Impact of COVID-19 on travel and tourism industry and ways of recovery

January 31, 2021 1:29 PM

Quite similar to what was shown in the 2011 Hollywood movie Contagion, the Coronavirus has not only caused more than a million deaths, but it has also created abrupt changes in the daily lives of people within a very short time, while adversely affecting global economy and causing widespread panic.

tourism industryGroup travels and leisure travels have almost stopped owing to the fear of being infected and spreading the infection, especially affecting the very young (school field trips), and the older travellers’ group travels.

By Monidipa Dey,

Quite similar to what was shown in the 2011 Hollywood movie Contagion, the Coronavirus has not only caused more than a million deaths, but it has also created abrupt changes in the daily lives of people within a very short time, while adversely affecting global economy and causing widespread panic. Of all the affected industries in the Covid-19 pandemic, the tourism industry appears to have taken the hardest hit across the globe, impacting various associated sectors, such as, hospitality, travel agencies and tour operators, all kinds of transportation services, along with many more. According to the World Travel and Tourism Council (WTCC), the Covid-19 pandemic is likely to cost the tourism industry almost USD 22 billion and a loss of almost 50 million jobs worldwide. Therefore, it comes as no surprise that tourism in India has witnessed a significant decline post Covid, in 2020.

With countries across the world now gearing up to fight a new coronavirus strain originating from the UK by restricting entries, it has been a nightmarish journey for the tourism industry right from the start of 2020, as the world went into a lockdown mode. Flights were grounded, cities came to a stand-still, trains stopped running and almost all public transport stopped plying; while hotels, cafes, pubs, and restaurants simply shuttered down. At the end of 2020, with still no confirmed vaccine available, no one knows how long the virus will continue with its deathly dance. As social distancing becomes the new mantra, with masks and gloves turning into a part of daily wear, people are preferring to remain within the safety confines of their homes, and very few are thinking or planning for a holiday. It is the fear of touching a stranger, fear of being infected and spreading it, the fear of death, and a fear of the unknown that has gripped the world, and this constant living with fear is an emotion that will take a long time to disappear; and until then travel & tourism industry is likely to remain in the dumps.

Some of the current visible trends in the tourism industry are :

1. Intermittent closed borders owing to lockdowns across nations is here to stay for quite some time, thus bringing overseas travels to a standstill for at least some more months. Thus, domestic travel is the more logical arena to focus on now.

2. A significant decrease in business travels, which is being replaced by increasing number of Zoom or Microsoft Team meetings.

3. Large global events and large gatherings being a complete no-no, the MICE market tourism has taken a nosedive and will remain dormant for some time.

4. Group travels and leisure travels have almost stopped owing to the fear of being infected and spreading the infection, especially affecting the very young (school field trips), and the older travellers’ group travels.

In such a dismal scenario it is imperative that the Government of India takes notice and plays a crucial role in helping the tourism sector to revive itself. Perhaps it can start by bringing in some immediate measures that would reduce the rate of Goods and Services Tax (GST), such as, consider the lowering of GST rates on room tariffs between INR 1000 to INR 7500 for a specific period of time, and lowering the GST 18% on commission earned by tour operators and travel agents for providing certain services. Besides these, the TCS or Tax collection at Source, which is made while making payments to various hotels and airlines, can also be considered for exemption under tax relief measures. Extending the time for availing Input Tax credit (ITC) for the FY 2019-2020 to March 31st 2021 will help to reduce pressure on cash outflow. Along with this, especially because tourism industry is facing severe losses, reversal of ITC can also be suspended until March 31st 2021. Extending due dates for filing GST returns, providing immunity from tax payment under reverse charge mechanism, and allowing GST on cash or receipt basis until March 31st 2021 can also be considered to help the tourism industry tide over this crisis period.

While discussing the revival strategies that can be adopted by the hoteliers, Sumeet Mehta (hotel valuations and finance specialist and the CEO of Paradigm Advisors) said that “Hospitality and Leisure Sector have faced the brunt of COVID-19 Lockdown with Summer Holiday Season totally washed out due to nationwide lockdown. Recovery in the sector is now visible as people have started stepping out and travelling. Hoteliers will have to focus on innovative marketing communications to created confidence in potential travellers that their properties are safe. Increased focus is required on cleanliness and sanitisation of properties to create confidence and evince interest. Premium properties that focused largely on MICE and corporate bookings will have to shift focus on individual travellers. Hoteliers will have to come up with attractive schemes and offers to pull guests and increase occupancy levels. Increased usage of technology and reduction in human interface to ensure safety along with a unique experience will ensure domestic travellers will be enticed to travel, thereby reviving hospitality and leisure sector.”

Rajkumar Sarrof, who owns the Pristine Travels private limited (a mid-sized Kolkata based IATA approved travel agency) gives insight into the problems being faced by the travel operators. As per Sarrof,

· the tour operators are a deeply divided lot, not just in size and scale, but also in terms of type of business, viz, groups, MICE, FIT, special interest, adventure tours, etc. Different segments have different ailments. The best general support can be to bring in a nodal agency, which can frame rules and announce them. Currently, rules are announced by different authorities, changes rapidly, and is very difficult to keep track of. Rules are in a complicated language and often interpretive, rather than made easy to understand. Support can be in the form of minimal interference, and by bringing in logical rules. Flight restrictions on certain days, keeping a resort open but most of its facilities closed, simply does not make sense.

· Authorities should invest in educating the stakeholders, training service providers, and cautioning all travellers about safe practices to be followed. However, too much restrictions, and cosmetic hygienic measures are often followed just to fulfil authority mandates which are acting as major headwinds.

· Rapid Antigen tests are more to fulfil government criterion of travel, and often healthy people being subjected to tests that is acting as disincentive to travel. However, if tests are mandatory, then they should be reliable and RT PCR would take precedence over RAT, and government paying for them would certainly help. A basic COVID-19 check kit should be there in all hotels, resorts, vehicles, etc.

Nitin Singh, the co-owner and Director of Royal Heritage Camps & Safaris, feels that while considering the revival of the tourism industry “the government should focus more on reforming policies for taxes, permissions, NOC, sanctions, and licenses; constructing more roads for better access especially for niche tourism destinations, and help in creating experiences and not merely sightseeing spots.”

While the revival of this industry must be made into a prime concern for the GOI, it is also essential that post COVID-19 the Indian tourism industry makes a move towards adopting a more sustainable, hygienic, and responsible form of tourism; the mantras being: hygiene, safety, health, quality, and value for money.

(The author is a well-known travel and heritage writer. Views expressed are personal and do not reflect the official position or policy of Financial Express Online.)

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