Tourism has become a key sector to the Lao economy in the last decade with direct revenue increasing more than twofold from US$380 million in 2010 to over US$800 million in 2018 (Lao Tourism Report 2018). Tourism contributes directly to income generation of the locals, employment opportunities, and foreign exchange earnings to the country. In 2019, tourism accounted for 4.6% of GDP and 13% of total employment. The number of tourist arrivals increased by 14.4% from the previous year with a total of about 4.8 million visitors and estimated direct revenue of over US$900 million in 2019.
The COVID-19 pandemic has been causing devastating global socio-economic consequences and visibly crippled the tourism industry as countries implemented strict and ranging measures to counter the spread of the virus around the world. According to World Tourism Organization 2020 report, the potential global impacts could range between an estimated 60-80% decline in international arrivals, amounting to losses of between of US$910 billion to US$1.2 trillion in export revenues from tourism worldwide.
The Government of Lao PDR has also taken swift action to counter the virus spread. On March 10, the Ministry of Information, Culture and Tourism made an announcement on
suspension and postponement of visitors from risky countries. On March 29, Prime Minister issued an Order on reinforcement measures on containment, prevention and full response to the COVID-19 pandemic. Therefore, while Lao PDR has so far largely managed to escape a health crisis, with only 23 cases and zero deaths (as of 30 September), tourism is one of the sectors hardest hit by the pandemic.
As a result of COVID-19 pandemic, all tourism businesses across the country have been directly affected, including 637 hotels, 2,283 guesthouses and resorts, 55,541 rooms across the country, 539 travel agents, 36 branches of travel agents, 809 tourist sites, as well as other tourism-related supply chain. The Ministry of Information, Culture and Tourism (MoICT) found that the number of international arrivals to Lao PDR in the first two quarters has declined from 2,228,459 visitors in 2019 to 886,447 visitors in 2020, or a decrease of 60% compared to the same period. In addition, most of tourism businesses have reduced the number of employees to the minimum in order to reduce the cost of companies’ operation and to help companies to survive from this difficult time.
MoICT has taken an initiative to conduct COVID-19 impact assessment report on tourism industry in Lao PDR. The assessment has identified key potential policy responses for a recovery plan for the country to undertake moving forward. However, the assessment was conducted under the uncertainty of COVID-19 based on the information available until July 2020, and the situation has now changed significantly and there is a need for the Lao tourism industry to reassess the situation and that policy recommendations will also need to be revisited. Therefore, this assignment will aim to provide updates to the draft developed by the ministry and develop it into a more comprehensive response and recovery strategy for tourism in Lao PDR. More importantly, it will provide a crucial background document for the development of the next Lao PDR’s five-year Tourism Development Plan 2021-2025.
As part of Socio-Economic Recovery Framework of the UN Lao PDR Country team, UNDP is collaborating with MoICT to further investigate the impact of COVID-19 on the tourism industry, to develop recovery plan for the short, medium, and long terms. This will also include investigating the impact related sectors such as transportation, handicrafts, agriculture, and related industries. This will add to the existing work already done by the Department of Tourism Development of the MoICT on recovery and response efforts to COVID-19 in Lao PDR.
Under this collaboration, UNDP will provide technical assistance to support the Ministry and contribute directly to inform the development of tourism development plan through the recruitment of tourism expert, consultation workshop, and publication of the final report in both Lao and English. Finally, the aim of this collaboration is to provide development partners with informed policy options to offer their support to help the tourism industry in Lao PDR weather the crisis and “build back better”.