Tourism and meeting industry after lockdown

Juliusz Kłosowski and Witold Żygulski talk with Andrzej Gut-Mostowy, Undersecretary of State in the Ministry of Development, responsible for the tourism sector.

H

ow do you assess the scale of today’s crisis for the tourism industry, especially the meet ings industry, caused by the COVID-19 pandemic?

Certainly, tourism in its broadest sense has suffered great damage, in terms of turnover and profitability. However, the tourism industry has different faces. Starting from sightseeing tourism, through camping, to hotel facilities. As for the latter, the scale of regression is quite different in small towns, where one comes for the sake of nature, and in metropolitan centers, such as Warsaw, Cracow, Gdansk

or Wroclaw. According to statistical data, the proximity of nature and the lack of crowds are extremely desirable con ditions that make it easier to cope with the effects of the COVID-19 crisis. A very good result - even better than in previous years - was recorded by campsites in the first half of the year, but hotel occupancy rates are now single-digit percentage in large cities. It therefore makes no sense to draw statistical averages for the tourism crisis because it is difficult to judge.

Tourism is changing its preferences, and all sectors are facing new challenges.

The meetings industry is indeed one of the most affected by crisis economic areas. This is due not only to the lockdown restrictions, but also to changes in consumer preferences caused by the pandemic. Even when administrative regulations allow for larger conferences, there is still no general will to participate in such events. Consequently, no one risks investing money in such activities. However, in this respect, I am a moderate optimist. Every restriction causes a reaction in the human psyche, causes a desire to react. When at some point the administrative and psychological barriers disappear, it will turn out that the meetings industry will return to its activity, because people will want to meet, that is our nature. The only question is how quickly such a situation will happen.

At a recent world conference of ministers of tourism one of the recognized experts said that the appearance of the coronavirus vaccine will bring the tourism industry quickly back on the path of turnover growth. There will be a re bound - people who have met for years, indifferently, whether socially or in conference, they will start again regularly to meet.

However, we do not have the vaccine yet and we have to face the current conditions; what do you bet on when it comes to the near future of the meetings industry? Are they technology platforms, or hybrid variants, or, finally, traditional meetings, of course with all the rules of pandemic time?

The ministry should not be concerned with stimulating or creating demand or trying to influence customer preferences, whether we are talking about the hospitality, backpacking tourism or the meetings industry.

Society makes its own choices. In a market economy, the ministry has to support all trends, all possibilities, but should not manually control processes taking place in the economy. Ministry, can only be a catalyst for market changes, which are very dynamic today. As early as August, it may have seemed to us that the epidemic is coming to an end, but then there was a sudden increase and today we have to reckon with the possibility of a second wave of the pandemic. Therefore, the whole industry is affected by the global epidemiological situation.

Today, Polish entrepreneurs receive powerful state support within the framework of the so-called anti-crisis shield; the

Andrzej Gut-Mostowy, Undersecretary of State in the Ministry of Development

meetings industry, as one of the most affected by the crisis, also cries for help, mentioning particularly desirable forms, such as guaranteed loans or changes in the VAT collection system. What does this have to do with the chances of being implemented?

We offer many support mechanisms for the tourism industry, including the meetings industry. These are subsidies to a part of the wage costs of employees of small and medium-sized enterprises and the social security contributions due from these salaries. Low-interest loans for microenterprises and the possibility of subsidizing wages from the Guaranteed Employee Benefits Fund during economic downtime or reduction of working hours are also helpful.

The tourist voucher, which has been introduced during the pandemic, primarily supports the budgets of families and entrepreneurs from the holiday tourism sector. In the Małopolska region there is already an educational voucher, addressed strictly to entrepreneurs. It can be used to pay for example for organized trainings. Is there under consideration any idea of a similar solution for the meetings industry, let’s say a conference voucher?

The idea of a tourist voucher is a combination of social policy with support for tourism, so it is difficult to apply this solu tion to the meetings industry. Other incentives would have to be used, especially financial ones, especially tax ones, which would need to be agreed with the Ministry of Finance.

Fiscal preferences should be a good solution for the industry.

Of course, they must be precise and tight, then, in my opinion, will effectively contribute to the revival of the meet ings market, while maintaining all the rigors resulting from the conditions of the pandemic.

AS EARLY AS AUGUST, IT MAY HAVE SEEMED TO US THAT THE EPIDEMIC IS COMING TO AN END, BUT THEN THERE WAS A SUDDEN INCREASE AND TODAY WE HAVE TO RECKON WITH THE POSSIBILITY OF A SECOND WAVE OF THE PANDEMIC.

Representatives of the meetings industry today talk about the need for access to guaranteed loans, without which they are not even able to pay out.

Such loans are already available. Bank Gospodarstwa Krajowego (BGK) [the state-owned bank, which is today one of the main operators of state aid for entrepreneurs as part of the anti-crisis shield] offers guarantees of up to 80 percent of the value of a given project. This gives a breath of fresh air to commercial banks or any other lenders, and helps ease the burden of risk.

The meeting business has for years been raising the problem of being unable to deduct VAT from many costs incurred in connection with the organization of congresses, conferences, fairswe are talking, for example, about hotel services or catering. This is an obvious loophole in the regulations since the conference organizer is not an end user, but must treat the VAT charged for these services as a cost. Can the industry count on changes in these regulations especially in the current situation?

As Secretary of State responsible for Tourism I will always fight for that VAT solutions are as beneficial as possible for the wider public of the understood industry. In this case, however, our role as a department is limited - we can only make demands to the Ministry of Finance, which watches over all the funds at the state’s disposal. It has a decisive opinion on tax issues. Of course, we present the current difficult situation of the tourism sec tor, we monitor the situation, but we realize that it is ultimately the Ministry of Finance who will make these financial decisions.

A few months ago, under completely different conditions, we talked about the prospect of introducing a system of local tourist fees in Poland, which would bring additional funds to local governments for the development of tourist infrastructure in the region; is this project being continued?

Consultations, discussions and analysis of this issue are ongoing. Discussions with the local authorities indicate that the planned tourist fee should be independent of en vironmental impact, cannot duplicate the already existing climate charge.

In September, I hope, the parliament will pass the most important regulation today - the so-called tourist shield. Then we will be able to return to the issue of local tourist fees.

The European Fund for Reconstruction is to direct funds amounting up to 175 billion Euros to Poland; what part of these funds will have a chance to boost tourism and the meetings industry?

The Ministry of Development has of course expressed interest in these funds; the pool of projects also includes those related to tourism and the meetings industry. Now it is too early to provide details, as the work is still ongoing.