Covid-19: guesthouses expected to incur USD 29 million loss

The Guesthouse Association of the Maldives (GAM) has estimated guesthouse businesses to incur losses totaling USD 28.9 million owing to the Novel Coronavirus (Covid-19) pandemic sweeping across the entire globe at an alarming rate.

In a statement highlighting the results of a survey conducted by the association prior to the government’s travel restrictions imposed on tourist check-ins at local guesthouses, the association noted that guesthouses are expected to take at least six months to recover from their losses since all guesthouses across the nation have been closed due to the outbreak.

The statement goes on to read that the guesthouse industry has been hit hard, with travel restrictions barring arrivals from top markets of the tourism industry such as Europe and China which have been in lockdown for a long period of time.

Further, the ban on tourist excursions as well as tourists checking into guesthouse or hotels in the country has also stricken the industry, hard, following which the businesses are at a complete standstill.

The association noted that guesthouse businesses are directly and indirectly linked to the island communities and as such, revenue earned through the businesses will go to island communities.

The people will face the biggest losses in the face of such a pandemic and as such, GAM welcomed the government’s decision to close down all guesthouses across Maldives during these difficult times.

The survey found that many guesthouses set up their businesses after acquiring loans and spent a great percent of their revenue on rent, utilities and salaries.

As such, a survey conducted during 2019 shows that guesthouses spent 56% of revenue on payroll, community-linked expenditures and others while 26% revenue was spent on utility bills like water, electricity and taxes such as TGST and Green tax.

This, GAM said, is proof that the guesthouse industry contributes significantly towards increasing the income of the citizens as well as the government.

Although the guesthouse industry is currently at a standstill, guesthouses are still required to pay bills, rent fees and employee salaries alongside taxes. With this being said, it is a challenge to estimate a date when guesthouses will be able to begin operations once again, and the industry is expected to take at least six months to recover. During this period, the industry will incur losses up to USD 28.9 million, reads the statement.

GAM also plans to share the results of the survey with the government and its stakeholders so that a plan to mitigate the significant losses may be formulated.