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Original Article | Open Access | Can. J. Bus. Inf. Stud., 2022; 4(3), 47-55 | doi: 10.34104/cjbis.022.047055

The Impact of COVID-19 on Micro, Small and Medium-Sized Tourism Enterprises: A Study on Chittagong Hill Tracts, Bangladesh

Most. Habiba* Mail Img

Abstract

The massive outbreak of the COVID-19 epidemic hit the world hard and Bangladesh is one the most affected countries by this pandemic. The condition of micro, small, and medium-sized enterprises (MSMEs) in the tourism sector in Bangladesh was worse during the outbreak. This project aims to examine the possible impact of the COVID-19 epidemic on micro, small, and medium-sized tourism enterprises (MSMTEs) in the Chittagong Hill Tracts (CHT), Bangladesh. This research is exploratory and descriptive in nature. Both primary and secondary data have been collected and analyzed to prepare this paper. Data were collected from 150 respondents and the collected data was analyzed by using SPSS (20) and MS Excel software. The outcome of the regression analysis shows that out of eleven independent variables seven of them have a significant influence on the dependent variable (overall impact of Covid-19 on small, medium, and micro-enterprises). These seven variables are employee turnover, challenges to new recruitment, decrease in income, business growth, a decrease in customers, business relationship hamper, and social stress on the entrepreneur. On the basis of the research findings, some of the strategies for the MSMTEs have been recommended at the end of this paper. 

INTRODUCTION

In early January of 2020, coronavirus (COVID-19) triggered a massive concern worldwide, and the outbreak has spread in several countries and infected many people globally, by the end of March 2020. The tourism and hospitality industry faced uncertainty as one of the most devastating sectors due to the epidemic. According to UNWTO, the total number of international tourist arrival has decreased by 84% between the period January 2020 and December 2020. The Tour Operators Association of Bangladesh (TOAB) claims that Bangladeshs tourism industry has lost at least up to Tk. 60 billion in the year 2020 due to this epidemic. 

The world economic losses range from $1.7 trillion to $2.4 trillion in 2021 (WTO, 2020). The epidemic continued for more than two years since the pandemic hit the earth and the earth faced one of its dark periods. Bangladesh has experienced millions of job losses, a tremendous reduction in monthly income, thousands of business shutdowns, and so on. In Bangladesh, the business related to tourism faced the ultimate uncertainty of its lifetime (Basak, 2021; Islam, 2021). As a prominent tourist destination in the country of Bangladesh, the economy of Chittagong Hill Tracts (CHT) is mostly dependent on tourism, and lots of businesses here are dependent upon tourism. 

This study presents the current situation of the micro, small and medium-sized tourism enterprises and will assess the overall impact of the COVID-19 epidemic on the MSMEs of the tourism sector in CHT.

Objectives of the study

The broad objective of this research is to evaluate the impact of the COVID-19 pandemic on the micro, small and medium-sized tourism enterprises in the Chittagong Hill Tracts in Bangladesh. The specific objectives is as under -

1) To identify the current situation of the MSMTEs in the Chittagong Hill Tracts in the context of employee turnover, income, and customers;

2) To assess the economic loss of the micro, small and mediumsized tourism enterprises in CHT; and

3) To measure the key impact of the COVID-19 epidemic on the MSMEs of the tourism sector in CHT. 

METHODOLOGY

This research is both exploratory and descriptive in nature. Quantitative analysis has been conducted in order to identify the COVID-19 impacts on the MSM-TEs in Chittagong Hill Tracts (CHT) with the help of both primary and secondary data. Primary data for this study is collected through the questionnaire survey tool where the respondents were asked to rate every 5 attributes on a 5-point Likert scale. In order to find the causal relationship between the dependent and independent variables, a multiple regression analysis has been done. Statistical analysis has been conducted by using the Statistical Package for Social Sciences (SPSS 20) software and MS Excel software.  Secondary data have been collected from the publications of the Tour Operators Association of Bangladesh (TOAB), Bangladesh Tourism Board (BTB), Bangladesh Parjatan Corporation (BPC), World Health Organization (WHO), Pacific Asia Travel Association (PATA), Bangladesh Bureau of Statistics (BBS), United Nations World Tourism Organization (UNWTO), and other research papers, magazines, newspapers, etc. 

Primary data have been collected from 150 different respondents of the Chittagong Hill Tracts. For data analysis, the selected dependent variable is the overall impact of Covid-19 on micro, small, medium and enterprises (Y) and the corresponding independent variables (Xi) areas under -

1) X1 Employee turnover 

2) X2 Challenges to new recruitment  

3) X3 Decrease income 

4) X4 Business growth

5) X5 Decrease customer 

6) X6 Increase price of supplies 

7) X7 Supported business shutdown 

8) X8 Business Relation Hamper 

9) X9 Social stress on entrepreneur 

10) X10 Increasing debt 

11) X11 Business Switch

Sample Description

187 businesses were approached and 175 of them were convinced to take part in the survey. Some of the questionnaires were half-done and hence they were rejected leaving 153 usable questionnaires. Among the useable 153 questionnaires, 150 were taken for the final data analysis. From three different districts in Chittagong hill tracts, the research data were collected. Among the 150 respondents, 41% (62) of the respondents are from the Rangamati district, 36% (54) are from the Bandarban district and the rest 23% (34) are from the Khagrachari district. 

The Table 1 above shows the demographic information of the respondents who participated in the questionnaire survey. The table shows that most of the participants are male and the age of the majority of the respondents are between 18 to 40. The respondents education level is quite satisfactory and around 58% of the respondents of our survey are the business owners themselves. 

Research Findings
Impact of the COVID-19 Pandemic on the tourism sector in Bangladesh 
According to the World Economic Forum (WEF), the world tourism sector contributes 10.4% to the world GDP and 10% to global employment. Because of the COVID-19 pandemic tourism sector collapsed in the very first place. Inbound, outbound, and domestic tourism was completely shut down in many countries. Globally almost 100 countries have shut down their border during the lockdown affecting not only tourism but also trade severely (Singh, 2020). Developing countries in Asia are on the list of the most devastating countries during the COVID-19 emergency. Bangladesh is on the list of the most affected countries by COVID-19 and the tourism and hospitality sector of this country had faced a great loss (Deb and Nafi, 2020). UNWTO reported that this country has lost around TK. 40 billion ($470 million) in the year 2020. Tour Operators Association of Bangladesh estimated the total loss of Tk. 60 billion (TOAB, 2020). According to PATA, in the year 2020, the tourism industry of Bangladesh has faced a great loss of around TK. 97 billion. In Bangladesh, around 10 million domestic tourists visit many destinations every year (IATA, 2020). In 2020, the number of local tourists has fallen tremendously and the travel by the international tourist has been completely shut down (PATA Bangladesh Chapter, 2020). Many tourism-related businesses have been closed completely and millions of people have lost their jobs. Tour Operators Association of Bangladesh reported that they have lost approximately Tk 15 billion as of April 2020; they also reported that 5000 jobs were cut by that time (TOAB, 2020). Tour operators in Bangladesh have lost TK 1.86 trillion followed by a ticket value in just three months during the COVID-19 epidemic. According to PATA, in our country around 4 million people either directly worked or are indirectly working with the tourism and travel industry. And they estimated that during the COVOD-19 the job of the 0.3 million people was at risk (Mia and Hassan, 2021). 

COVID-19 impacts on the MSMEs of Bangladesh 
Asia small and medium-sized enterprise monitor 2021 (ADB, 2022) reported that the most affected sector of tourism is small, medium and micro enterprises because their business is dependent upon tourism. In comparison with the other parts of this country, the lockdown was maintained strictly in Chittagong hill tracts. Due to the lockdown and other restrictions, thousands of small, medium and micro enterprises have been shut down. Most of them shut down temporarily and many of them shut down completely. Many of the micro, small and medium-sized business owners had been forced to switch their businesses. In Bangladesh, Chittagong hill tracts are one of the main regions which are highly dependent on tourism economically. The majority of the local businesses depend on tourism to survive and this epidemic has a high impact on these businesses. MSMEs in tourism include hotels, restaurants, local CNG, boats, resorts, souvenir shops, and other small businesses which depend on the tourist flow. CHT area was very restricted during the lockdown situation and everything related to tourism was completely shut down. That is why the tourism businesses in the CHT region were highly affected. Shafi, Liu, and Ren, (2020) stated four main points in their study findings of which the MSMEs are vulnerable, and those points are logistics, market, labor, and capital. Bangladesh Rural Advancement Committee (BRAC) surveyed 6030 respondents and the survey results show that 20%-30% of the enterprises had their businesses open during the lockdown; on the contrary almost 40%-70% of the enterprises had their businesses closed during that period. It took almost 8-9 months to fully reopen their business. Business revenue and employment of MSME were highly affected due to the lockdown which is shown in Fig. 1. The figure shows that the sales value gradually declines throughout the lockdown period operating costs also decreased and, there was no profit during the lock-down period, employee layoff rates also increased during that period and the organizations also reduced the payment of their employee. Several studies conducted on the COVID-19 impacts have found different key impact factors of the pandemic on MSMEs such as decreased profit & income, business shutdown, and business switches (ADB, 2022). Those studies also argue that the majority of the enterprises run by women get severely affected during this period in the context of funding, sales, income, and profit. Several studies accuse the government of the MSME assistance programs as low and lack of awareness of the pathetic situation of these enterprises. As such, due to the Covid-19 pandemic, sustaining the tourism and hospitality industry has become a challenging task arising from this crisis (Haque, 2021). Some experts estimated that it will take another 2 years to go back to the situation in 2019 for the tourism and hospitality industry (NAIEM, 2021). We hope that the government, BTB, BPC, destination management organizations (DMOs), national tourism organizations (NTOs), tour operator agencies, and other related organizations will work hard and together with proper planning and management to overcome the situation.

Problems faced by MSMTEs due to the COVID-19 Pandemic
Of the surveyed businesses, 83% of the MSMTEs in Chittagong hill tracts were being highly affected because of the Covid-19 epidemic, 6% of the respondents said that there was no impact on their business, and the rest 13% is unsure about the impacts. There were various types of major problems that MSMTEs had faced during the COVID-19 period such as new recruitment challenges, a decrease in income, a fall in business growth, high employee turnover, a decrease in customers, relationship hamper with other businesses and social stress on the entrepreneur. On the basis of the 5 scales Likert scale analysis, these variables were tested and discussed in detail in the regression analysis part. Fig. 2 presents the outcome of the chosen strategies by the MSMTEs to curb the pandemic crisis. According to the figure, 12% of the enterprises have completely shut down their business during the lockdown period while 24% of enterprises have shut down partially, 8% of the MSMTEs have switched from their business, majority of the enterprises have planned to apply for a loan which is 42% and rest 14% enterprises have continuing to operate their business during the period. The above Fig. 3 is presenting the chosen strategies by the MSMTEs to handle the cash-flow shortage. 23% of the businesses lay off their employees to handle cash flow, and 38% of the enterprises reduce the salary of their employees which also impacted the living of the employees, on the other hand, 23% of the businesses temporarily shut down their business to manage cash flow, promotional activities were withdrawn by 6% of the businesses, some other measures are taken by the rest 10% of the businesses. 

Appeal to the government for assistance 
The coronavirus pandemic was devastating for the whole universe and it was a nightmare for the business, especially those who are doing business in the tourism and hospitality industry. The enterprises need assistance from the government to get back in their old shape. The Fig. 4 above presents the statistics where 29% of the businesses expect subsidies in the utility charges from the government, 39% of the businesses demand loan on a very low-interest basis, and 25% wants subsidies in tax. 

RESULTS

Table 2 represents the standard deviation and mean value of the dependent variable ‘Impact of COVID-19 on the businesses along with the other eleven independent attributes from the survey. The mean value of the dependent variable is 4.05 which represents that the MSMEs of the tourism sector in CHT are impacted highly because of the pandemic. It also shows that social stress on entrepreneurs (mean value 4.23), business relationship hamper (mean value 4.21), and employee turnover (mean value 4.17) has a high impact on small, medium, and micro-sized tourism enterprises. Decreasing customer and business growth also have a relatable high impact on small, medium, and micro enterprises of the tourism industry in CHT. From the multiple regression analysis, this study intends to discover the degree of influence that the independent variable has on the dependent variable.


In Table 3 the coefficient of all of the independent variables on the dependent variable can be seen. The estimated regression equation is given below in the form of an accompanying equation.


Y= -.961+.144X1 +.118X2 +.213X3 +.105X4 +.111X5 + .056X6 +.077X7 + .214X8 +.154X9 +.047X10 +.015X11


In Table 3 P-value of the majority of independent variables (employee turnover, challenges to new recruitment, decrease income, business growth, decrease customers, business relationship hamper and social stress on entrepreneur) is less than .05 which means that these independent variables have a significant influence on the dependent variable. Table 4 represents the model summary of the regression analysis which represents the R, R2; adjust dR2, and Std. Error of the Estimate. Here the R-value is .909, the R2value is .826 and the adjusted R2 value is .812. As the R square and Adjusted R Square value are relatively high that means this model is a good fit for the data. The model also shows that around 83% of the total variability in the overall impact of Covid-19 on MSMTE scan be explained by the estimated model. Here Table 5 shows the significant outcomeof the F-test, and also represents the rationale to discover the individual variable effect which is the effect of all of the independent variables on the dependent variable regarding the overall impact of Covid-19 on MSMTEs. Here the P-value is less than .05 and that means this model is statistically significant. Overall acceptance of the research has been testedby the ANOVA model which presents an acceptable result. As such, it can be said that this multiple regression model is a fit for the study. 


Recommendations and Policy Implications 

On the basis of the literature study and field survey some strategies have been suggested that can be followed by MSMTEs to boost their business activity and sustain a similar type of epidemic in the near future. The post-pandemic business environment has changed drastically. We are now living in the new-normal era and people are more attached to digital platforms. The majority of the MSMEs are already active in the digital platform. To boost sales and other business activities every MSMTE needs to be active in the digital platform. MSMTEs should give more focus and emphasis on innovation and creativity. They always should search for new opportunities for their business to grow. The employees should be trained to ensure the effective use of the digital platform. Cross-training on the business premises can also facilitate the running of business operations effectively in emergency periods. Many MSMEs like fast food vendors, restaurants, grocery stores, clothing stores, and other related MSMEs can be more focused on home delivery services. Online banking facility doesnt need physical contact for transaction. This can help MSMTEs to operate their financial transactions in a situation like the COVID-19 epidemic. Fadhli and Rohmah, (2021) stated in their study that lockdown makes the MSMEs thrive financially, the government should provide those businesses with different financial aids such as subsidies in taxes, subsidies in utility charges, low-interest loans, etc. MSMTEs should emphasize improveing their relationship with other firms. Because of the epidemic, the whole world has been familiarized with a new concept of working which is “work from home”. This concept offers a great opportunity to MSMTEs if it is used carefully. This can help the MSMTEs in the reduction of the cost involved with the physical office such as office rent, utility charges, management costs, etc (Adriyanto et al., 2021). If the operating cost is minimized the business wont have to lay off its employees who can help reduce the employee turnover rate and the business wont have to face the new recruitment challenges. 

CONCLUSION

If we include the cottage industry it appears that MSME covers almost 99.97% of the whole enterprises in Bangladesh which happen to be served by 86% of the total labor force of Bangladesh (ADB, 2022). MSME which contributes 25% to the GDP of this country was on the verge of devastating conditions because of the outbreak of COVID-19. CHT is blessed with breathtaking natural beauty which attracts the attention of a great percentage of domestic tourists. The majority of the MSMEs of this region are dependent on tourism. The pandemic of COVID-19 had caused a major loss to the MSMTEs. This research was conducted to identify the COVID-19 impacts on the MSMTEs operating in Chittagong hill tracts. This research found that the percentage of being highly affected because of the Covid-19 epidemic in CHT is 83%, only 6% of enterprises said that there was no impact on their business during the lockdown and 13% are unsure about the impacts. The research also has found seven key impacts of the COVID-19 pandemic on MSMTEs in CHT which are employee turnover, challenges to new recruitment, a decrease in income, business growth, and decrease of customers, business relationship hampers and social stress on the entrepreneur. To curb the epidemic crisis, different business firms have chosen different strategies, 12% of the business firms were completely shut down, 24% of the firms have shut down partially, 8% of the firms switched their business, and 14% of the businesses were continued during the lockdown and 42% of the total MSMTE-shave planned to apply for a loan. However, in order to handle the cash-flow shortage, 23% of the business firms laid off their employees, 38% of firms reduced the salary of their employees, 23% of the MSMTEs have followed the temporarily shut down policy, and 16% took other measures. To handle the situation and overcome the losses the MSMEs need government assistance in the form of subsidies in the utility charges, low-interest loans, and subsidies in tax and the response were 29%, 39%, and 25% respectively. No comprehensive study has yet been conducted in Bangladesh so far on the COVID-19 impacts on MSMTEs. The present study might open the door for further research on this topic because MSMEs are considered one of the most significant players in terms of this countrys economic strength. Some strategies have been recommended at the very end of this study that can benefit the MSMTEs for their survival and advancement, and policymakers to help facilitate MSMTEs to survive and grow soon.  

ACKNOWLEDGEMENT

I do hereby acknowledge the contributions of the respondents and sources of materials from which I used data.

CONFLICTS OF INTEREST

The article is an output of my original research work. This article has not been used for any other purposes or published in any form. I believe, there will arise no conflict with other research works or researchers. 

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Article Info:

Received

April 18, 2022

Accepted

May 23, 2022

Published

May 30, 2022

Article DOI: 10.34104/cjbis.022.047055

Corresponding author

Most. Habiba*

Lecturer, Department of Tourism and Hospitality Management, Rangamati Science and Technology University, Rangamati, Bangladesh.

Cite this article

Habiba M. (2022). The impact of COVID-19 on micro, small and medium-sized tourism enterprises: a study on Chittagong hill tracts, Bangladesh. Can. J. Bus. Inf. Stud.4(3), 47-55. https://doi.org/10.34104/cjbis.022.047055

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