Tourist Refund in the Post-Pandemic World

The pandemic has disproportionately affected the tourism sector, which is also likely to be one of the last few sectors to recover from the pandemic, as countries re-open domestic economies but remain cautious on lifting travel restrictions. Even when travel restrictions are eventually lifted, it is imperative for destinations to assure potential travellers that the destination is safe for tourism.

As the Minister for Trade and Industry pointed out, Singapore will need to “assure both local and overseas guests of our high health standards, the kind of precautions and safe distancing measures that we put in place.” Singapore’s “model of providing a tourism product will have to be end-to-end, starting from before, during and after the so-called consumption of the product in Singapore.”

This brings to mind what is the last chore of every trip – getting that tax refund. But can a tourist get her tax refund safely in the post-pandemic world?

“Tourist Tax Refund - Last but Not Least.”

Tax refund is the last task for tourists, but it is definitely not the least on their minds. This is true for travel to both high tax destinations such as the European countries, and also Singapore, where the GST rate is relatively lower. The willingness of tourists to suffer incredible inconveniences just to get their tax refund underscores its importance. Indeed, the mere mention of tax refund invariably conjures images of tedious paperwork, snaking lines of impatient tourists, hefty service charges and adverse exchange rates. Still, tourists continue to join (toe) the line.

This is hardly the kind of last (or worse, lasting) impression that a destination would want visitors to bring home. And tax refund really does not have to be done that way, because technology can easily alleviate many of these pain points. Yet many destinations persist in subjecting their guests to such an unpleasant experience. The good news is some destinations do offer a digital experience with airport kiosks that reduce the paperwork and even the waiting time at the airport. Singapore is working with a home-grown start-up Tourego, to pilot the use of mobile applications to even skip the airport kiosks.

Structural Issues in the Global Industry

Unfortunately, the pandemic presents new challenges to the tourist tax refund industry that destinations have to address in order to realize the safe end-to-end tourism product espoused by the good Minister.

Firstly, the industry is highly concentrated with one dominant player accounting for 70% of the global market. The high level of concentration means that should the dominant player succumb to the financial stresses brought about by the pandemic, many destinations have yet to catalyze the growth of alternative players who can fill the vacuum. Destinations with home-grown incumbents such as Singapore’s Tourego, may be less susceptible to this risk.

The glacial pace of innovation in the industry also locks destinations in costly legacy systems that cannot be readily adapted to meet the challenges of the post-pandemic world. Kiosk-based systems are state of the art in the industry, but do not resonate with the mobile-first lifestyle of today’s traveller. But more importantly, they are ill-suited to cope with the demands of the post-pandemic world. Self-service kiosks and centralized refund counters are a magnet for crowds and the sharing of touchscreens on refund kiosks exposes tourists to an unnecessary risk of contagion. Paper-based systems predominant in European destinations fare worse. It is inconceivable for destinations to continue with this state of affairs in the post-pandemic world.

The Post-Pandemic Traveller

Wanderlust cannot be suppressed indefinitely. The pandemic will come to pass, travel will resume, but the post-pandemic traveller will have different considerations and behaviour. She will want to be assured of a destination's cleanliness and standards of hygiene. She will be concerned about the prevalence of the practice of physical distancing and donning of face masks in the destination. She will also be worried about coming into physical contact with contaminated surfaces or being asked to remove her face mask for identity verification.

Hence, destinations should administer tax refund procedures in a manner that addresses these concerns, so that the first wave of post-pandemic travellers can be advocates for the destination when sharing their experience with subsequent waves. And this is best achieved by leveraging on their preference for contactless solutions, which can get them their refund at a safe distance from strangers.

Aspirations Remain, Concerns Emerge

The Ideal Post-Pandemic Tourist Refund System

This ultimate experience can already be realized by mobile-based solutions offered by start-up companies such as Tourego, whose users are verified for eligibility by a contactless scan of their QR Code ID to obtain electronic refund tickets in-app, approved for refund by Customs officials remotely, with the monies credited into their mobile wallets online. These solutions can also incorporate contact tracing capabilities.

Imagine a tourist refund experience in which there is:
  • No need to hand over your passport to, or remove your face mask before, the cashier or Customs official for verification.
  • No need to receive in return paper refund tickets and cash handled by so many others before you.
  • No need to stand in proximity to strangers for hours just to get this done.

The pandemic presents an unprecedented challenge but also an unprecedented opportunity to reshape the tourist tax refund industry in the wake of the new normal in the post-pandemic world. While the Tourego experience remains an ideal to most destinations mired in legacy tourist refund infrastructure and caught up with other priorities as the pandemic runs its course, Smart Nations such as Singapore are particularly well-positioned to deliver this revolutionary experience in the “last mile” in the destination of every tourist journey, which will require an unprecedented level of inter-agency cooperation across immigration, taxation, and tourism authorities.

It will be no mean feat, but it is incumbent on destinations to ensure tourists to get their tax refunds safely in the post-pandemic world and leave a positive impression on visitors to bring home, in a true end-to-end model.

Tan Tie Wee
Founder at Tourego Pte Ltd
August 2020