COVID-19: Impact and recovery

Federation of Associations in Indian Tourism and Hospitality (FAITH) has been regularly sharing updates with the Ministry of Tourism (MOT) and Prime Minister’s Office (PMO) on the impact of COVID-19 on the industry. The association recommends the utilisat

FAITH has written to MOT and the PMO to apprise the government on the effects of the COVID-19 outbreak till now, and has been sending updates to them almost every fortnight since the outbreak was declared a global emergency. The letter reads, “This is one of the worst crisis ever to hit the Indian tourism industry, impacting all its geographical segments - inbound, outbound and domestic, and almost all tourism verticals - leisure, adventure, heritage, M!CE, cruise, corporate and other niche segments. The whole tourism value chain across hotels, travel agents, tour operators, destinations, restaurants, family entertainment venues, as well as air, land and sea transportation has been affected.” The letter also mentions:

Inbound tourism of more than $28 billion in value accounts for almost 60-65% of the total between October and March. As the news of the virus started picking up from November, the percentage of cancellations in this segment started going up exponentially, and is reaching a peak of almost 80% in March in many Indian locations. The value at risk from this segment will be in multiples of tens of thousands of crores.

Forward bookings for October 2020-March 2021, which should have started picking up, aremuted. These are showing highly discouraging signs with cancellations of important global travel marts, which are marketplaces for contracting for the next season.

The value of NRI segment from developed markets, whose major season for visit is families and relatives, is around 60% during April to September. There are reports of large-scale forward cancellations from these, and unless the progression of the virus stops, almost the entire value for the remainder of 2020 season is at risk.

The holiday season of Indians, both for travelling within the country and outside it, is heavy from April to July and from October to December. More than 28 million Indians are estimated to have travelled outside in 2019 and there were almost 1.8 billion domestic tourist footfalls. The December holiday season of 2019 took an estimated hit of almost 40-50%; the holiday season of April to July 2020 is likely to take a humongous hit, too, which could be as high as 80-100% unless there is positive news of the progression of the virus decreasing. There are advanced cancellations and highly reduced forward-booking pipelines for the holiday season. Only corporates are flying and that, too, only on highly essential same-day travel. Most MNCs are advising work from home.

Cruise tourism of all kinds has come to a complete standstill with no clearances.

Unexpected no-shows are happening and most group meetings and celebrations have been cancelled. Even eating out at restaurants is coming under serious pressure.

To save on variable costs and minimise fixed costs, many small and mid-sized hotels, resorts and car rental companies are shutting down operations and asking staff to go on leave without pay.

Most Indian travel and hospitality companies are facing demands for full refunds and they are doing so out of their cash reserves, even for which they have paid advance tax & GST.

Working capital of most tourism corporates is hit by almost 60% and for micro, small and medium tourism enterprises by almost 80%. Margins are nil or negligible in many cases. If there ever was a time for the Central and state governments and the tourism industry to stand together, this is it. The employees, managers and entrepreneurs are bravely fighting for survival at the front line and need an umbrella cover of relief and support from the Central and state government. Once the virus stops progressing and as the domestic traveller will start returning upon seeing such confidence-building measures, the global traveller will also be enthused. This will be the time for India to start its global tourism strategy revival and target even those tourist source markets that were travelling to our competing nations.

This will be the time for India to start its global tourism strategy revival and target even those tourist source markets that were travelling to our competing nations