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RSTV: THE BIG PICTURE- ROAD AHEAD FOR TOURISM & HOSPITALITY INDUSTRY

RSTV

Introduction:

The cascading effect of the global coronavirus pandemic is crippling the tourism and hospitality industry at an “astonishing pace”. Media reports suggest Foreign Tourist Arrivals (FTA) in India have come down by about 67 per cent annually in the January-March quarter, while for domestic tourists, the figure is lower by nearly 40 per cent. The travel and tourism sector alone accounted for 9.2 per cent of India’s GDP in 2018, and generated 26.7 million jobs in that year.

Present Sector of Tourism sector:

  • India is the most digitally advanced traveller nation in terms of digital tools being used for planning, booking and experiencing a journey, India’s rising middle class and increasing disposable incomes has continued to support the growth of domestic and outbound tourism.
  • During 2018, foreign tourist arrivals (FTAs) in India stood at 10.56 million, achieving a growth rate of 5.20 per cent year-on-year During January-November 2019, Foreign Tourist Arrivals (FTAs) were 96,69,633 with the growth of 3.2 per cent.
  • During January-November 2019, a total of 25,51,211 tourist arrived on e-Tourist Visa registering a growth of 23.8 per cent.
  • The travel & tourism sector in India accounted for 8 per cent of the total employment opportunities generated in the country in 2017, providing employment to around 41.6 million people during the same year. The number is expected to rise by 2 per cent annum to 52.3 million jobs by 2028.
  • International hotel chains are increasing their presence in the country, as it will account for around 47 per cent share in the Tourism & Hospitality sector of India by 2020 & 50 per cent by 2022

Coronavirus impact:

  • Tourism creates a large number of semi-skilled jobs for the local population in not only local hotels and catering trades but also in other fields like transport, retailing, heritage interpretation etc.It is believed that around 70 per cent out of a total 5.5 crore workforce could get unemployed, which is around 3.8 crore people. This effect of job losses and layoffs has already begun throughout the country.
  • The Indian hospitality sector is staring at a loss of $4.2 billion to $4.7 billion in revenues due to coronavirus outbreak.
  • The loss to the organised market, which is about 5 per cent of the total lodging sector in the country, is estimated to range between $1.3 billion and $1.55 billon. This amounts to an erosion of 27-32 per cent of the overall revenues as compared to the previous financial year.
  • The hospitality sector is entirely dependent on travel, trade, and tourism for its sustenance. The massive spate of cancellations in recent weeks has largely eroded the ability of hotels across India to operate without piling up worrisome losses.
  • The devastating impact of coronavirus could result in 18-20 per cent erosion of nationwide occupancy across the sector, and 12-14 per cent drop in average daily rates (ADRs) for the entire 2020.
  • At present, about 15-25 per cent of the employees in the branded hotel chains are either contracted or casual staff. Under the current circumstances, these people would be first to be laid off by the hotel companies.
  • Early signs of reduced travel became evident in the middle of February but the biggest shock was felt in March when large-scale cancellations across the corporate, MICE and leisure segments happened.
  • The situation is likely to remain grim over the next two-three months with companies adopting “work from home” and “no travel” policies.
  • Impact of the virus to begin waning by June-July, and business to pick up in the second half of the year. “It is also our assumption that as the last few months of 2020 come by, it is likely that inbound travel may still be a fraction of what India gets in typical years.
  • With the current crisis in the tourism sector, which contributes roughly 10 per cent to India’s GDP (about $275 billion), the impact on the macro-economy is expected to be huge.

Way Forward:

  • India’s travel and tourism industry has huge growth potential. The tourism industry is also looking forward to the expansion of E-visa scheme which is expected to double the tourist inflow to India. India’s travel and tourism industry has the potential to expand by 2.5 per cent on the back of higher budgetary allocation and low-cost healthcare facility. The next step is where all the action is.
  • Once the outbreak of the virus is contained and the world is set to travel again, any plan of re-opening must be done keeping long-term benefits and safety compliances in mind.
  • It is imperative that hospitality companies reach out to deferred and cancelled bookings and give due attention to domestic travellers.
  • The report insists that hotels and airlines must slowly roll out their services rather than starting everything instantly and to not get caught up in spending.