Government’s wage support is biggest relief for weary SG tourism players

Tourism companies in Singapore heaved a collective sigh of relief following the unveiling of the Resilience Budget yesterday afternoon, where the government has committed a total of S$440 million (US$305 million) to help the tourism industry with critical operating costs.

Support from the Resilience Budget includes full property tax waivers for the rest of 2020, as well as an enhanced Jobs Support Scheme (JSS) where the government will co-fund 75 per cent of wages for aviation and tourism firms, 50 per cent for F&B firms and 25 per cent for other sectors.

A global slowdown in travel has hurt Singapore’s travel and tourism industry

Steven Ler, president of the National Association of Travel Agents Singapore (NATAS), told TTG Asia that the government’s latest lifeline was a welcome one for an industry that is facing “strong headwinds” which have forced some members to contemplate drastic cost reductions to save their business.

These cost reductions include remuneration adjustments, longer no-pay leave and lay-offs.

“A good number of travel agents were considering cost-reduction exercises, from deepening pay-cuts to releasing their staff from April 1. The enhanced JSS is a much needed support at this point, as it will enable companies to have greater liberty to re-channel their cash flow to address other pressing concerns, with rental being the next largest operating cost,” said Ler.

Most travel agents TTG Asia spoke to are appreciative of the enhanced JSS.

Chung Kek Yoong, director, Pacific Arena, said: “We have never been in a situation where there is no revenue and travel is at a standstill. Without the enhanced JSS we will have no choice but to lay off most of our staff once our cash reserves are depleted, although we have already downsized by 10 per cent since the crisis begun.”

James Yeow, chairman, OMT group of companies, welcomes the government’s help to preserve his headcount. Because travel agents are a niche profession, he said replacing and retraining staff that were let go in bad times would be challenging when good times returned.

“This support will take a significant load off having to pay for their salaries and allow us to channel our existing cash flow into rent and other overheads,” he added.

EU Holidays, which has a large headcount of 120 people, has chosen to ride out the storm without staff redundancies. Director Wong Yew Hoong said the enhanced JSS would help the company with the wage burden and “ensure our survival for a longer time”.

Dynasty Travel, one of Singapore largest outbound travel agencies, has also chosen to prioritise staff well-being.

Alicia Seah, director, public relations & communications with the company, described the latest relief package as being “really generous”, and said it would help to defray wage and other operating costs while supporting staff training.

“We are now planning to use this period to train and upskill our employees, which will in turn benefit us when business resumes. We will tap on government’s support and various grants for employee training and upskilling courses, such as adaptive skills, service excellence, and occupational first aid. Digital marketing place-and-train programmes will also come in useful as the business undergoes digitalisation,” Seah added.

When asked about Dynasty Travel’s next-stage plans in the worst case scenario, where the crisis is prolonged beyond the support afforded by the Resilience Budget, Seah said: “Should the situation continue to deteriorate, we may implement flexible work arrangements. We hope to protect our workforce and keep our people as much as possible. When demand picks up, we want to be able to quickly ramp up and resume business.”

However, the Resilience Budget appears to not have much impact on lean outfits. Boutique travel agency owner Sheryl Lim, who runs Travel Wander, said: “It will not benefit us much at this point as we are home-based and operate with four staff, of which two are part-timers. Prior to the announcement, we have already taken up to 25 per cent pay-cut to finance our daily operations, ranging from maintaining our website, purchasing business solutions and paying our vendors. If anything, the wage supplement component will only contribute temporarily to our depleting cash flow and not significantly towards long-term sustainability.”

For hoteliers in the city-state, whose operations are dependent on a large labour pool, there is a sense of relief.

Singapore hotels are determined to protect their staff as much as they could in this crisis

Kwee Wei-Lin, president of the Singapore Hotel Association (SHA), said in a statement: “The Resilience Package has fortified Singapore’s hotel industry. SHA is truly thankful that our appeals over the past months have been heard.

“Through the collaborative effort of various government agencies and industry partners, SHA was in active dialogues to seek financial assistance for our members. As the outbreak escalated over the weeks, SHA proposed a series of relief measures to alleviate our hotel members’ financial burden.

We are relieved and appreciative that most of our appeals have been granted. This is a tremendous show of confidence in Singapore’s tourism industry and a much-needed boost of motivation for our embattled hoteliers.”

SHA represents 158 hotels in Singapore, comprising some 85 per cent of gazetted room inventory.

“Job security remains our top priority,” emphasised Kwee. “With more than 40,000 hospitality workers at risk, the Resilience Budget has given hotel members the ability to protect our human capital.”

Michael Issenberg, chairman and CEO, Accor Asia Pacific, told TTG Asia that “every little bit counts at this stage”.

The company oversees 30 hotels in Singapore, including Raffles Hotel Singapore.

Issenberg said: “Today, more than ever, we are concerned with the welfare of our local employees, so the enhanced JSS will be a welcome relief for our hotels to help us care for our teams in this time of crisis.

“In the medium-term, training will also be beneficial to nurture staff motivation and help us ensure that when travel rebounds, Singapore is ready to welcome travellers back in the most professional way possible.”

While applauding the Singapore government’s support to ensure the long-term viability of the country as a tourism and events hub, Issenberg also expressed a desire for other governments in the region to follow suit.

Although Tan Shin Hui, executive director of Park Hotel Group, regards the Resilience Budget as a “powerful cocktail of short term, mid-term and long term measures that help with cashflow and costs, availability of credit, saving and creating jobs, and support for lower income earners”, she is reserving her views on whether the lifeline will truly be able to alleviate the current financial hardship felt by hotels.

“The main challenge most hotels have is the high and inelastic cost base. When revenue falls drastically and swiftly as witnessed during this crisis, hotels are not able to react fast enough to contain costs,” Tan elaborated, adding that labour cost forms the bulk of hotel overheads.

Tan shared that Park Hotel Group has implemented voluntary no-pay leave across the board and is gradually moving into four-day-work weeks.

“We need to be very careful and sensitive when implementing any cost containment measures (regarding labour) as that impacts the livelihood of our team members,” she said.

With the latest survival package, Tan said her Group needs to “go back to the drawing board” and review their cost containment plans while awaiting more details from the relevant government agencies. – additional reporting by Therese Tan

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