Resume: The tourism industry has been the worst hit by the coronavirus pandemic. As of October 2020, the number of international travellers has dropped by 93.4% as compared to the same period of the previous year. Given these circumstances, assistance to the tourism industry is of paramount importance. A target measures package to aid the tourism industry has been unveiled as part of the anti-crisis plan. One of the measures is aiding those hotels with an annual turnover under GEL 20 million. The government will subsidise 80% of their loan interest for 12 months. The budget of the programme is GEL 60 million and approximately 3,000 hotels will be covered. Currently, nearly 2,000 hotels have already used the programme. Therefore, the statement of the Minister of Economy and Sustainable Development is TRUE.
At the same time, FactCheck refrains from discussing the expediency of the aforementioned programme and the analysis is focused solely on the delivery of the government-approved plan.
Analysis
The Minister of Economy and Sustainable Development, Natia Turnava, spoke about the tourism industry and the ongoing loan interest subsidy programme as part of the anti-crisis plan and stated: “The loan interest subsidy programme for small and family hotels is being successfully carried out and nearly 2,000 hotels have already used this opportunity.”
Tourism was one of the rapidly growing sectors of the economy before the pandemic, constituting 11.5% of the GDP with over 150,000 service employees (according to 2019’s data). The tourism industry has been the worst hit as a result of the pandemic. Therefore, the government unveiled an emergency targeted measure package to support tourism. These measures are as follows:
• Entities of the tourism industry will be fully deferred from property tax payments in 2020 whilst income tax will be postponed until the end of the year. In total, GEL 135 million is envisaged for this purpose.
• For six months, the government will subsidise 80% of the loan interest for owners of hotels with less than GEL 20 million turnover. The budget of this programme is GEL 60 million and approximately 3,000 hotels will be covered.
• Food facilities will be involved in the loan-guarantee plan which will allow them to deal with liquidity problems and fund operational expenses.
• For six months the government will subsidise bank guarantee interest for tourism companies/tour operators.
• The government will also carry out special activities for the rapid restoration of guide and other professional tourism services. The authorities will subsidise expenses for participation in tourism exhibitions. GEL 5 million has been allocated for supporting tour-guides and tourism companies.
The total budget of the aforementioned measures is GEL 200 million.
As mentioned previously, the government has allocated GEL 60 million for the co-funding of loans for small and family hotels and nearly 3,000 hotels in total will use this programme. Initially, loan subsidies were limited to last for six months whilst it was decided later to provide subsidies on annual loan interest for commercial entities from 1 March 2020 onward for the next 12 months.
According to the Product of Georgia data, by the end of August 2020 two stages have already been announced for helping the small and medium hotel industry. There were 612 and 295 beneficiary business entities as part of the first stage and second stages, respectively. In total, 907 hotels were involved in the loan co-funding programme as part of both of the stages and the total co-funding sum reached GEL 10.7 million. As reported by Product of Georgia, currently nearly 2,000 hotels have used the loan co-funding opportunity. Of additional note is that on 13 November 2020, the fourth stage of the aforementioned programme was announced and applications to become involved can be submitted until 22 November 2020.
The tourism industry has been particularly affected by the coronavirus pandemic. As of October 2020, the number of international travellers has dropped by 93.4% as compared to the same period of the previous year. The summer tourism season essentially failed. Winter resorts are ready for the winter tourism season although, as stated by hotel owners, bookings are currently down by 97% whilst local vacationers are nowhere to be seen. Taking these circumstances into account, aiding the tourism sector is crucial.
Given all of the aforementioned, the statement of the Minister of Economy and Sustainable Development, Natia Turnava, is TRUE.
