Rapid COVID-19 socio-economic impact assessment reveals deep, widespread and cross-cutting impact on tourism sector

Dochula Pass in Bhutan's capital Thimphu is a popular tourist attraction. The site has remained almost deserted since the country imposed temporary restriction on tourism to keep COVID-19 at bay.

May 18, 2020: Bhutan closed its doors to tourists immediately after the country detected its first COVID-19 case on March 5 in an effort to combat the spread of the disease. This has hit the tourism and hospitality sector hard.

Deep, wide-spread and cross-cutting impact 

According to the recent Rapid Socio-Economic Impact Assessment (RSEIA), the impact of COVID-19 pandemic on Bhutan’s tourism sector is already deep, widespread and cross-cutting. This is one of the three key findings of the assessment that analyses the vulnerability of individuals, households and businesses engaged in the tourism sector. 

The rapid study was conducted by the National Statistics Bureau (NSB) in collaboration with the Gross National Happiness CommissionMinistry of Labour and Human Resources, and Tourism Council of BhutanUNDP Bhutan supported the assessment as a technical lead in collaboration with UN agencies in the country.

The study conducted phone interviews with 1,285 people working in the sector, including tour operators, guides, hotel and restaurant owners and staff, over two weeks from 2nd – 16th April. The halt in tourism due to the coronavirus global health crisis has had grave impact on their lives and increased vulnerability across many dimensions.

The study partnered with the Oxford Poverty and Human Development Initiative (OPHI) in constructing a Multidimensional Vulnerability Index for Tourism (MVI-T). Eight core indicators of vulnerability were used, and they are Income Loss, Coping Strategy, Loss of Livelihood, Food Security, Limited Savings, Indebtedness, Vulnerable Household Members and Tourism Dependent. Over 80 per cent of the respondents were found to be deprived in at least three vulnerability indicators simultaneously.  

The study showed that almost one third of respondents lost their jobs or have been put on unpaid leave. Around two-thirds of the households surveyed rely on tourism for livelihood and a vast majority of these households (three in four households) saw their income fall by 50 to 100 per cent.  Many households lack savings to get through the crisis and most business owners have debt and the crisis has compromised their repayment capacity.  

Strong interest in alternative employment

Another key finding is that there is strong interest (76 per cent) in alternative employment to cope with the crisis. Working in agriculture was the top choice for alternative employment among the surveyed population. The findings show potentials for urban to rural migration. Moving back to village was the second most popular choice for the self-employed individuals, while regular, casual and family workers ranked it as their third choice. Respondents also showed interest to work as electrician, carpenter and plumber among others.  

Limited coping capacity

The third key finding is that while the impact of COVID-19 pandemic is hard hitting, coping capacity of the affected is limited. A vast majority of the respondents said they are banking their hopes on the government support.  

“The findings reveal the extent and nature of vulnerabilities experienced by those directly affected by the crisis in the tourism sector and we hope these crucial data would prove useful in the design and execution of the immediate and medium to long-term response measures,” said NSB Director Chhime Tshering.

Looking beyond the immediate term, the crisis can be turned into an opportunity to transform Bhutan’s tourism industry and its economy at large, and to address structural issues that contribute to vulnerabilities and inequality,” said UNDP Resident Representative Azusa Kubota.

“Having a strategic, long-term vision while designing and rolling out the medium-to-long term recovery package will help plan for a better future," she added. 

The RSEIA Report also outlines policy recommendations for immediate relief and alternative livelihood support measures, and long term ‘build back better’ measures. Some of the immediate responses include supporting re-skilling and upgrading within the tourism sector itself, supporting liquidity and operations of affected tourism-related businesses, and designing gender-sensitive employment and re-skilling programs.  

The ‘build back better” responses include aligning alternative employment and re-skilling programs with the future requirement of labor and skills as per the country’s economic vision and building future resilience and sustainability of the tourism sector.

About NSB

NSB is Bhutan’s main statistical agency and custodian of official statistics in the country. The agency works to provide timely, relevant, and reliable statistics, consistent with international principles and standards.

About UNDP

UNDP partners with people at all levels of society to help build nations that can withstand crisis, and drive and sustain the kind of growth that improves the quality of life for everyone. UNDP Bhutan is part of the 170-country office UNDP network, and offers global perspective and local insight to help empower lives and build resilient nations. UNDP on Twitter | on Facebook | UNDP Bhutan Office