Impact of COVID19 pandemic on Indian Travel & Tourism sector and the way ahead
Updated: Jan 29, 2021
The Travel and Tourism industry across the world celebrated 27th September as World Tourism day. Since its initiation in 1980, the purpose of this day is to raise awareness on the role of tourism in everyone’s life and how it affects social, cultural, political and economic values worldwide.
In 2020, the day was celebrated amid a global crisis caused by COVID19 which has brought the world to a standstill. It is ironical that while we celebrate this day, COVID19 has made our families confined to home, avoid socializing with friends, avoid a long drive, avoid having a nice dinner with family, avoid a spa session, the list is endless.
Everything that hospitality industry stands for and caters to has been constrained by the pandemic.
The COVID19 outbreak, lockdowns and life
After COVID19 outbreak several countries across globe declared long term total lockdowns including closure of industries, businesses, educational institutions and domestic and international travel.
In India, Government of India declared a nationwide lockdown from March 2020, which was further implemented by states by initiating various measures like defining contentment zones, disinfecting localities, testing, tracing, isolating and treating people to contain the COVID19 infection.
To avoid danger of uncontrollable community spread, the states also brought in strict measures on intercity, district and state travel of people apart from international travel restrictions from central government. Without an e-pass approved by the governments against a valid reason, people were not allowed to travel or even step out of the house. This brought in many safety measures like social distancing, frequent sanitization, wearing a mask, avoid public gathering which have become a new normal by now.
While the lockdown had its benefits like it helped the state governments to ramp up medical facilities like huge isolation wards, medicines, safety PPE kits to treat the unknown number of infected citizens, it affected the economy at a larger extent, which again was a calculated and accepted disadvantage. All efforts were towards saving lives, which was given preference over everything else.
The impact on Travel and Tourism sector
The lockdown affected many industries and business segments and as a ripple effect affected the manpower in terms of reduced or no income, salary cuts etc. Amongst all, the tourism sector is affected more than others by the current COVID-19 pandemic. The vulnerable groups within the tourism sector like the hospitality staff at resorts and hotels, small cottage industries at holiday and heritage destinations, many cultural and adventure activity providers are among the hardest hit.
As per data published by Ministry Of Tourism, India, By 2019 around 4.2 crore jobs were created in the travel and tourism segment in India, which becomes around 8.1% of the total employment in the country. If we take these numbers and add the up the remaining unorganized sector count to it, we can understand the huge number of people and their dependant families have negatively affected by it.
As per ratings agency ICRA, pan-India hotel occupancy rate to hit a multi-year low in FY2021 and is expected to be 35-40 per cent. The report also mentions about declined occupancy in all the key markets in Q4 FY2020 and YTD FY2021, impacted by the travel restrictions and lockdowns to contain the virus spread.
As for the revival, the report states that lower-end business travel, drive-to-destinations will revive first and MICE segment will be the last to recover. The entire segment will take more than 12-18 months to recover, given the medical research finds a cure or vaccine.
The current scenario and ray of hope
After a continuous strict lockdown, the central government decided to open up economical activities in a step by step unlock process with a final decision left to states in terms of implementation. This has resulted in steep increase in COVID19 infections and bringing India to a second country in terms of total COVID19 infection count.
There are some positive news amid the scary situation which is pointing towards a gradual drop in cases and a flattening of COVID19 curve.
As per recent Times Fact-India Outbreak Report, India is projected to peak with 7.87 lakh active cases from September 02 till September 16, following which the cases are projected to show a steady decline. As per the report, subsequent to peak the daily active case count is projected to decline by mid November. The report shows positive signals of flattening the Covid-19 curve and a continued effort to practice safety measures will be important control the pandemic and saving India from Covid-19.
In June and July, The National Centre for Disease Control had conducted sero-survey in Delhi to find the extent of corona infection. The report revealed 23.48% of Delhi’s population had already been exposed to the virus with most of the population was asymptomatic. In the same way, serological survey done for Mumbai indicated that 57% of slum and 16% non-slum population was contaminated, but they had developed immunity against the virus.
All such reports and surveys are indicating that communities across India are gradually developing natural herd immunity against COVID19. On the other hand, many experts think that India can achieve herd immunity via natural infection as well as with a vaccine in parallel. Given that two Indian vaccine candidates are in different stages of human trials, and one is in pre-clinical trial phase, reports indicating Indians are gradually developing herd immunity, we can look at controlling the spread soon.
The way ahead for Travel & Tourism sector
Travel and tourism sector is one of the worst affected business segments due to COVID19. In case of Hotels and Resorts, It has already lost its assured summer season which brings highest occupancy percentage at higher room rates bringing in most of the annual revenue. Lower occupancy across hotels in cities and destinations has affected travel related services like airlines, taxis too. The situation has not changed much even after central government’s announcement of easing up restrictions.
If everything goes well as the reports are mentioning and the COVID19 curve starts showing a decline towards beginning of November, there is a need of a strategy to invite tourists to visit their favorite destinations, nearby drive to destinations and experience a safe and memorable holiday. People have been confined to their homes for a long time and looking for a break, and the recent higher weekend occupancies in nearby resorts across major cities like Mumbai, Bengaluru and Chennai has shown this trend.
If the industry misses to generate revenue during this winter season, then it has to wait for summer season in 2021, making a revenue loss for the entire year. The cash rich larger hospitality players may survive the lull year but it will be difficult for the small hoteliers, huge manpower at resorts and hotels, small cottage industries at holiday and heritage destinations, cultural and adventure activity providers, travel agents, taxi service providers to run the show.
There is a need for central government, tourism ministry and state governments to work with major associations and bodies in travel and tourism industry to make the upcoming winter season a success.
It will be a pleasure for everyone in hospitality industry to see all smiles back on faces of a family during a safe and fabulous holiday!
By, Atalbihari Baddar