A look at how the tourism sector is getting back on its feet after a long lull
After a severe downturn in the months following the outbreak of the pandemic, the travel and tourism sector is trudging back to normalcy. According to CARE Advisory and Research, the demand for domestic travel started gaining traction with ease in restrictions from June, 2021, and the hotel occupancy rate is estimated to have reached around 50% in July, 2021.
The Indian hotel industry took a hit of over $17.81 billion in revenue in FY21, as per the Federation of Hotel & Restaurant Associations of India (FHRAI). But things have started looking up. Online travel aggregators (OTAs) like Thomas Cook surpassed pre-pandemic levels in September, 2021, while MakeMyTrip, in October, saw recovery of 85% in its homestays segment and 90% in the flights segment, compared to the same month in 2019. Hospitality chain Marriott expects its domestic business to reach pre-pandemic levels by the first quarter of 2022.
The Indian Brand Equity Foundation forecasts that the travel and hotels market in India, worth $275 billion, is expected to grow to $500 billion by 2030.
Back in the game
Cleartrip has seen 75% recovery in the domestic flights segment, compared to pre-pandemic levels, while the international segment recovery is at 30%. “Our monthly domestic volumes have increased tenfold since May, 2021, across flights and hotels. International travel will probably take a few quarters to revive,” says Prahlad Krishnamurthi, chief business officer, Cleartrip.
MakeMyTrip says essential and leisure travel was the first to make a comeback post the second wave, followed by corporate travel. The travel operator has seen significantly higher bookings for villas than pre-pandemic levels. “There will be a definite uptick in demand for alternative accommodations or homestays, as people will look for comfort, privacy and exclusivity at a home away from home,” says Vipul Prakash, chief operating officer, MakeMyTrip.
Most OTAs have been adding services to make travel booking easier in these uncertain times. MakeMyTrip, for instance, has introduced ‘Price Lock’, a feature that enables customers to lock flight fares for up to seven days while they firm up their travel plans. Under train bookings, the platform has launched the ‘Trip Guarantee’ feature that allows travellers to book last-minute alternate travel, in case the desired rail ticket remains unconfirmed.
Thomas Cook has introduced a feature called ‘Holiday First and Pay When You Return’ — customers pay only once they return from their holiday. “Post the second wave, we have witnessed a surge in demand; we have been growing 100% month-on-month since July,” says Rajeev Kale, president and country head – Holidays, MICE, Visa, Thomas Cook (India).
Marriott’s domestic business is helping it sustain at present; it expects inbound travel to pick up by Q1 2022. During the pandemic, Marriott’s food delivery business, Marriott Bonvoy on Wheels, became its main revenue stream, with demand for this service coming in from cities like Delhi, Mumbai and Bengaluru. “Marriott Bonvoy on Wheels is currently active in over 90 hotels across India, and has garnered approximately $6-7 million in revenue in 2021,” says Monisha Dewan, senior area director (sales and distribution) – South Asia, Marriott International. The hospitality chain is planning to add nine properties across India by 2022.
Road to revival
Tushar Shah, director, CARE Advisory and Research, says the domestic leisure segment, coupled with the staycation and workation segments, is expected to drive demand in the medium term, and possibly recover faster than the business segment. Besides, India reopening its borders to international travellers, after 20 months, is likely to help the industry, albeit at a slow pace.
Rajat Mahajan, partner, Deloitte India, says travel and tour operators would now need to understand the psyche of the customer who is coming out of the pandemic and starting to travel for leisure, business or spiritual purposes. “Value-adds will be the key drivers for customers to choose brands, as the number of trips will reduce and customers would like to get maximum benefit from any trip,” he adds.
However, localised restrictions within the country, that differ from state to state, may continue to act as a hindrance for travel bookings. Consumers may still be wary of interstate travel, as compliance with specific state-based regulations, including RT-PCR tests, increase the overall cost of travel. Moreover, the threat of a probable third wave of the pandemic could potentially alter the pace of revival of the travel industry.