Impact of Covid-19 on Tourism Industry
Ever since the first known case of Covid-19 was identified in China in December 2019, the world has undergone many forced but mandatory changes impacting our day to day lives. The whole world was caught unaware with this virus, resulting in large scale infections and deaths globally.
Each and every country responded differently to this pandemic. Some were quick to respond and were better prepared compared to some others. Countries like South Korea and Singapore are being praised for their efficient handling of the virus outbreak within their boundaries. While countries like Italy, UK and USA have been highly criticized for the delay in responding to the pandemic due to which both the number of infected and dead are huge in these countries.
As soon as the infected people’s count was rising globally, as an immediate measure, most of the countries banned all incoming international passengers via air, rail and road. This was followed by imposing lock-downs across the nation/state/cities to prevent people from getting infected with each other.
As on date 9th May 2020, people have been caught within their homes since many weeks. Industries are shut, transports are banned, shops, malls and restaurants are closed, daily-wagers lost their lively hood. Many industries are looking at a dark future.
Countries, companies and people dependent on tourism business will be among the hardest hit as the same is completely shut down currently and even after lockdown is lifted, people will avoid unnecessary travel for a longer period.
What is COVID-19
COronaVIrus Disease 2019 (COVID-19) is an infectious disease caused by Severe Acute Respiratory Syndrome CoronaVirus 2 (SARS-CoV-2). The disease was first identified in December 2019 in Wuhan, the capital of China’s Hubei province, and has since spread globally, resulting in the ongoing 2019–20 coronavirus pandemic. The first confirmed case of what was then an unknown coronavirus was traced back to November 2019 in Hubei.
As of 9th May 2020, more than 4 million cases have been reported across 185 countries and territories, resulting in more than 2,75,000 deaths. More than 13,00,000 people have recovered as well.
Impact on Travel Industry
The worldwide outbreak of COVID-19 has brought the world to a standstill, and tourism has been the worst affected of all major economic sectors. All other major industries will start working post lock-down period in various parts of the world but travel industry will take time to overcome the impact as most people will still avoid unnecessary travel for a longer time.
The disruptions that it has caused are across the entire value chain i.e. Airlines, Hotels, Travel Agents, Tour Operators, Restaurants, Rail Networks, Roadways, Water Transport and Cruises, Taxis, Auto-rickshaws and a slew of other indirect providers.
Equally, all segments within inbound, outbound, and domestic arenas, like Corporate Travel, Leisure Holidays, MICE (Meetings, Incentives, Conferences & Exhibitions), Weddings etc. have all come to a grinding halt.
In India, according to a study, this coronavirus impact could render 3.8 crore people jobless, which is around 70% of the total workforce of 5.5 crore working directly/indirectly with tourism and hospitality sector. This effect of job losses and layoffs has already begun throughout the country.
India has a very strong tourism business with a contribution of approximately 10% to India’s GDP every year. In 2019, total 10.9 million FTA (Foreign Tourist Arrivals) contributed around 28 billion USD which is roughly INR 2 lakh crores as FEE (Foreign Exchange Earning) to the Indian economy. Apart from this 1.8 billion domestic tourists are the mainstay of the local industry. Total size of the Indian Tourism economy was around 228 billion USD (approx 17 lakh crore rupees) in year 2019.
With a complete ban on any modes of transport (air/rail/bus) along with all the hotels/resorts for almost 2 months, the entire Indian tourism industry, is looking towards the Indian Government for help. They are aware that even after lockdown is lifted globally, there will not be much travelers to help boost the dying sector.
Airlines are expecting losses in billions of USD. With corporate India working from home and zero tourism, the Hotel industry faces a loss of revenue of around 1.10 lakh crores rupees.
Overall, the Indian tourism industry is projected to book a revenue loss of Rs 1.25 lakh crore in calendar 2020. During April-June 2020 alone, this industry is expected to book a revenue loss of Rs 69,400 crore. Many people have cancelled their advance bookings for corporate and leisure travel bookings to foreign destinations even in the 3rd Quarter of 2020. Most of the summer holiday bookings for various Indian states have also been cancelled (about 40-50 per cent), thereby impacting domestic tourism.
The impact will be vast as huge number of local vendors selling outside almost every major tourist hot-spots will be effected. Coffee-shops, eateries nearby tourist areas will be almost empty, taxi services will not be getting much bookings for most of the time during this year.
In a letter written to India Prime Minister Mr Narendra Modi, the Federation of Associations in Indian Tourism & Hospitality (FAITH) said “as a result of this pandemic, Indian tourism industry is looking at pan India bankruptcies, closure of businesses and mass unemployment”. They have given specific suggestions to be implemented to support the industry.
1. There should be a support fund for twelve months to support basic salaries with “direct transfer” to the affected tourism employees
2. A twelve-month moratorium on their EMIs of principal and interest payments on loans and working capital from Financial Institutions (both banking & non-banking)
3. Additionally to prevent insolvency, they requested for a deferment for 12 months of all statutory dues whether GST, Advance Tax payments, PF, ESIC, customs duties at the central government level or at any state government level the excise fees, levies, taxes, power & water charges, bank guarantees & security deposits and deferment of all renewals, across the tourism, travel, hospitality & aviation industry
4. TCS (tax collected at source) on travel was proposed in Finance Bill 2020 to be levied from April 1, 2020 and they requested that it should not be introduced as it will displace business from India to overseas, which will lead to shutting down businesses of most Indian tourism companies
5. They also requested a complete GST Tax Holiday for the tourism, travel and hospitality industry for a period of 12 months
6. They also requested to set up a National Tourism Task Force of all relevant ministries of the central government along with ministry of tourism and chief secretaries of State governments and industry stakeholders to meet regularly to fast-track all tourism investment approvals.
With the Indian Economy also taking a huge impact due to the nation-wide lockdown of almost 2 months, it is almost impossible for the government to meet all these demands. But certainly, some relaxation will be provided to this industry, as this involves a huge potential risk to the livelihood of a strong workforce. The same is expected to be announced later this year.
The reversal of fortunes is likely to be led by the young and fearless travellers, tempted by low costs and great value propositions and a strong push back by customers who have been “boxed-in” for months in their homes and are yearning to break free.
The sequential recovery may be slightly slow and quite different but will happen definitely. This too shall pass and the human spirit will fly higher than ever.
How We Can Contribute to Indian Tourism Industry
As soon as the lockdown gets lifted and the business starts, not many but few people will definitely plan their trips to freshen up after being locked within their homes for 2 months.
In order to re-strengthen the dying tourism sector, incase we are planning to travel, we have to plan our trips within India almost for more than a year. This will be a small contribution which each Indian traveler can make, as FTA (Foreign Tourist Arrival) in India is expected to be very less.
Many organizations/companies will definitely urge you to do this via social media campaigns, advertisements, tempting offers etc.
Last year in 2019, there were 1.8 billion domestic tourists within India and close to 30 million Indians visited abroad.
We Indians are also among the top spenders globally while traveling abroad.
So, in the current scenario, why not those travelling abroad and spending huge amount of money outside of India, do the same within India for atleast next 1 year.
India as a tourist destination has everything to offer: beautiful sandy beaches, amazing hill-stations, historical forts and palaces, desert and wildlife safaris, spiritual destinations. Apart from these, India also offers multiple destinations for nature-lovers and adventure seekers. There are many religious sites for people belonging to all faiths. You will find mouth-watering dishes in each and every state of the country. Indian hospitality is world famous due to its own reasons.
From Kashmir in the North to Kanyakumari in South, Kutch in West to Arunachal in East: India has a lot to offer.
If you are travelling, just pick your next destination in India rather than abroad to give your contribution to Indian Tourism Industry.