 thousand are in the public sector. According to government forecasts, due to the pandemic, about 100,000 workers in the private sector could lose their jobs. The gastronomy sector or HoReCa, which stands for "Hotel, Restaurants and Catering", has suffered heavy losses due to measures put in place to prevent the spread of COVID-19. The country needs strategies to be competitive in the tourism market economy using country specific resources [13].

In Q1 period of 2020 the number of visitors is 21 859 while the number of their net stays is 35 119. The largest number of local visitors is observed in the Peja Region with 8 277 visitors and 16 562 nights. The relation is because in some municipalities there has been a decrease in the frequency of tourists as a result of the arrival of the first infections in early March 2020, and this has affected many visitors in terms of psychology of free movement. On the other hand, it can be seen that the beginning of the pandemic, most of the municipalities based on the registrations have marked a decrease as a result of the pandemic (see Figure 1).

Table 2. Comparisons of Q1 between last three years (2018, 2019 and 2020)

 

 

Q1/2018

Q1/2019

Q1/2020

 

Regions

 

 

 

 

 

 

 

 

Visitors

Nights

Visitors

Nights

Visitors

 Nights

1

Gjakova

875

1.105

785

1.023

280

391

2

Gjilan

775

972

1.159

1.357

904

1.266

3

Mitrovica

957

1.203

1.340

1.383

1.613

1.623

4

Peja

9.835

12.638

9.527

17.700

8.277

16.562

5

Prizren

4.870

5.937

5.308

6.464

5.111

6.838

6

Pristina

8.964

11.589

7.447

11.364

4.719

7.246

7

Ferizaj

1.257

1.650

1.746

2.356

954

1.193

 

Total

27.533

35.095

27.312

41.647

21.859

35.119

Figure 1. Number of infected by cities

Referring to the data of the municipalities and their scattered infections turn out to be, respectively the municipality of Prishtina which leads with the highest number of infections of 34% taken as an average sample of cases, to continue with other municipalities Ferizaj 7%, Prizren 6%, Vushtrri 6%, Mitrovica South 5%, Peja 5%, Pudujeva 4% etc. The most common symptoms of COVID-19 are fever, fatigue and dry cough. Some patients may have pain and suffering, nasal congestion, runny nose, sore throat or diarrhea (see Figure 2). These symptoms are usually mild and start gradually. Some people get infected but do not show any symptoms and do not feel bad. Most people (about 80%) recover from the disease without the need for special treatment. About 1 in 6 people taking COVID-19 become seriously ill and have difficulty breathing. In municipalities with a high risk of infection with over 150 infected people per 100,000 the entry and exit of citizens and vehicles in addition to health personnel, security personnel, justice and students will be prohibited. Access will also be granted to citizens in need of medical care, production, supply and sale of essential food goods and medicines for humans and animals. To help enterprises ensure sufficient liquidity, the Central Bank of Kosovo (CBK) in coordination with the Kosovo Banking Association decided to extend the loan repayment deadline until April 30, and later this deadline was extended to mid-June - this measure was intended to help businesses and households that have difficulty generating income as well as those affected by the crisis. The CBK has also stated that once the loan deferral requests are approved by the banks, no additional provisions should be applied. The interest rate on loans to SMEs operating in the tourism sector has been reduced to 50%, while the interest rate on loans to large companies has been reduced to 15%... The inevitable economic downturn has resulted in significant job losses and lower revenue collection, which will increase the country's poverty level. In the midst of this unprecedented crisis, Kosovo has an unprecedented opportunity to reshape its economic structure and accelerate change in important economic and social issues, which have so far undermined the country's economic progress. Crises like the crown can bring many opportunities for Kosovo's fragile economy, so the country's institutions must seize the opportunity and adapt policies that bring about real change. Businesses, on the other hand, need to allow themselves to be reorganized, thus pursuing digital transformation. Undoubtedly, the way forward depends a lot on the bold measures that the government will be willing and willing to take. In well-developed and emerging economies, government intervention has been quite impressive, and Kosovo must follow the same path. Currently, the government's plan for economic recovery is very ambitious, capturing 1 billion euros, but whether the government will be able to inject this money into the economy or not remains to be seen. What is more important is that in Kosovo the climate is very favorable for tourists because four seasons are adjusted in accordance with official calendar and in rare cases the climate happens to be different, for instance, the winter season is snowy each year, there are many citizens from Kosovo in European Union countries and who always spend their summer holidays in Kosovo in their homeland, while this time it was impossible due to pandemic and their non-arrival has greatly affected the country's economy based on in the statistics of previous years.

The sector employs many seasonal, part time and temporary workers. With the impact of the crisis continuing over June-July-August and reduced capacity for many industry branches, many of these jobs will be directly affected. In normal circumstances, the sector can help provide diverse employment opportunities for migrants, women, students and older workers, not only in major cities but also in remote, rural and coastal areas, as well as other often economically fragile locations where alternative opportunities may be limited.

Growing economic after crisis it is the most important issue according to the World Tourism Organization (WTO). Therefore, the first step of any state is the possibility of recovery which is an urgent application package to return the economy [14] to a situation which does not suffer even greater damage. According to Gamage et al. [15] we identify that the tourism sector is the industry with the fastest growth in economies in developed countries and then developing countries, at the same time tourism is considered as the largest source of opportunities employment and job creation in the economy of a country and the top income generator in an economy. Also in Kosovo it is projected to cause problems by Q1 2021, which will further deepen the trade deficit, mainly due to declining remittance and diaspora tourism. According to Central Bank of Kosovo (2020) Kosovo has a very high dependence on remittances, receiving an amount of over 10% of GDP on an annual basis. CBK predicts that Kosovo's economy will experience a real economic decline in the range -2% to -4% for 2020. Prior to the outbreak of the COVID-19 pandemic, forecasts for Kosovo's economy for 2020 were promising. Estimates made by the World Bank Group (WBG) forecast a 4% increase in Gross Domestic Product (GDP) in 2020. However, given the circumstances and conditions that are changing rapidly due to the limitations of COVID-19, economic growth has now been undermined and the risk of economic contraction remains high. Similar to other emerging economies, the virus is expected to have a shocking negative impact on Kosovo's fragile market. Uncertainty over the longevity and severity of the virus has prompted the country to take strict measures, including restrictions on the movement of people, services and goods, travel bans, suspension of the educational process, closure of non-essential businesses and later also the imposition of partial isolation of the population. Thus, the power of local communities to influence decision making as well as policy making.

Source: Open Data Kosovo.org. 2020

Figure 2. Number of infected by cities

5. Conclusions and Recommendations

Municipalities in Kosovo have shown good potential in institutional management and taking measures to prevent the spread of COVID-19 virus [16]. In addition to the awareness-raising role, municipalities have proven to have a good coordinating role - cooperating with the central level and this approach has given good results in maintaining the public health of the country's citizens. Faced with a completely new situation, the municipalities will be forced to change their previous plans. This, in addition to affecting the dynamics of work in the municipalities, at the same time many projects, plans and regulations will either be canceled or postponed indefinitely. COVID-19 pandemic the situation, of the Government of Kosovo, in the first economic emergency package, has allocated 10 million euros for Kosovo municipalities that will be used to overcome the consequences created by measures taken to prevent the COVID-19 virus and to help them during this time. Restriction of movement has caused a drastic decline in business activities on the one hand, while the complete closure of many industries has left many workers unemployed. Restriction of movement for citizens and suspension of business activity in many sectors caused a significant decline in economic activity in the country. Restrictive measures caused a drastic decline in aggregate demand. The impacts so far on the business level are very large in declining sales and investment disruptions. Eventually, the job market may not be the same as it was before the pandemic. Therefore, the post-pandemic period could be a new beginning for many public policies, including those of social welfare.

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