Travel Agencies on Verge of Bankruptcy Due to Covid-19

EghtesadOnline: Travel agencies suffered losses to the tune of 10 trillion rials ($38.5 million) in the first two months of the Covid-19 pandemic in Iran alone, of which 40% were due to the decline in domestic tourists and 60% by fall in the number of international tourists, says the head of Travel Agents Guild Association.

News ID: ۷۸۵۶۸۱

08 December 2020

“Travel and tourism sector has been one of the hardest hit by the coronavirus. Losses incurred by businesses active in the field are even more startling in Iran compared with other countries because most governments have lent financial support to the sector whereas in here the government has failed to offer adequate help to the tourism industry,” Hormatollah Rafiei was also quoted as saying by the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture.

The official noted that travel agencies and airlines alone had 50,000 people on their payroll, which has now reduced to fewer than 10,000, which shows that 40,000 people have lost their jobs following the outbreak of coronavirus.

“Today, only 20% of travel agencies have managed to keep their companies afloat, while others have shuttered and jobs have been lost. Of those still active, more than 60-70% have downsized their staff. An agency, which used to have 100 employees, is now working with 20,” he said.

Noting that travel agencies have not generated added value since the start of the pandemic in order to pay value added tax, Rafiei said, “The government has not considered any help regarding taxation and insurance for the economic operatives of this sector. First, it announced it would consider facilities regarding taxation, but it has become stricter about imposing tax. We did not ask for interest-free loans; cheap loans would have been enough for us to live through the crisis. But under the formula devised by the government, the coronavirus loans are actually offered at a lending rate of 24% rather than the claimed 12%.”

Rafiei further said that the government was urged to forgive the 23% share of insurance premium employers have to pay, but it adopted an uncompromising approach to obtain the same.

“The government has not only failed to help salvage the sector, rather it has trampled private sector investors underfoot. Who knows what would become of the industry in the future?” he concluded.

Travel and tourism players, including tour guides and owners of traditional restaurants, eco-lodges and hotels will receive loans worth between 160 million rials ($637) and 9 billion rials ($35,856) at an interest rate of 12%, IRNA reported recently.

Registration at Kara.mcls.gov.ir for tourism coronavirus loans started on Nov. 19, following the approval of government-backed relief package by the taskforce to fight the economic impact of coronavirus on Sept. 30.

As per the guidelines provided by the taskforce, tour guides will receive loans worth 200 million rials ($796); travel agencies between 1,500 and 3,000 million rials ($5,976-$11,952); tourist transportation companies 800 million ($3,187); centers for tourism studies 600 million rials ($2,390); and traditional hotels and eco lodges will be eligible to receive between 800 million rials ($3,187) and 2,000 million rials ($7,968) depending on their grade, floor area and number of rooms.

In addition, hotels will be granted between 2 billion rials ($7,968) and 9 billion rials ($35,856) and hotel-apartments, motels and guesthouses will receive between 2 billion rials ($7,968) and 3.5 billion rials ($13,944) depending on their ratings.

The repayment period of the loans will start after a six-month breather, as of the second month of next Iranian year (starting April 21, 2021).

The taskforce has also decided to defer the payment of all expenses and debts of tourism players (back taxes, employers’ insurance premiums, repayment of loan installments, utility bills) until the end of the current fiscal year (March 20, 2021).