Figure 17. Breakdown of respondents in manufacturing sector by number of workers, 2017 & 2021 35 Figure 18. Breakdown of respondents in the Tourism Sector by annual sales: 2017, 2019, and 2020

4.3 Tourism sector: impact of measures taken to curb COVID-19

Impact on sales. All of the respondents had sales between “U $ 100,000 and U $ 1 million” in 2020. About 8% of the respondents indicated an increase in isales in 2020 over 2019 while 69% reported a decline in revenue. About 23% of the respondents were in the same isales level as in 2019.

Figure 18. Breakdown of respondents in the Tourism Sector by annual sales: 2017, 2019, and 2020

Reduction in GDP contribution. Although there were a few respondents who were able to quickly shift their marketing to target domestic tourists and, thus, were able to sustain or increase their revenues in 2020 over 2019 figures, the general trend was a decline in sales. Contribution of the tourism sector to the gross domestic product (GDP) decreased from US$ 2,089 million in 2019 to US$ 1,114.7 million in 2020 (WTTC 2021) or a decline of 47%.

Impact on workers and jobs. All of the respondents said that they cut down the number of employees. Informal and seasonal workers were among the first who lost their jobs. Permanent employees faced either pay cuts or an unpaid leave. According to the World Travel and Tourism Council, 207,000 workers in tourism establishments in Nepal lost their jobs in 2020. Number of workers employed in the tourism sector decreased from 1.042 million in 2019 to 0.835 million in 2020 (WTTC 2021) or a decline of 20%.

Figure 19. Breakdown of respondents in the Tourism Sector by number of workers, 2017 & 2021

The following were the key disruptions and shocks experienced by the tourism industry, which led to decline in sales and number of workers:

● Decline in tourist arrival. Number of international tourists decreased from 1.19 million in 2019 to 230,000 in 2020. Rate and strength of business recovery will be tied to the ability to provide assurances and confidence to the public that traveling to Nepal is safe and with minimal risk of getting infected with COVID-19 in addition to delivery of tourism products and services that match the demand of the travel market. ● Decline in tourist spending. Total tourist spending in 2020 was 51% lower than 2019 figures. It should also be noted that during the last five years, the tourism industry generated more revenue from domestic tourists than from foreign tourists. Percentage share of tourism receipts from domestic tourists increased from 57% in 2019 to 73% in 2020. The COVID-19 crisis has further driven home the importance of promoting domestic tourism to improve resilience of the industry.

Figure 20. International and domestic visitor spending (in US$ million) in Nepal: 2019 and 2020

● Limited financial reserves. A key challenge faced by tourism enterprises is sustaining their cash flow to cover cost of operations. Many of enterprises in the tourism industry have limited retained earnings to survive economic shocks (Sinclair and Russell 2020). ● Debt burden due to cancellation of Visit Nepal 2020. In anticipation of the Visit Nepal 2020 programme of the government which targeted 2 million international tourist arrivals, businesses in the tourism industry invested heavily in infrastructure financed through government loans. Many of the enterprises are facing difficulties in paying back their loan.

The tourism sector, which contributed 8% to the country’s GDP and enabled 570,000 jobs in 2018, is suffering a 47% reduction in profits because of the measures adopted to curb the spread of COVID19. The key disruptions and shocks experienced by the tourism industry which led to decline in sales and workers include decline in tourist arrival, decline in tourist spending, limited financial services, cancellation of Visit Nepal 2020 and the resulting debt burden on the small businesses.