The aim of this investigation is to compare how the Covid-19 pandemic has affected the hospitality industry in Switzerland and Madagascar. More precisely, in the Riviera region located in Switzerland around the lake Leman investigating multiple towns including Montreux and Vevey and their surroundings. Montreux is my hometown. In Madagascar, I will be focusing my research on the island of Nosy Boraha, an island on the east coast of the mainland. Having family with Malagasy backgrounds has offered me the chance to visit Madagascar every year including during the pandemic. Furthermore, the study will examine exact data from a range of hotels with a variety of different rankings that are spatially located in both these areas. After numerous issues with lockdown periods, the lack of international clients due to cancelled flights and the need of government aid I have decided to compare data from a low-income country and a higher income country. This will allow the study to explore two extremes and determine whether the development of a country increases the fortitude of the impact created by the pandemic.
Has the Covid-19 pandemic had a more serious impact on the Swiss or Malagasy hospitality industry?
Nosy Boraha better known as “St. Marie” its French name, is located on Madagascar’s east coast in the Indian Ocean in the region of Toamasina. The island is 49 kilometres long and 5 kilometres wide (“Sainte Marie”). The Ravoraha international airport was constructed in the south of the island in 2015 and the island equally has a commercial port. Its population is
estimated to be 30'000 people (“City Population”). The island was a popular pirate base between the 17th and 18th centuries while then being colonised by the French in 1750. Since then, the island has been receiving a range of international tourists seeking for an adventure with beautiful coral reefs, transparent waters and incredible Fauna and Flora.
The riviera region is located on the north shore of Lake Leman in the canton of Vaud. It consists of many small towns, the most popular ones being Montreux and Vevey which we will be focusing on. Vevey and Montreux both have a small population size , these towns may seem uninteresting however in normal times, their breath-taking views and the multitude of
events organised every year attract tourists from every corner of the world. Montreux has a population of 26’000 people (Romanvie) and Vevey has a population of 19’683 people (City population).
To have a clear focus for this study, I have based the data collection on the following hypothesis -
The pandemic had a stronger impact on the hospitality industry in Madagascar compared to Switzerland.
Indeed, Madagascar has high poverty rates as well as being a less economically developed country. Madagascar had a HDI of 0.528 points in 2019 ranking 164th place in the world’s ranking (“Madagascar 2022”). Equally, the government’s corruption and lack of investment in the country’s health and public sector may be a potential reason for the pandemic’s stronger impact on the hospitality industry. Hypothetically, this will lead to a faster spread of the virus and a disordered management of the pandemic, which is unappealing to tourists. Therefore, the pandemic will have a milder impact on hospitality in Switzerland due to its strong health sector and high HDI ranking of 0.955 points in 2019 leaving it in 2nd place worldwide (“Switzerland HDI”). International clients will continue to visit Switzerland during the pandemic as entry regulations will not be as strict as Madagascar. The government is politically stable which will allow them to create regulations to diminish the spread of the virus and put testing centres and support in place for patients.
In Switzerland, it was on the 16th of March 2020 that the country went into confinement where schools, inessential shops, restaurants, and bars closed. People were advised to stay home however everyone had the freedom to go out without permission. In Madagascar, they started handling the situation on the 20th of March 2020 when they took measures to avoid the spread of the virus. They announced confinement in the Analamanga region where the capital is situated and implemented a curfew (“Coronavirus à Madagascar”).
It was also on the 20th of March 2020 that there was a suspension of all flights to and from the capital. Later, on June 4th, 2020, there was a suspension of all international “Air Madagascar” flights (Madagascar Tourisme). These flights coming from Paris and the Reunion Island were often the main influx of international clients for tourism in the country. The borders then closed for tourists until the 6th of November 2021 when its borders reopened for flights from Europe to the capital via Air Madagascar and Air France. However, entry in the country was not easy as a PCR test was required 72 hours before the flight and an antigen test was done upon arrival in the airport. This discouraged tourists to visit Madagascar since if their test was positive at arrival their whole holiday was ruined. Recently, the government announced that no PCR tests were required from international tourists to enter the country. On the other hand, Switzerland closed around 130 border crossing points on the 17th of March 2020 (“Switzerland Covid-19”).
Any businesses promoting leisure stayed closed in Switzerland until the 1st of June 2020. The Swiss Government then implemented the use of Covid Certificates in September 2021. This regulation allowed members of the vaccinated population to enter bars, restaurants, museums etc. As a percentage of the population was not vaccinated, this decreased the number of local clients in the hospitality sector. In November 2022, 69% of the population was vaccinated (“Coronavirus: The Situation”). With many regulations coming through after that, in April 2022 they lifted all restrictions related to the pandemic.
During the two months and a half of closure, business owners still had to pay their employees but without their monthly revenue which was a struggle. This is when the
government put RHT into place which stands for “Réduction de l’horaire de travail” translating to “short time working compensation” or “furlough”. The government would pay part of employees’ salaries who worked in companies that couldn’t operate due to extraordinary reasons (“Short-time working”). For hotels and restaurants, the government paid 80% of an employee’s salary.
In the contrary in Madagascar, restaurants and hotels were never asked to close however the fear that many people had of the pandemic left these establishments empty. The government chose a different option to help business owners during the pandemic. François-Xavier Mayer, president of the tourism office in Nosy Boraha states that “The World Bank gave money to the state and the state instead of giving it directly to the hoteliers to cover salaries or, as they did in Switzerland to maintain salaries and maintain the economy, they did it differently. They said, well so we're going to create training courses for which we'll pay people to be trained to find a job.” (Mayer, François-Xavier “Personal Interview”) In fact, the state created training courses such as agriculture, computer training and French and English-speaking courses. This was implemented to avoid unemployment during the pandemic and the participants were paid for a day’s work. Moreover, for hoteliers who needed to adjust parts of their hotel or reconstruct areas, the government would grant an amount of up to 12’000$ to help. However, François-Xavier expressed that “only about a hundred files were accepted”. (Mayer, François-Xavier “Personal Interview”) Without this help, it would’ve been difficult for hoteliers to fire some employees who live solely off their salary to feed their families and allow their children to go to school. Cutting them off during these hard months would leave them in poverty. Madagascar’s high rates of poverty have deepened due to the pandemic, the rate has deepened from 75% to 78% (Eichstadt).
To collect data for this study, I contacted many hoteliers who have agreed to give me data
from their hotels.
The pandemic in Madagascar triggered one of the deepest recessions in the country’s history. A recession significantly declines the economic output of a country which created high rates of unemployment, a collapse in export revenues and private investment which ultimately led to a decrease in living standards. It was estimated that 1.8 million people had fallen below the poverty line in 2020 (Madagascar Economic). Madagascar is one of the main exporters of vanilla, gold, raw nickel, cotton textiles and titanium ore. While international trade was paused during the pandemic, the country lost a significant amount of export revenue as a percentage of its gross domestic product (GDP). GDP is the value of total output produced in an economy over a period of time. In fact, in 2016, international exporting accounted for 33% of their GDP (Beck). The Chinese and U.S markets take in 25% of Malagasy imports and as they were closed this limited their opportunities even further (Eichstadt). The business cycle shows an economy’s growth in the long run. A peak in the country’s economy is situated at point B and a trough is displayed at points A and C.
During the pandemic, the country’s economy was therefore plunging as seen by the labelled recession. Equally, this was due to the large contraction of GDP by 7.1% caused by the pandemic (Madagascar Economic). In addition, as unemployment rates continued to increase, this put a strain on hoteliers and members of the tourism industry as a large proportion of the labor force works in tourism. The tourism industry in Madagascar is internationally renowned for its ecotourism. The economic gains received from tourism allow the country to ensure the protection of habitats and natural resources (Vernart). In 2019, travel and tourism contributed 12.7% to Madagascar’s GDP compared to 4.4% in 2020 (“Contribution of Travel”).
Equally in Switzerland, in consequence of the pandemic the GDP dropped by 2.4% in 2020. In addition, private consumer spending fell by 3.7% in 2020, the sharpest decline since the second world war (“Swiss GDP Takes”). Private consumer spending fell as many sectors were closed. People could not spend money in restaurants, bars, culture, hotels, and transportation. This caused a fall in aggregate demand, the total amount of spending on goods and service in a period of time at a given price level. Private consumption is a component of aggregate demand.
The graph above demonstrates a fall in aggregate demand by a shift to the right in the short run. As AD falls, the price level decreases and so does the quantity of output. This causes a contraction in the Swiss economy. The fall in private consumption was one of the main
reasons that hoteliers in the tourism industry suffered so much. They weren’t making any form of revenue. Unsurprisingly, in the hospitality industry, there was a decline of value added in accommodation and food services by 20.8% in 2020 (“Swiss Economy”). The government therefore had to increase their spending to bail-out the economy with subsidies and emergency loans to businesses.
This decline in aggregate demand can be concluded across both countries as its components such as consumption and net exports decreased. However, the relative support offered by the country’s governments slightly reduced this decline in aggregate demand which aided both economies.
2018 | 2019 | 2020 | 2021 | |
---|---|---|---|---|
Montreux Riviera | ||||
Occupancy rate (rooms) | 54.5% | 56.8% | 31.2% | 43.0% |
Number of nights sold in the hotels in the Riviera region overall. | 731'753 | 757'733 | 376'936 | 561'404 |
Figure 7 - Table On The Table Above Shows The Data Collected By The “Société Des Hôteliers Montreux- Vevey” Of The 54 Hotels In The Region For The Years Before And During The Pandemic.
Tralala Hotel Montreux, Switzerland and Princesse Bora Lodge Nosy Boraha, Madagascar
This graph demonstrates that the hotel in Madagascar was impacted by the pandemic far stronger than the hotel in Switzerland. In 2020, as the pandemic hit, both graphs plunged to a low occupancy rate however Switzerland’s plunge is lesser than Madagascar’s. In 2021, both graphs start rising however Switzerland starts peaking at an earlier stage than Madagascar. This is because tourism restarted far quicker in Switzerland.
Across both graphs, we must take into consideration the difference in rooms of both these hotels. The Tralala Hotel holds 34 rooms while the Princesse Bora lodge holds 20 rooms. Therefore, in the years before the pandemic, the Tralala Hotel had sold more nights in their hotel. However, once again both graphs plunge severely in 2020. This visually depicts the impact that the pandemic had on tourism in these areasleading to the large decrease in nights sold across both hotels.
Across both locations as an overall, a significant decrease in the occupancy rate over the years can be observed in 2020. This reinforces the strong impact of the pandemic in both countries that was previously observed by the data representation in the singular hotels.
Undeniably, both locations have hotels with very different capacities. In the Riviera Region, I collected data from 54 hotels with many rooms whereas in Nosy Boraha, it is less urbanized and so the 10 hotels where I collected data from have far less rooms. In 2020, the nights sold across the 10 hotels decreased by 91% which represents the steep plunge seen on Figure 2.4.
In Switzerland, a drop in clients during 2020 is equally apparent as the number of nights sold decreased by 50% from 2019. At the start of 2021, the number of nights sold increased by 67% from the previous year. This is because due to national clients starting to travel around the country.
As seen from the data in Figure 1.5, the occupancy rate dropped by a high percentage of 25.6% from 2019 to 2020, the peak year of the pandemic. The number of nights sold before the pandemic in the Riviera region has equally decreased by 296’573 from 2018 and 2019 combined to 2020 and 2021. This decrease can be felt amongst many hoteliers from the
region through their survey responses. The “Grand Hotel du Lac” in Vevey has had a fall of 50% in occupancy rates since the pandemic. Many of the hotels own restaurants that lacked clients. The Covid Certificate was a threatening regulation for small restaurants “who suffered a lot, especially the ones that didn't have terraces and had to respect the distances inside.” (Mayer, Estelle “Personal Interview”).
As stated in my hypothesis, the Swiss government was effective to aid hoteliers struggling due to the pandemic. According to the survey responses, their help through RHT was claimed beneficial by many hoteliers. The survey responses all stated that the RHT helped them out and surprisingly only a few responses expressed that some employees were fired. In the report of “The Fairmont Montreux Palace”, they claimed that they did have to fire a few employees since they reconstructed their workstations. Although the help given by the government was highly appreciated by hoteliers and restaurateurs, Estelle Mayer declares the following, “we received aid from the Confederation that we had to repay. So, it's going to be difficult to pay back all this aid.” (Mayer, Estelle “Personal Interview”) This explains that although the government did aid the business owners during the pandemic, this was only temporary until they gained enough money to pay the government back.
The data from Figure 1.6 displays that the origins of clients have strongly changed in the Tralala Hotel. In 2018 and 2019, international clients were present but in 2020 and 2021 the clients were all European. Estelle Mayer, the owner of the hotel states that “The year 2022 is an exceptional year because the national tourists stayed in Switzerland, as many of them are afraid to travel.” (Mayer, Estelle “Personal Interview”).
This map portrays how international the clientele was in Switzerland before the pandemic. Many members of the society of hoteliers agreed with the fact that there is an increase in Swiss clientele over the years during the pandemic.
Figure 2.7 displays the locations of the hotels studied in Nosy Boraha. It can be observed that the hotels are densely distributed in the southwest of the island nearer to its capital, Ambodifotra. This may be because the capital of the island is accessible for tourists as it is close to the airport and the commercial port.
From the data collected, the decrease in tourism on this island has been devastating for its business owners and the destination itself. As seen by Figure 2.0, from 2019 to 2020, the occupancy rate in Nosy Boraha dropped by 44.7%, almost twice as much as the decrease in occupancy rates in Switzerland. Before the pandemic, Madagascar had a huge reliance on tourism for employment as the tourism industry supports more than 300’000 jobs in the country. Every year, the tourism revenue amounted to approximately $900 million (Maron). Since the start of 2020, Madagascar has lost about half a billion dollars in tourism revenue (Eichstadt). The “Vanivola Hotel” lost 70% of the clients from their hotel and their restaurant. The survey response from the “Sainte Marie Lodge” was disastrous as they declared that in 2020 and 2021, they had a total of 0 clients.
Without the return of tourists, these establishments will be impossible to maintain. A new initiative was formed this August to boost tourism after the pandemic in the island. The inauguration of the new tourism office funded by the government followed by a carnival and whale watching. The president of Madagascar Andry Rajoelina was present to demonstrate his involvement in reviving the island. He created an initiative to multiply the flights coming from the capital to Nosy Boraha (Andry Rajoelina). This event named “Baleines en fête” circulated across many local news articles promoting the island and its full reopening to tourists.
This initiative along with the lift of all Covid-19 restrictions will hopefully bring back international clientele. Hoteliers who used to have almost 100% of their clientele from Europe and due to the pandemic had 100% of national clientele will finally be able to expand their businesses.
According to the survey responses, despite the government’s aim to integrate training programs and subsidise constructions, hoteliers in Nosy Boraha did not seem to have received any aid. This may have been due to the government’s corruption level. The corruption perceptions index created by the Transparency International association gives a score to countries on their government’s level of corruption based on bribery, diversion of public funds and officials using their private office for public gains (“Corruption perceptions”). This score
is the perceived level of public sector corruption, where 0 means highly corrupt and 100 means highly clean. According to them, Madagascar’s score stands at 26/100 in comparison with Switzerland with a score of 84/100 (“Corruption perceptions”). This comparison seems to indicate how corrupt Madagascar’s government truly is. However, the funding for the tourism office is an advantage for all business owners of the region.
Throughout this study, it can be concluded that the arrival of the Covid-19 pandemic in early 2020 had devastating effects on tourism and hospitality in Madagascar and Switzerland creating massive deficiencies in the hospitality industry and therefore the country’s economy. Switzerland, a developed European country along with Madagascar, a third-world undeveloped African country both were impacted by the pandemic in different ways. Despite that, Hypothesis 1 can be approved. The pandemic had a more serious impact on Madagascar’s tourism and hospitality sector, far greater than in Switzerland. This was seen by the unreliable aid from the government but equally by the fact that the country was closed for a large amount of time compared to Switzerland. In addition, the pandemic did not only affect tourism, but it also led the country to plunge deeper into poverty. In Switzerland, there were no international clients in 2020 and 2021. This may have been due to the traveller’s fear of the virus but also due to the many complications implicated in travelling. The government dealt with the situation in a generous way by subsiding hoteliers and restaurant owners to maintain their employees’ salaries. What can be deduced from the data analysis is that in both locations the overall trend is a decrease in tourism but equally a decrease in clients across the hotels studied. However, the impact was stronger on the hospitality sector in Madagascar as seen by the larger decreases in occupancy rates, number of nights sold and
international clients before and after the pandemic compared to Switzerland. Thus, this investigation shows that the low development of Madagascar increased the fortitude of the pandemic’s impact on its hospitality industry.
Investigating the impact of a new virus was a challenging task taking into consideration that the countries I investigated are very different in terms of development and geographical location. While living in Switzerland, the collection of primary data was easier however to collect primary and secondary data in Madagascar was a challenge due to the distance and the lack of human interaction. As the pandemic is not fully over, this investigation can therefore be further investigated in the upcoming years.
I believe that one of the main strengths of my methodology was that it was primarily constructed through the connections I have within my surroundings allowing me to obtain in- depth data. This made my data reliable as it came directly from the hoteliers. An overall comparison in both locations provided far more data expanding the focus of the investigation and increasing the number of comparison factors. My past experiences in the countries investigated equally allowed me to have further insight into how these countries were before and after the pandemic. This allowed me to have a critical view of the pandemic since I have lived through it.
Additionally, although Nosy Boraha island has a larger length in kilometres, it is far less urbanised than the Riviera Region, so its size did not affect the results.
The interviews I carried out were very beneficial for the analysis of my data. Estelle Mayer and François-Xavier Mayer, both granted me information from a personal angle enabling me to make connections between the data collected, the circumstances and the pandemic itself.
The most significant limitation of this investigation was the fact that the pandemic is not over and so the comparison that was made cannot be finalised. The long-term effects of the pandemic on tourism cannot fully be analysed yet as globally, some countries are still suffering from its impact.
During the methodology, there was a smaller range of data from hotels in Nosy Boraha, Madagascar as the island does not have as many hotels as the Riviera Region, Switzerland creating an uneven balance. However, this did not affect the data comparison as the occupancy rates are calculated using percentages and I could calculate percentage changes to analyse the nights sold.
Moreover, the secondary data, as in published material was difficult to find as I am possibly the first to analyse the impact of the pandemic on tourism and hospitality in the chosen countries. It was especially limited in Madagascar. In Switzerland, the Covid-19
regulations and updates were widely publicised across the media. This was not the case in Madagascar making it a challenge to find reliable published material about the pandemic.
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Appendix 1 -
Interview with Estelle Mayer, president of the society of hoteliers in the Riviera region, Switzerland. (Translated from French).
LM
Hello, today we are with Estelle Mayer, the president of the hoteliers in the Riviera region in Switzerland. So, do you think that the pandemic will have lasting effects that will lead to an overall decrease in international clients for the next few years?
EM
So yes, indeed, there will be a decrease in the overall number of customers for the next few years. But this year has started again with a lot of tourists coming back and the Swiss. The year 2022 is an exceptional year because the national tourists stayed in Switzerland, as many of them are afraid to travel.
LM
Thank you. And as the president of the Riviera Hoteliers Society, have any of your colleagues been on the verge of closing their establishments due to the lack of tourism?
EM
So, some of the establishments, especially the small ones, suffered a lot, especially the ones that didn't have terraces and had to respect the distances inside. All the big structures didn't suffer too much or got by halfway with the help of the Confederation.
LM
Thank you. Was 2022 a good year of tourism for you and your many establishments?
EM
It was an exceptional year, yes, because, as I said earlier, in fact, the national tourists stayed in Switzerland. And then the French, Italian, Spanish tourists came back equally.
LM
Do you think that the government has been effective in supporting the businesses financed by tourism?
EM
So, in fact, the government has been very effective for RHT. For all the people that we had to put out of work during this pandemic period, while the establishments had to be closed. On the other hand, we received aid from the Confederation that we had to repay. So it's going to be difficult to pay back all this aid.
LM
Was the implementation of the Covid certificate a struggle for the hotel and restaurant owners?
EM
It was a huge struggle because a lot of people didn't want to be vaccinated. So, they didn't come to us anymore. Afterwards, we had to manage this, and it was very challenging, nonetheless.
LM
Thank you. And did the hotel have any customers during the lockdown?
EM
Yes, we got customers by putting a lot of people in RHT, and we also worked a lot as the owner of the establishment to receive our customers at a lower cost.
Appendix 2 -
Interview with François-Xavier Mayer, president of the tourist office in Nosy Boraha, Madagascar. (Translated from French)
LM
Do you think that the pandemic will have lasting effects that will lead to an overall decrease in international clientele for the next few years?
FXM
As the border only fully opened a few months ago, we are hoping for international clientele to come back for the summer season from November. This would be a great accomplishment for our destination.
LM
As a hotelier, in your opinion, has the government been effective in supporting tourism- supported businesses in St Marie? If not, how have you managed your employees?
FXM
The World Bank gave money to the state and the state instead of giving it directly to the hoteliers to cover salaries or, as they did in Switzerland to maintain salaries and maintain the economy, they did it differently. They said, well so we're going to create training courses for which we'll pay people to be trained to find a job. So, it is a bit weird. They said, for example, we're going to do training in cooking, training in agriculture, computer training, English, French and all that. So the state paid for these trainings. And so, the hotel employees, instead of doing nothing, they were trained and they were paid like a day's work.
LM
Did the state help in any other way?
FXM
They did indeed, we had to prepare documents and certain hotel establishments were helped if they did constructions or made adjustments in their hotel. For example, let's imagine that Iwant to put in a new fridge or do some work in the bar. We had to pay for 30% of the investment and the State gave 70% for the constructions. But that was just for an amount not exceeding €12,000. So, they gave the fund of 12,000 € to reconstruct something in your hotel. However, I would say only about a hundred files were accepted. So, you had to submit a project, and then you were funded 12,000 € to do something.
LM
What initiative will you take to boost tourism on the island of Sainte Marie?
FXM
So, in fact we do a lot of communication and media. In the tourist office we released new promotional videos. They were funded by one of the government programmes. This was financed precisely for the revival of tourism. We had an event this end of August; the president of Madagascar came to the island to introduce the new tourist office which was equally funded by the state. This get together was exposed on many media channels across Madagascar which is great promotion for this following year.