Covid Impact on Mongolia Tourism

Numerous business sectors have been hard-hit by the pandemic lockdowns, particularly services, restaurants, pubs, hairdressers, and gyms, but none were hit as hard as the tourism sector, which has seen almost no revenue since the beginning of the pandemic.

The World Tourism Organization’s (UNWTO) World Tourism Barometer reported that there had been 900 million fewer international tourist arrivals (overnight visitors), across the globe, representing a 74% decline for the period January-October 2020. This decline was caused by a combination of covid restrictions on travel, fear of travel, and a retraction in the economy, leaving people with less money for discretionary spending. Fear of being “trapped” by lockdowns was another deterrent to would-be travelers. People were afraid that they might buy a ticket, schedule a trip, but then get locked down in their home country or they could arrive at their destination, but then because of restrictions, not be able to visit the sites and attractions or not be able to return home.

The Size of the Industry
Tourism accounts for 7% of global trade and 10% of all employment. Declines in the tourism sector are estimated at $2 Trillion dollars, resulting in an approximate 2% decrease in global GDP, and a loss of nearly 240 million jobs. While all countries have been affected, the GDP of some countries is 20% dependent on tourism. World Heritage Sites have been closed in 90% of countries. Additionally, 90% of all museums have closed and 13% will never reopen.

Some tourism dependent countries, such as in the Caribbean, saw their GDP decline by 12%. Others, such as Fiji, are projected to see a decline of as much as 20%. Even in G20 countries, tourism accounts for roughly 10% of employment. In the US, Hawaii, a state extremely dependent on tourism, 15% of jobs were lost. In the Caribbean, it is estimated that construction has been halted on 60% of the 30,000 new hotel rooms that were planned. This means there are knock-on effects, which ripple through the entire society, resulting in employment in construction, architecture, procurement, raw materials purchases and production, and other sectors as well.

John T. G. Nielsen, General Manager at Fivelements Retreat Bali, estimated that Bali tourism had decreased by 50-75%. “Some hotels have closed down. Some remained open, but at 50% off the normal price. Some have not re-opened because the normal rate is too high, and they can’t afford to be open at 50% of the normal rate. Unemployment is quite high as a result.”[1]

Mongolia
In the earliest days of the pandemic, the Mongolian government imposed the following restrictions: All foreign nationals were denied entry to Mongolia. All flights were suspended, as were all international rail routes. Public gatherings were restricted, including events, meetings, conferences, sporting events, and concerts. Wearing a mask in public was mandatory, with violators being subjected to fines. Foreign nationals were forbidden to cross the land borders with Russia. All borders were closed between China and Mongolia.

The country’s largest festivals and tourist attractions were also cancelled. Blue Pearl Ice Festival at Lake Khuvsgul in Khuvsgul aimag, the Eagle Festival, plus Naadam which was largely virtual in 2020, and Sagan Tsar which has been effectively cancelled two years in a row. Consequently, Mongolian tourism decreased by 90%.

Lost Revenue and Staff
Olly Reston, Director/Owner, Goyo Travel, said, “In 2019 we did 230 trips [to Mongolia], for about 700 clients. Last year we did 4 trips, for about 16 clients…and we are looking about the same this year as well.”[2] Narantsetseg Delgersuren General manager of New Juulchin Tours LLC, reported that in addition to arranging tourism to Mongolia, her company provides tours for Mongolians travelling to other countries, but of course, when the airport closed, this revenue was lost as well.[3]

Olly Reston explained that the work of a tour company is frontend loaded, meaning it takes months of salary and expenses, marketing, sales and public outreach to book the upcoming tourist season. The Mongolia travel season ends in October, “and then the rest of the time, you have people working full-time, to set up the trips for the following year.” Beginning in October, 2019, the tour companies were paying employees to setup the 2020 tourism season, which never came.

“When we had to close the office, we lost all of the upcoming revenue and had already paid all of the labor and other costs, money which could not be recovered…. we have been in survival mode since last year…We have not had a single traveler arrive in Mongolia since February 2020.”

Khongorzul Khatanbaatar, CEO of Extreme Mongolia, an adventure camp experience in Terelj National Park, said that the government was offering some low-interest loans for small and medium sized businesses, hard-hit by the coronavirus lockdowns.[4] She applied for the 3% government loans, “but they wouldn’t loan money to anyone in tourism because we don’t know when tourism will reopen and be able to earn money again.” Consequently, the company has been relegated to applying for a commercial bank loan, at 10.5%. To make matters worse, with so many companies closed, and so many people unemployed, competition for loans is fierce.

Keeping staff
According to the Mongolian Tourism Association, there are 570 registered tour companies, with 200 actively operating. A survey by the National University of Mongolia determined that 60% of jobs in the tourism sector have been lost.

In spite of the severe decline in revenue, some tour companies are reporting that they tried to keep some of their key staff on the payroll during this turbulent period, so that they would be ready as soon as the airport reopens. Bilguun, Tour Manager for Amicus Travel, Mongolia said that his company ‘spent money the whole year to keep our best managers because it takes so much time to train them to being professional and doing a good job. During the pandemic we had the risk of not earning money, but if we lose our staff then we would be running the risk of not being able to provide good services to the clients.”[5]

Narantsetseg Delgersuren’s situation was similar. She explained “We have 48 fulltime employees and we are trying to jeep them as long as we can because qualified staff is very important for our business…and it is important to keep consistent quality for our customers.” Consequently, her firm is still paying wages (although reduced), monthly social insurance, and health benefits.

Domestic Tourism
Some major international travel destinations, such as the United States, Germany and France, have seen some recovery, while countries such as China and Russia have seen an increase in domestic tourism. Even the EU expects internal tourism to recover faster than international tourism. For Mongolia, however the increase in domestic tourism has been small and not very helpful from a revenue standpoint. “We have some internal tourism,” explained Bilguun, “but the money is dramatically less.” Narantsetseg Delgersuren cited reports that Mongolia’s domestic tourism had increased in 2020. “They claim that last summer internal tourism boomed, but Mongolians are not used to travelling with a tour company. There is no language barrier. They just load in their car, with their tents, and they go on their own…I don’t think it had much impact on the economy like inbound tourism.”

“Khuvsgul Lake has 100 camps. Some of those camps, last year had a bit of local travelers, but many only host foreign travelers, so they had a rough time last year. Gobi as well. And many didn’t open at all last year.” Narantsetseg Delgersuren

Bilguun’s take on domestic tourism was similar. “We can organize difficult and comfortable tours, but then the price is too high, and the Mongolians are unable to buy that sort of tour.” He also said that he books his foreign clients in good hotels, “but most of the Mongolians prefer to stay in tents.” As a result, the revenues from domestic tours are low.

Even the smaller fees charged to domestic tourists were further reduced by lockdown restrictions. “Travel with more than five people was prohibited, so we could do family trips but no big, organized groups” explained Narantsetseg Delgersuren. She added, “And now, we cannot even do that.”

Mongolians are concerned that if they leave Ulaanbaatar, a lockdown could be declared and they would not be able to return. Throughout the entire first year of the pandemic, there were periods where people were stuck in the city, who wanted to return to the country, or vice versa. To leave the capital Narantsetseg Delgersuren said, “You have to have a valid reason…and you have to have a PCR test.”

If Travel Opened Tomorrow
“Mongolia is not a bucket list country” said Bilguun. “It’s never on top of a list of countries. It may be third or fourth.” Consequently, Mongolia travel is normally booked three to six months in advance. “Normally by this point we would already have booked thousands of tourists for the July Naadam tour” said Bilguun. If travel opened immediately, it would already be too late in the year for July bookings. “The people who were planning to come to Mongolia have already changed their plan to Vietnam or someplace else.”

“You won’t get new people booking for Mongolia for at least a year.” Reported Olly Reston. “What you might get…is people who paid for and booked the trip back in 2019 and have not cancelled or asked for their money back, they might come if the country opened.”

Recovery
Travel companies have reported that demand for travel is still strong. “When you look at internet online searches for Bali, it is higher now than it has been in the past, and still number one.” said John T. G. Nielsen. “We still receive emails every day from Americans, Brits, and Australians who want to travel.”

In spite of demand, recovery cannot come until clear government guidelines on tourism have been issued. “We have a lot of people who are desperate to travel.” Olly Reston said, but then explained that those people will cancel their trips, rather than run the risk of travelling and finding out that some attractions are closed, or that they have to remain in the capital for several extra days, waiting for the results of a PCR test. Additionally, governments will have to issue clear statements on what sorts of documents, tests, or vaccination records must be shown in order to enter or exit the country.

Bilguun echoed Olly Reston’s words. “For this year, we are waiting for the government to say exactly what they will require from tourists, like vaccine passport or quarantine, or how many days they should give a PCR Test.”

While all countries are facing similar issues, Mongolia’s situation is made more extreme by its geographic location, sandwiched between Russia and China. Higher end tourists normally plan their Mongolia trip well in advance. Backpackers, on the other hand, might be willing to hop on a train, ride across Europe and Russia and stop off in Mongolia, on the way to China. But even these tourists will be deterred by uncertainty. Olly Reston explained that “It is too risky now to try and travel across 15 nations in three months and risk getting trapped somewhere or turned away.”

Recovery is Far Off
“It is not just up to Mongolia.” Olly Reston said. “This is true, not only for Mongolia, but for all countries. Travel cannot open until everyone agrees on details. There are 300 apps being developed around the world. I have seen legitimate vaccination certificates that didn’t even have the person’s name on them. How can you open until all details are established?” In addition to country’s agreeing, airlines have to agree, and airports, and transit locations, all have to have similar restrictions and requirements or a traveler could risk being turned back, mid-trip. And once they arrive, they have to know that restaurants, hotels, and tourist attractions will be opened.

Some countries are beginning to negotiate small, regional agreements, such as Australia and New Zealand, and possibly Singapore, ironing out details for travel. The UK has announced that it will be implementing a traffic light system, allowing its citizens to go to some countries, but not others. But this needs to happen on a broader scale, and with consistent requirements.

The Mongolian Tourism Association, explained Narantsetseg Delgersuren, “are working with government not to have quarantine for incoming travelers…Instead, we have proposed a travel bubble, where tourists will have mobile quarantine…following the rout that we notify the government in advance. So, they will know where these people will be travelling and they will not mix with other groups or local travelers, only the pre-agreed-upon rout, so they will not have to quarantine.”

The Future of Tourism
The Mongolian Tourism Association is urging the government to quickly open travel to countries with direct flights. They expect regional travel to begin by the end of 2021, while international travel may not restart until 2023.

John T. G. Nielsen predicted, “We probably won’t go back to where we were three years ago that will take 5 to 6 more years. We will probably see a gradual return, as countries make bilateral agreements.” He went on to explain that he expects travel to be much more expensive and that people will have to plan more because of safety restrictions

Experts claim that it will take 2.5 to 4 years for travel and tourism to return to 2019 levels, but even that seems unlikely. Continued restrictions, plus increased health and safety requirements will drive up the costs and increase the difficulties associated with international tourism, which could suppress the sector forever, or until prices are brought back to 2019 equivalent levels.

[1] Antonio Graceffo, interview with John T. G. Nielsen, General Manager at Fivelements Retreat Bali, through Whatsapp, recorded on April 15, 2021.

[2] Antonio Graceffo, interview with Olly Reston, Director/Owner, Goyo Travel, through Whatsapp, recorded on April 13, 2021.

[3] Antonio Graceffo interview with Narantsetseg Delgersuren, general manager of New Juulchin Tours LLC, via Whatsapp, recorded on April 13, 2021

[4] Antonio Graceffo, interview with Khongorzul Khatanbaatar via Facebook video call, recorded on April 29, 2021, in Ulaanbaatar, Mongolia

[5] Antonio Graceffo, interview with Bilguun, Tour Manager for Amicus Travel, Mongolia, through Whatsapp, recorded on April 13, 2021.\

By Antonio Graceffo, PhD.