Kerala liquor policy dampens tourism industry

Kerala’s liquor policy has made a dent on the state’s tourism sector, which registered a drop in tourist arrivals last year, according to a report by Kerala Tourism Statistics – 2015.

The growth of foreign tourists visiting God’s Own Country has decelerated to 6 per cent in 2015 from 7.6 per cent in 2014 and 18.9 per cent in 2010. Domestic tourist arrivals also dropped to 6.6 per cent in 2015 from 8.6 per cent in 2010.

A restrictive excise policy manifesting in prohibition, the stiff competition from neighbouring countries, and higher rates have contributed to the decline in tourist arrivals in Kerala, according to the report.

With the implementation of complete prohibition, Kerala has grappled with an estimated loss of more than ₹7,000 crore annually. The State was expected to generate ₹3,208 crore in 2014-15, however, its earnings were restricted to ₹1,977 crore.

Prior to the ban on liquor, Kerala had the country’s highest per capita consumption of liquor at 8.3 litres a year and liquor was a major source of revenue, earning about ₹12,000 crore, the report said.

The State’s tourism department conducted the survey by sending an online questionnaire to managers and owners of hotels and resorts and to tour operators.

According to the report, 32 per cent of the respondents (hotels and resorts) and 19 per cent of tour operators believe that the biggest factor affecting the tourist arrivals was the ‘New Excise Policy’ along with increased competition from neighbouring destinations.

The role of the alcohol-beverage industry/ liquor industry in Kerala cannot be overemphasised in the decline of tourist arrivals and visits. The Kerala government initially imposed a graded ban on liquor consumption and eventually made the state liquor-free.

Apart from the dent in state revenues and the resultant economic impact, the sluggish growth in the tourism industry has also significantly impacted auxiliary industries including hospitality, MICE business and the overall livelihood of the people.

The current excise policy has adversely impacted the growth of the meetings, incentives, conferences and exhibitions (MICE) business. Around 70 per cent of hotels/ resorts have conference facilities and almost 50 per cent of the tour operators handle MICE.

The year 2014-2015 saw a sharp decline in MICE business to -0.6 per cent in 2015 from 4.8 per cent in 2014 and 9.1 per cent in 2013. After significant investments in infrastructure and marketing, if the MICE business takes a beating owing to the excise policy, it will affect the overall tourism prospects of the State in the coming years.

The strict enforcement of excise policies in the hospitality industry with restricted sales and service of alcoholic beverages in banquet halls during corporate functions, conferences and social events have plunged the hospitality industry into further crisis with hoteliers grappling with cancellations of big events. Destination weddings, which were popular in Kumarakom and Kovalam, have also been hit badly, the report said.

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