Measures are planned to help the tourism business to overcome the crisis
Mar 20

Inbound tourism in Lithuania generates about 1 billion EUR of revenue per year, while outbound tourism – 300 million EUR. In our country, about 80 percent of the tourism business sector is made up of small and medium-sized businesses. It employs about 48 thousand people. Various restrictions due to the coronavirus have seriously affected the sector – this industry was facing a crisis as early as mid-February, and the crisis keeps getting worse. Experts in various fields confirm that measures are being sought in Lithuania and worldwide to help businesses and consumers in the tourism and other sectors.

“Enterprise Lithuania” closely cooperates with business entities. Consequently, as an emergency situation dominates, the institution is constantly receiving requests for a further business organization. “Companies don’t know how to manage employment-related risks, when, after putting the country under quarantine, rendering services becomes impossible, how to act when demand drops significantly, and when, in case of tourism, no demand is left at all”, – Daina Kleponė, the Managing Director of “Enterprise Lithuania”, states the questions that are of relevance for business.

Alternative travel reimbursement options

Currently, tour operators are facing a very big problem – they have already paid for many services, such as hotels, flights, tours and other tourist services, but are unable to recover the money they have paid. Tour operators must also bring tourists back to the country at their own expense, and the consumers, who have not yet left on the tour, but have already paid for the travel package, are seeking to recover the money they have spent.

According to Edmundas Rusinas, an expert lawyer who specializes in tourism law, in case of the coronavirus, after many countries have been put under quarantine, force majeure could be applied. However, a couple of years ago, the Travel Directive came into force in the European Union. In this Directive, the concept of force majeure, for the purposes of the tourism sector, has been replaced by the definition of special circumstances.

“An open question is whether the current pandemic could be attributed to special circumstances. In light of the existing situation, the Member States are considering revising the Travel Directive. The aim is to achieve that the update adopted would be favorable both for the tourists having acquired the tour and that it would not cause significant damage to the tourism business”, – reviews the situation E. Rusinas.

The expert notes that force majeure does not apply only to combinations of tourist services when tour operators offer a variety of integrated travel packages. Force majeure is valid for individual services such as transportation, accommodation, and similar, and applies under the law of the country in which the service was acquired.

Žydrė Gavelienė, the President of the Lithuanian Chamber of Tourism, says that some countries, that are fighting the coronavirus, have already decided how to address this issue without shifting all the burden to one side. “The introduction of vouchers – the coupons of the same value of travel/services in Lithuania, which could be used by consumers in the future following the end of the pandemic, is one example of the ways how to save the tourism business and travelers’ money”, – says Žydrė Gavelienė.

According to E. Rusinas, namely, vouchers are one of the options currently under consideration. A discount on a future tour could be another alternative that is favorable both to the consumer and the tourism business.

Neringa Baronienė, the Deputy Director of the State Consumer Rights Protection Authority, supports the need of seeking compromise and dialogue since the situation is unusual both for consumers and service providers. “

“In the first place, the affected consumers are advised to contact the tour operator or travel agent and seek options for postponing the organized tour for later, for changing its direction, or accept a different offer of compensation. It is important to find a mutually acceptable solution. We recommend the consumers to use termination of the contract as an ultimate measure if finding another alternative with the service provider fails“, – N.Baronienė presents the position of the State Consumer Rights Protection Authority.

Imposing downtime due to stoppage of work is the optimal option for the employer

Employment relations are another sensitive issue that causes huge losses for businesses, especially for tourism. Dr Tomas Bagdanskis, who is the labor law expert and the Managing Partner at “iLAW”, says that companies may take the following measures: leave (accrued or unpaid), downtime, modification of employment contracts (reduction of working time, cut of wages) or employee dismissal as a critical measure.

“Downtime could be an option having the least negative effect on both parties. The Seimas of the Republic of Lithuania has adopted the amendment that after imposing downtime due to stoppage of work as a result of emergency or quarantine, the employer must pay the employee not less than the minimum wage established in Lithuania if the employment contract provides for the full rate of working time. Subsidies will be provided to private-sector employers to pay the employees for downtime.

60 percent of the estimated funds are reimbursed, or 90 percent of the estimated funds by the Resolution of the Government of the Republic of Lithuania after restrictions have been set in sectors of economic activity, but not more than the minimum monthly salary. During an emergency situation or quarantine, this subsidy will be paid for up to 3 months. The subsidized employers will have to keep the jobs of the employees for at least 3 months after the end of the subsidy payment“, – T. Bagdanskis talks about important changes.

According to him, when the workload is heavy but the company incurs losses, attempting to negotiate salary reductions with the employees is one of the options, or imposing a partial downtime, when the employees would have to work part of the time, and another part of the time they would be sent to downtime, would be another option.

Aid package for the tourism sector is planned

Currently, the Government cooperates closely with the business representatives of the tourism sector, analyses business requests, and proposed aid measures. A mixed working group, that has been formed in the Ministry to address problems in the tourism sector, held its first discussion on March 13. Dr Renaldas Čiužas, the Head of Tourism Policy Division of the Ministry of Economy and Innovation, says that later this week the necessary amendments to the Law on Tourism, to the Civil Code and to the implementing legislation will be considered in order to facilitate the resolution of certain situations due to the impact of the coronavirus on the tourism business. Proposals regarding the amendments will be made by the Government of the Republic of Lithuania.

“In view of the pandemic declared by the World Health Organization, that an event of this magnitude has never happened before, and that at the time of preparing the EU Package Travel and Linked Travel Arrangements Directive (Package Travel Directive) it could not be foreseen, it was decided, together with the Ministry of Justice, to request the European Commission to review the provisions of this Directive as a matter of urgency. The news can be followed on the website of the Ministry of Economy and Innovation”, – says R. Čiužas.

The recorded live streaming of the expert talk “Coronavirus Challenges faced by the Tourism Sector: consult experts“ can be found here.