FEDERATION OF THE HOTEL INDUSTRY IN ROMANIA
30 YEARS OF ACTIVITY IN THE HOSPITALITY INDUSTRY IN ROMANIA
Employers' organization member of IHRA/ International Hotel & Restaurant Association / CAEN Code 9411 Observer member HOTREC (Confederation of National Associations of Hotels, Restaurants, Cafés and similar establishments in the European Union) Calea Grivitei no. 143, Continental Hotels Building 1st floor, room # 37, RO-010708 Bucharest Tel: 021 – 312 05 70 ; Fax: 0372- 12 17 97 ; E-mail: [email protected] Fiscal code: 8286669 Account: UniCredit Bank – Rosetti branch RO73 BACX 0000 0030 0148 3001
Bucharest, 21.03.2020
To: Economic Working Group
Subject: Coronavirus impact on the hospitality industry in Romania
Dear Prime Minister, Ludovic Orban,
Dear Minister of Finance Florin Cîțu,
Dear Minister of Economy, Virgil Popescu,
Dear Minister of Labor, Violeta Alexandru,
Dear Mr. Secretary of State for Tourism, Răzvan Pîrjol,
We are writing this letter to you on behalf of the hotel industry in Romania. The current moment is one of the most difficult that our industry is going through, the negative impact generated by coronavirus epidemic affecting our industry more seriously and much more rapidly than other disruptive events have done in the last 30 years.
From the outset, we mention that the most important aspect is also represented in our vision of the need to resolve the medical crisis as a priority, and that is why we support the measures taken by the authorities. We must be responsible, and that is why we are trying to do everything that depends on us in this regard. Some of us have allocated units as quarantine spaces, others have closed the doors to allow employees to stay at home, and others continue to deliver services for the few customers who, however, need hotels for the sectors that are still operating, such as the medical one, or freight transport, energy delivery, food, etc.
The effects of the coronavirus crisis on tourism are also seriously present in Romania, and according to what we have already mentioned through several positions submitted to you, but also through the teleconferences to which you have invited us, 62.5% of the hotels in the country intend to close their doors indefinitely (many of them have already done so, others will follow in the coming days). Note: The data comes from an internal study conducted by FIHR.
I appreciated your openness to dialogue with FIHR, our sector being always mentioned by you at the top of the list of areas affected by the COVID 19 pandemic. Unfortunately, it is so, we are one of the sectors strongly affected both in the country and in Europe or in the world. That is why the authorities of all the countries affected by this virus have taken immediate measures to protect the sector, something that we have also tried to do through this dialogue that we have responsibly had with you for several days now.
We eagerly awaited the concretization of these rounds of discussions into official documents, which would attest that we understood on both sides what our needs, expectations, but also the possibilities, your assumptions are, so that in a realistic and pragmatic approach we could find the best options to move forward.
We saw the official documents yesterday and, as a constructive dialogue partner, we present the following FIHR feedback, as a representative of the hotel industry, but also as a member of the Concordia Employers' Confederation.
Unfortunately, as a general opinion the proposed plan of measures to support the economy is far from the expectations of the industry because
– It does not bring PREDICTABILITY. All economic agents need to know what happens during the state of emergency period, but especially what happens afterwards. A plan of measures valid for a month only helps the industry temporarily and will not prevent our sector from collapsing with closed units and hundreds of thousands of employees laid off and sent to the state's care as unemployed
– It does not bring CLARITY – there are many measures that are not sufficiently clarified, such as the subjective interpretation of “financial capacity”
– It brings additional BUREAUCRACY. Both in technical unemployment where operators initially pay and later recover the money from the state, and in the introduction of emergency certificates issued by the Ministry of Economy,
– It brings DISCRIMINATION – between SMEs and large companies, between seasonal operators (who do not benefit from the same measures) and between those active all year round
– It does not bring SIMPLICITY – the best measures now were the simple ones and easy to apply and understand.
As a detailed analysis of the measures taken to support our industry, we come up with the following clarifications:
A. Infusing liquidity into the market through:
1. Credit measures for SMEs are welcome and if they are quickly followed by some simple and clear rules of applicability, they will mean a plus for the bravest and most committed among us. However, we allow ourselves to raise three questions in this regard:
a. Why are there not (so far) similar lines of financing for large companies, which go through exactly the same problems as SMEs, only on a larger scale (number of hotel units, number of employees)?
b. The allocated amounts are insufficient compared to the needs of market operators and especially compared to the influx of financial resources allocated to neighboring countries with which we will otherwise end up competing to exit (we hope as soon as possible) from this crisis.
c. Why is it not chosen that the state's credit guarantee refers to existing credits at this time, it would be simpler and faster for both banks and operators and implicitly for the state? For example, the hotel industry and the banking sector (both part of the Concordia Confederation) are ready to sign a moratorium in this regard, which we will immediately submit to the authorities.
2. Extension of payment deadlines for certain tax obligations represents a unanimous request from the business environment, but for our sector the effects are limited if they are not followed by other measures such as:
a. Regarding the periods in which we are not active in the market, certain tax obligations should be canceled and not extended on a pro-rata basis at least. We are referring to the specific tax or building taxes – which it is hard to believe that we will be able to pay in the absence of activity related to these months. b. Another question mark we have here comes from the obligation to submit tax returns on March 25/March 31, although in the public space their postponement to April 25 was circulated
3. Supporting SMEs in their relationship with utility and rent providers – could be one of the necessary measures but the risks must be taken by the state and not rolled over to the providers of these services. The state can credit these services, because it would not be honest for this pressure to be placed only on the utility providers and who would subsequently either get into difficulty or put pressure on the rest of the actors operating in the economy.
4. Payment of state arrears. A measure mentioned in the action plan and requested by all employer structures is the prompt payment of all state debts to economic operators, whether we are talking about sick leave, unpaid invoices or VAT to be reimbursed.
B. Measures to help tourism employers in their relationship with employees
1. Regulations on technical unemployment – is the most anticipated item in the list of measures with which the state supports the economy affected by the COVID 19 pandemic. Therefore, things here should be as clear and simple as possible, so that there is no room for interpretation. At this moment, hotel operators (who according to the regulations consider themselves part of the category of those whose activity has been totally or partially interrupted by the state of emergency – we hope we are not mistaken) are asking themselves questions about the period in which this support will be granted, and are asking themselves whether and how the financial capacity assessment can be made. We appreciate the elimination of the regulation regarding the obligation to assume the subsequent maintenance of employees for 6 months, it was and still is in the hands of fate what will happen in the next 6 months. We believe that here, one of the solutions that could have been used was that method of partial work according to the German model (kurzarbeit) through which the employee's time and pay were divided between the state and the employer, and we understand that in the current conditions it was avoided in order to convince people to stay home. We propose to re-analyze it as a solution applicable immediately after the end of the state of emergency, because the risks of a large number of unemployed people will persist for a long time.
2. Paid days off for parents staying with children – is a measure intended for those who need to supervise their children. However, this measure will probably not be used much for 2 reasons: a) the related taxes are also borne by the employer (compared to the previous measure), so it is less favorable than technical unemployment and b) the conditions provided for in the regulatory act force the parent who chooses this option to give up along the way, if the other parent also becomes unemployed (for example) and last but not least, it brings a lot of bureaucracy.
In all proposed measures, it is necessary that the rules and application procedures be as clear as possible and, as far as possible, facilitate the release of funds with speed, in order to reduce the pressure on the liquidity of economic operators, as they are not recording income during this period.
We also expect to quickly communicate the necessary steps, provided for by the methodology for obtaining the Emergency Certificate for all economic operators (SMEs and large companies).
We also draw attention to the fact that seasonal operators do not fall under any of the forms of support because they cannot report income from either March 2019 or January-February 2020. Although they have employees maintained throughout the year, to be prepared to open with the start of the tourist season.
We are aware that this crisis is only at the beginning, its dynamics certainly requiring other rounds of discussions, as well as other forms of intervention to find the best answers to what the near or medium-term future will offer us. Certainly, support measures must be thought out for our sector for the period following the state of emergency. We know that we all have to make sacrifices now (state, employees and employers) to succeed in getting out of this crisis.
In the hope that you will take into account the position mentioned by the employers' organization of hoteliers in Romania FIHR, we assure you of our full availability.
Călin ILE – President of FIHR (Romanian Hotel Industry Federation)
