2019 was not a bad year for the Indian tourism industry. The central government was quite attentive towards the tourism and hospitality sector having launched positive schemes like Swadesh Darshan - Integrated Development of Theme-Based Tourist Circuits and the Pilgrimage Rejuvenation and Spiritual, Heritage Augmentation Drive (PRASHAD). However, the coronavirus pandemic and the extended lockdown have affected Indian tourism and hospitality sector.
Foreign Tourist Arrivals (FTAs) during 2019 were 10.89 million (provisional) with a growth of 3.2% over the same period of the previous year. Foreign Exchange Earnings (FEEs) during the period during 2019 were $29.962 billion (provisional estimates) with a growth of 4.8% over the same period of the previous year. The Indian Ministry of Tourism in its newsletter for January - March, 2020 published that, “FTAs during the period January-March, 2020 were 24,62,244 as compared to 31,79,792 in January-March, 2019 registering a 22.6% fall. FEEs during the period January - March 2020 were $6.159 billion as compared to $7.427 billion during the same time of 2019. The growth rate in FEEs in January - March 2020 over the same period in 2019 plunged to 17.1%.”
The growth of the tourism sector is proportionate with the increase in family earnings and savings. As the lockdown has directly affected employment and income generation, the travel and tourism sector is expected to observe a downfall in the long-run. Even after the lockdown, hygiene and health related issues will pull tourists back, hampering its expected growth.
The United Nations World Tourism Organisation (UNWTO) in its ‘Global Guidelines to Restart Tourism’ (published on May 28, 2020) regarding the global tourism scenario has estimated, “100 to 120 million jobs are at risk, $910 billion to $1.2 trillion lost in exports, international tourist arrival will be 850 million to 1.1 billion less.”
This estimate echoes the condition of the Indian tourism sector. In 3,691 sites including 38 world heritage sites registered by the Archaeological Survey of India (ASI), the total revenue collected from tickets was `302.34 in FY19 and `277.78 crore in FY20 (April-January). As the virus spread around the world, the last three months could not attract much foreign or domestic footfalls, marking a huge loss for the government.
The Indian tourism industry includes a large number of big and small private players. The Indian government has announced a three months extension of moratorium in addition to the previous three months for loan repayment. The travel and hospitality enterprises who have taken loans are pleased with the decision.
Madan Pradhan, Director, Tourism and Civil Aviation Department, Sikkim, told BE, “The tourism industry is going through a poor time and travel operators who have taken loans from banks will be benefitted by the moratorium extension. Some owners are obliged to do lay-offs because of no income. The Sikkim state government has announced a `50 crore subsidised loan package for the educated but unemployed youths. People, who have lost their jobs in this crucial period even from the hospitality sector, can start new businesses availing this loan facility.”
Sarouk Husain, Owner, Summit Guest House, Meghalaya, told BE, “Extension of the moratorium is a worthy step but hotel owners like us who did not take any loans but have to continue operations are really struggling. Since January-February, we did not have any occupancy due to the pandemic and there is no hope before October. We are waiting for specific government directives for the hotel industries. Without any income, I had to lay off two of my staffs but the rest are getting full payments.”
Tourism bodies are concerned
According to the Federation of Associations in Indian Tourism & Hospitality (FAITH), the tourism industry can see bankruptcies and closure of businesses coupled with huge unemployment. FAITH has estimated that around 70% of their total workforce can be unemployed till the lockdown is withdrawn.
Subhash Goyal, Honorary Secretary, FAITH, told BE, “It is feared that out of 55 million people, at least 20-30 million people will be jobless. We have requested the government to at least pay the salaries of those employees who are under the Employees State Insurance (ESI) scheme, which is under government consideration . As far as MSME is concerned, it is because of our effort that tourism industry has also been included in the MSME sector and the upper limit has been enhanced to 250 crore. This will give the following advantage for most of the smaller operators to come under the MSME. They will get 20% loan on whatever sanction loan amount they have without any additional collateral. The interest will be charged after three months. However, in FAITH, we have requested that the loan should be given without any interest for at least five years and the Ministry of Tourism should either absorb or subsidise the interest component. We have also requested the Ministry of Commerce to increase the SEIS benefits from 7% to 10% which is also under active consideration by the government.”
On the moratorium extension for loans payment, Goyal added, “There is no interest waiver, it will not help much but it can be a little breather for one or two months only.”
Representatives of FAITH and other tourism/hospitality bodies had earlier met the Indian tourism minister and submitted few suggestions. These included a complete GST tax holiday, relaxation in the Marketing Development Assistance (MDA) terms, usage of the MGNREGA funds to support salaries of employees in the sector, advisory to airlines to not levy cancellation fees/issue full refunds etc. But according to the apex tourism body, these did not reflect in the recently announced government stimulus.
The government plans to incentivise domestic tourism and short trips within the country with measured relaxations. The West Bengal state government has announced relaxation since June 8, 2020 in five of its popular tourism centres. Sikkim, which is a highly tourism-oriented state, has opened hotels and homestays for inter-districts tourist arrivals within the state.
Indian Railways is running 100 pairs of express trains though these are not expected to attract many tourists as of now. Public aviation facilities are also expected to resume entirely but the higher costs will definitely restrict a section from traveling. According to the Centre for Asia Pacific Aviation India (CAPA India), the Indian aviation industry, excluding Air India, suffered losses of around $500-600 million in the fourth quarter of FY20, owing to the pandemic. The aviation companies will try to minimise losses after the lockdown. Goyal commented, “The high cost of tickets is going to adversely affect tourism and air travel not only within India but all over the world. Only very essential travels like medical emergencies and unavoidable business meeting travels will take place. The tourism, aviation and hospitality industry will take at least one year to bounce back after the vaccine is discovered.”
The UNWTO, in its guideline, has suggested a few measures to boost the sector. It has advocated provision of liquidity, pushed for steps to be taken to protect jobs and recover confidence through safety and security measures, increased public-private collaboration, opening of borders with responsibility, harmonisation of protocols, and focus on sustainability. UNWTO has also urged the governments and regional blocks to advance travel facilitation towards e-visa/visa on arrival/ no visa policies and temporary visa cost exemption to stimulate the demand in tourism sector. It is expected that the tourism and hospitality industry can get its pace by the end of the 2021 fiscal – provided the pandemic is controlled by then.