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Rebuilding Tourism

The successive waves of COVID-19 have totally devastated the global travel and tourism industry and India bore the brunt with two waves already over and the threat of the third looming over. The green shoots that started appearing post the first wave completely disappeared with the arrival of the second wave. The slow recovery recorded in the first quarter, 2021, diminished and the situation became dire during the second wave when localized lockdowns and restrictions imposed by various state governments crippled the tourism industry. The second wave was even more virulent and hit the young and the urban class with people scrambling for oxygen. The pandemic forced many industries to adapt to new models of doing business by adopting online strategies. However, tourism is about moving out and visiting places and this cannot be done virtually.  

According to UNCTAD and UNWTO report, the crash in international tourism due to the coronavirus pandemic could cause a loss of more than US $ 4 trillion to the global GDP for the years 2020 and 2021. The report says international tourism and its closely linked sectors suffered an estimated loss of US $ 2.4 trillion in 2020 due to the direct and indirect impact of a steep drop in international tourist arrivals. A similar loss is expected this year, the report warns, noting that the tourism sector’s recovery will largely depend on the uptake of COVID-19 vaccines globally. According to the report, the reduction in tourism causes a 5.5% rise in unemployment of unskilled labour on an average, with a high variance of 0% to 15%, depending on the importance of tourism for the economy.

The World Bank, in its latest report, slashed India's GDP forecast to 8.3 per cent for FY22 as against its earlier estimate of 10.1 per cent. It has further projected India's growth to be 7.5 per cent in 2022.

The UNWTO states that destinations around the world welcomed 180 million fewer international arrivals during January - March 2021 compared to the first quarter of last year. Asia and the Pacific continued to suffer the lowest levels of activity with a 94 per cent drop in international arrivals over the three months. In India, the number of foreign tourist arrivals dipped from 12 lakh in December 2019 to 470 in April 2020. Even though India and other countries gradually opened their borders after the first wave, only 80,000 foreign arrivals were recorded in December 2020.

Impact assessment

The hospitality sector is the worst hit within the industry due to its nature. “The sudden onset of the second wave has left the hospitality sector again reeling under the impact of the crisis as travel restrictions and curfew continue to pose challenges for leisure and business travellers. All the major tourist destinations are facing the brunt of extended curfews and lockdowns.  The preliminary indications are that approximately 40% of small scale hotels have shut operations across the country while large numbers of others are looking at a possible collapse if no respite is offered in the coming months,” Madan Prasad Bezbaruah, Secretary-General, Hotel Association of India (HAI), said.

Gurbaxish Singh Kohli, Vice President, Federation of Hotel & Restaurant Associations of India (FHRAI), says that the impact is highly devastating. “As per our last estimates, the industry has been impacted by Rs. 1.40 lakh crores and this is the fiscal impact. The lakhs of jobs lost with 40% establishments shut down permanently compounds the fiscal impact.’’

On the international front, Rajiv Mehra, President of the Indian Association of Tour Operators (IATO), says that the inbound tourism impact on the economy during the last financial year till 31st March 2021 was almost 95%. “This means a loss of almost US$ 27 billion, almost Rs 2 lakh crores on a direct basis. On an indirect economic basis, the loss is over Rs 6 lakh crores. The domestic tourism market has an impact of almost 60% to 70% of the total value. This implies almost Rs 2.5 to 3 lakh crores of direct domestic tourism loss. On an indirect basis, the economic impact is almost Rs 6 to 9 lakh crores,” Mehra says and adds that impact on job losses of almost 3.5 crores.

Jyoti Mayal, president, Travel Agents Association of India (TAAI), feels that the devastating second wave has impacted everyone. “We have all lost family, friend, colleague, or an acquaintance. Businesses that had slowly restarted crashed and the industry is truly struggling with revenue and cash flow. We are now paranoid, and it will certainly take us a while to gain total confidence to move out as in the pre covid era and vaccination will truly be the driver. We must realise that domestic tourism as drive cations would revive much quicker at selected sustainable destinations, but other travel is more of friends and family, urgent business-related or unavoidable travel. It’s not normal tourism travel,” Mayal says.

PP Khanna, President, Association of Domestic Tour Operators of India (ADTOI), opines the impact has been more during the second wave as shortage of oxygen cylinders, beds in the hospitals and other infrastructure facilities have kept everyone guessing for the safety first and there has not been much movement of tourists due to lockdown clamped by states. 

“The second wave of the pandemic hit the travel, tourism, aviation and the hospitality industries sharply. The travel and tourism industry-related services were affected- passenger traffic, air cargo demand, airport workforce, and incoming revenues. Foreign countries banned the entry of Indians. The economic recovery downed, and the flexibility in spending on luxury has declined drastically due to rising unemployment and worries about likely job losses in the future,” Biji Eapen, National President, IATA Agents Association of India (IAAI), said.

Anticipating revival

Despite the setback, industry associations think that the industry will bounce back quickly. “The industry has the inner strength and core competence to revive its primary position in the tourism and hospitality sector and as the little lull period before the second wave showed it can bounce back quickly. But the devastation has been too deep and extensive, and it requires the helping hand of the government to find its feet,” Bezbaruah opines. He adds that the situation will ease with faster vaccination drives and herd immunity. He highlights that the recent announcements like increasing the size of the Emergency Credit Line Guarantee Scheme (ECLGS) from Rs. 3 lakh crores to Rs. 4.5 lakh crore, liquidity support by the Reserve Bank of India and tax exemptions given by some state governments, are some of the measures that will help the sector gain confidence towards recovery.

Mayal echoes similar sentiments. “I am very confident travel and tourism will revive with new opportunities, new zeal and a new outlook. We need to adopt the new protocols and procedures. Consumers will want more information about their end-to-end journey. We’ll start to embrace travel more consciously, seeking out smaller brands, hotels and experiences that reconnect us with nature and minimise our footprint. Short stays and weekend trips will be huge,” Mayal says adding that travellers will have a greater desire to seek out less crowded attractions and destinations, as well as nature-based experiences.

Mehra feels that reassurance and confidence-building measures need to be put in place during the revival phase. “Vaccination is the key. All our front-line tourism workers must be 100% vaccinated to be ready for the tourism activities. There is a need to create awareness on clean and hygienic tourist locations,” he says and suggests that the e-Tourist Visa/International flight operation should start from October 2021, if the situation remains under control. “Open up domestic tourism as soon as possible where the number of Covid cases has reduced drastically without any restriction. This will help build confidence among foreign tourists to visit India. All-State Governments should promote information on Covid 19 free destinations.’’ Mehra adds.

Eapen feels that natural recovery is possible only when international tourism resumes which needs globally coordinated, risk-based solutions in a phased manner. “We need travel recovery and have to start somewhere. Accelerating plans for digital health passports like Common Pass or IATA Travel Pass can be a vital tool in opening up travel once again. In addition, we have to see that all governments and airline operators will accept proof of vaccination as a condition for international travel,” Eapen suggests.

Kohli says that the revival is secondary. “We are yet in the survival mode. Only if one survives, one can revive. Restaurants if all goes well shall see revival within a year if all restrictions being abolished, whereas hotels will take another 3 years minimum to get back on track,” Kohli says.

Fiscal support

Welcoming whatever fiscal support extended by the government, Presidents of the associations demand more financial support from the government.

While we appreciate the small piece-meal relief bits that have come in we expect a lot more hand-holding and stimulus, Kohli says. “For an industry that contributes to such a large extent to the GDP, employment and revenue of the govt we would expect no less. We have made representations to different arms of the govt and expect something soon, hopefully,” Kohli adds.

Mayal feels that the government must contribute to the industry’s benefit in challenging times. “When the travel, tourism and hospitality are struggling to stay afloat, why are we not considered for support such as monetary subsidies, statutory rebates and tax-free holidays. The lack of liquidity and continuous fixed costs are making it difficult for the industry to survive. We are an important sector & need to be reached out to by the government. The revival of travel and tourism will result in a reduction of unemployment, foreign exchange earnings and infrastructure development,” Mayal suggests.

Mehra says that the government’s decision to open a separate liquidity window of Rs15,000 crores with tenors of up to three years at the repo rate till March 31, 2022, will bring some succour to the tourism industry. He asks to release the SEIS Scrips for the year 2019-20 that has been kept on hold for over a year. “This is the legitimate demand of the sector as per provision in the foreign trade policy 2015-20,” he emphasises. He opines that ECLGS 3.0 announced on March 31, 2021, and the anomalies in the operational guidelines and FAQ issued by NCGTC has defeated the very purpose of the same. We urge the government to amend it suitably, he says.

Bezbaruah feels whatever support the government has extended will go a long way in bringing relief for the hospitality sector. “But much more needs to be done and that too quickly. We have explained that these relief measures are needed not because of the inefficiency of the industry but because the circumstances are beyond the competence of the industry and government support is justified by the lives and livelihoods in millions that will be saved in the process and the fillip that it will give to the economic recovery.

HAI has requested for stimulus package - subsidising of salaries of hotel employees by the government to 50% from April 2021-March 2022. “Many countries have provided this support to employees as part of their economic recovery programmes. In addition to this, infrastructure status to hotels will prove to be a tipping point of recovery and growth for the hospitality sector. It will also enable the sector to access long term funds at subsidized rates as available to other infrastructure industries such as airports, railways, ports etc. Infrastructure status will gravitate greater investments in the travel and hospitality sector around the country. In short, we have urged that tourism should be given the strength to become a pillar of development as the PM has often mentioned and a pragmatic sectoral recovery plan should be mooted,” Bezbaruah suggests.

Since the assistance offered by Central Government is limited to travel agencies having the Ministry of Tourism’s approval, the majority of travel agencies will not become eligible for availing of the help. “So, while appreciating the Central Government's initiative as a positive step, we at IAAI suggest extending the benefit to all IATA accredited travel agencies and travel and tour agencies approved by respective state governments in India to revive the tourism industry large,” Eapen says.

Associations’ role

All these associations stood by their members in whatever possible way they could. These associations kept on sending information to keep their member informed and updated through various channels. They also used the lockdown period to upskill their members.

TAAI has been in the continuous process of motivating its members. “We conducted various webinars, organised meetings, updated all on travel and tourism-related issues, interacted with stakeholders, various educational programs on tourism & statutory compliances were conducted. We also have been able to help our members in getting refunds and booking through GDS,” Mayal informs.

Eapen says that IAAI’s stand on airline ticket refunding policy to save our valued customers was right, accepted and acknowledged by the Industry. Khanna says that ADTOI is in touch with its members regularly through zoom meetings, emails and this way taking association activities forward with their full support.

According to Mehra, IATO Covid Task Force formed with the members of the Executive Committee to guide and endeavour to help fellow members concerning medical consultation, medicines and hospitalization.

Due to our intervention through our regional arms, states like Gujarat, Karnataka, Chattisgarh, MP, Goa and Maharashtra have given reliefs in levy’s fees, statutory, and our representations to excise department and municipalities have got them a reprieve in taxes etc instead of the pandemic, Kohli informs.

Overall, there is the hope that if the government could assist in direct relief it will hasten the recovery process very soon.

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