Challenges galore, trade undeterred
In the past one year, outbound tourism sector has witnessed quite a few blows — from demonetisation to doubling of service tax and finally Goods and Services Tax. However, industry insiders say that they have survived these jolts and are going strong, wit
Issues like demonetisation, and recent taxation issues only had a short term effect on outbound tourism. In the beginning, people were not able to understand the tax-related issues properly and got a little bit confused but when they did understand the nittygritties, things came back on track. We are getting good numbers of outbound queries and most of the queries are getting confirmed. More than 50 per cent travellers are going abroad first time but there has been no problem in making the payment due to demonetisation, which happened last year.
Demonetisation and new taxation rules have affected outbound tourism, but somehow, I believe our clients who have to travel, do travel. They may compromise on the inclusions and hotel categories; or instead of taking two holidays a year, they would take one such holiday; but they definitely travel. Sadly, they do not put in the money down immediately and instead wait for a long time before taking any decision. The market has changed and the travel agents and tour operators have to innovate to deal with the current situation.
During demonetisation last year, we were hit by a short-term jolt. For most of our consumers, travel then seemed to be not an immediate requirement. Unfortunately, soon after we were hit with increased taxation, we realised that the sentiments in terms of consumer uptake was a bit dampened. That was when we smartly and strategically created something like Amazon’s Black Friday Sales, as well as The Grand Indian Holiday Sale, to catalyse demand and inspire consumer. Then we did another campaign—Thomas Cook goes local. After that there was no stopping us and our growth trajectory increased.
While the taxation is a little hard for us, international tours are going much better than last year. There was no breakdown and no effect of demonetisation on our business. However, the change in taxation has certainly impacted the market, especially with tax on packages and hotel bookings. There are people who book the package but they want to pay the supplier directly. Some of them are directly contacting the suppliers to save the increased tax. We are losing business. This is the main issue we are facing these days.
The year has been quite tough and has affected outbound tourism. Customers are becoming more vary and are probably trying to do online transactions because then the tax issue does not come into play and the price becomes cheaper. However, some of the clients feel that they would still like the services of a travel agent and are willing to pay the tax and go with it. Thus, for us it is has been not so bad. Business has come, but not as much as expected. A lot of people have decided that they will hold back their holidays till things stabilise.
Demonetisation did not really affect us much. It was only for the initial 15 days. However, the new taxes have made a lot of difference and clients are moving towards the online medium to book and save these taxes. It is not an encouragement for tour operators. The government is not realising but they are discouraging passengers booking through tour operators by which they get employment as well as some income tax benefit. While these things have made a difference, the outbound season did not change much, as people still need tour operators for long-haul destinations.