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Banned from travel in a post-Covid-19 world

Nandana James Forum Gandhi | Updated on May 01, 2020 Published on May 01, 2020

Table for one: A restaurant worker waits for the elusive customer near the historic Taj Mahal in Agra, a Covid-19 hotspot   -  PTI

Stay at home — three words that have grounded holiday plans the world over as the novel coronavirus pandemic rages. The multibillion-dollar tourism sector, a growth engine in many economies, stares at gigantic losses; thousands of its workers — from top executives to ticketing staff, forex dealers, housekeeping personnel, guides and hawkers at tourist spots — face an existential crisis

*The travel, tourism and hospitality industry was among the first sectors to be hit by the Covid-19 pandemic and the attendant closure of borders; and it will also take the longest time to revive.

*This year is expected to be a complete washout with no revenues, businesses running out of working capital and job losses.

* Once the pandemic abates, essential travel apart, segments like domestic tourism, yoga and wellness tourism, spiritual tourism, medical tourism and wedding related travel and hospitality are expected to pick up first.

Vijaya Shenoy recalls rubbing her hands with glee as clients began flooding in with travel plans in January 2020. After a not-so-memorable 2019, the branch manager of Diana World Travel in Bengaluru looked forward to drawing up unforgettable itineraries for the would-be travellers. The year gone by wasn’t great; you need to buck up, her boss had said, and she’d nodded enthusiastically.

Barely two months later, in March, the live screens at her office that were connected to airlines started flickering, showing multiple flight cancellations — the pandemic had started wrecking travel plans everywhere. The nationwide lockdown followed soon.

Nothing in Shenoy’s 35-year career had prepared her for the carnage that unfolded.

She remembers keeping the business running through upheavals of several kinds — the 2003 SARS outbreak, the Surat plague, the kidnapping of Kannada superstar Rajkumar and the ensuing violence, and more. No matter what the prevailing crisis was, customers could always travel for an urgent reason, even if that meant limited flight options or exorbitant prices.

“It was never this bad,” says the 64-year-old travel industry professional, who was left staring at a situation where “one just can’t move”.

Her office simply struggled to comprehend the magnitude of the situation — “that it would be this huge that the world closes down,” she exclaims, flabbergasted. “This caught us offguard. Completely numb... It’s only a flu, you take medicines, and you will be fine... that’s what we were told, right?” she adds with a wry laugh.

Like her, Bridgit Kallanparambil, a Kannur-based tour guide for Italian-speaking tourists visiting South India, is in a state of despair. She fears she is on the brink of poverty.

The 48-year-old government-accredited guide has been working since 2006, but suddenly finds herself with no safety net to fall back on. All her scheduled tours for the coming months stand cancelled. Her payment dues for three months are stuck with travel agencies, and it will be a while before she can finally retrieve them.

“My life and future are nothing but a big question mark now. There is no hope left. At least if there was some certainty about when travel will resume, I wouldn’t have to grapple with this acute tension and anxiety,” she laments.

The lockdown across India and other countries to stem the Covid-19 pandemic is the kind of unprecedented event that the hyper-globalised world is struggling to come to terms with. And the travel industry — a labyrinth of multiple, interconnected and allied sectors — thrives on the antithesis of what the coronavirus underlines: Stay at home.

Even Indian railways, which chugged on amid the raging wars of 1962 and 1971, has ground to a halt.

Derailed: A railway coach repurposed as a Covid-19 isolation ward, as Indian Rail, which chugged on even during the 1962 and 1971 wars, ground to a halt   -  THE HINDU / KVS GIRI

 

Naturally, Kallanparambil and her fellow professionals in the travel industry are not only denuded of work overnight but also crippled by fears over when, and if at all, life would get back to normal.

***

The travel, tourism and hospitality industry was among the first sectors to be hit by the pandemic and the attendant closure of borders; and it will also be among those that will take the longest time to revive, says Meenakshi Sharma, director general of the ministry of tourism.

Ticket to nowhere: Travel agents across India expect business this year to be a complete washout   -  PTI

 

This is a sector that has multimillion-dollar businesses including multinational travel corporations such as Thomas Cook and Akbar Travels, hospitality behemoths IHCL, Marriott, Hilton and others, aggregating giants including Tripadvisor and MakeMyTrip at one end, and airport workers, housekeeping staff at hotels, local guides, taxi drivers and hawkers at tourist spots among numerous other small players dependent on it at the other end.

A break-up of the sectors big and small that turn the wheels of Indian tourism

• 1.3 lakh-plus tour operators (domestic, inbound, adventure, cruise, outbound)

• 53,000 travel agents

• 19 lakh tourist transporters

• 53,000 hotels

• 5 lakh restaurants

• 137 airports managed by the Airports Authority of India (AAI), and 16 private airports

• 15 passenger airlines, including regional ones

• 2,700 MICE (meetings, incentives, conferences and exhibitions) events

Source: Federation of Associations in Indian Tourism and Hospitality (FAITH), India

There are no revenues generated and tourism businesses are running out of working capital, says Ashish Gupta, consulting CEO of the industry body Federation of Associations in Indian Tourism and Hospitality (FAITH), India.

Sure enough, the threat of job losses is not far behind, with some experts projecting disconcerting numbers.

Subhash Goyal, chairman of industry body Assocham Tourism and Hospitality Council, says nearly 70 per cent of the estimated 5.2-crore tourism workforce could face unemployment unless the sector is given a bailout package immediately.

He foresees bankruptcies, closure of businesses and mass unemployment as a result of the pandemic.

A major contributor — around 9 per cent (including indirect contributions) — to the country’s gross domestic product (GDP) and a vital source of foreign exchange, the tourism industry soldiered on in recent times despite headwinds such as the economic slowdown, the closure of Jet Airways, political upheavals, demonetisation of a huge chunk of currency, and the added cost of tax collected at source (TCS). The Economic Survey 2019-20 stated that the tourism industry remained “a major engine of growth”.

Companies across the estimated $250-billion Indian tourism sector — whether they are big-ticket online travel agents (OTA), tourism boards, hotels, forex dealers or friendly-neighbourhood travel agents — expect this year to be a complete washout, especially the first and second quarters of the financial year.

“In our 90-year-old history, this crisis is more severe than the Great Depression [1929] and the World War II. Its financial impact will be far higher than the combined impact of 9/11 and 2009 (sic) financial crisis,” said Arne Morris Sorenson, CEO of themultinational hospitality giant Marriott International, in a post on the company website on March 21. More than 75 per cent of its global business is “below normal”, hundreds of hotels have closed, and some may never reopen — leading to tens of thousands of employees perhaps being furloughed, he added.

Companies BLink spoke to are bracing themselves for a drastic year-on-year revenue decline of 50-80 per cent.

This, in turn, will set off salary cuts, hiring freezes, layoffs, slashed marketing budgets and other cost-cutting measures.

“This is the darkest hour for travel. What the travel industry (and indeed any industry in our nation) faces today is no less than a war,” says Aloke Bajpai, CEO and co-founder of the OTA Ixigo, in a LinkedIn post dated March 30.

The Ixigo co-founders are forgoing their entire salary, while the leadership team agreed to a 60-plus per cent graded pay cut and the rest of the staff will face 20-50 per cent cuts, says Bajpai. Looking ahead to hopeful times, he adds, “We will reinstate the salaries as soon as the situation improves, and we will also convert the accumulated salary deductions over the hardship period into equivalent ESOPs [employee stock options], so that everyone benefits from (the) future upside when the going gets better again.” The company saw a 50 per cent dip in demand in the first week of March; it has paused its marketing spends and and cut non-essential costs.

At travel portal Yatra.com, too, marketing campaigns have been put on the backburner, as have bonuses for FY2020 or salary increases for the next year, says Dhruv Shringi, co-founder and CEO. The company had recorded ₹175.78 crore revenue and ₹2,110 crore worth bookings for air tickets, hotels and travel packages during the three months ended September 30, 2019.

At BookMyForex.com, a leading forex dealer, founder and CEO Sudarshan Motwani is expecting few new customers, given the current circumstances. He sees a total washout for the first quarter of the financial year, and a 70 per cent year-on-year decline in the second.

The company had secured funding in February to expand beyond major cities into smaller cities, besides introducing technological innovations, widening its business models, and stepping up marketing efforts. Now it is forced to rethink the whole. “While we will continue with the technological development, most of our other plans will be on hold until the situation gets better and the market opens,” Motwani says.

He and the other senior leadership at BookMyForex.com have taken a salary cut, but further salary cuts or layoffs may also be necessary, he says.

Loveleen Multani Arun, who runs Panache World, a boutique travel company in Bengaluru that specialises in customised trips, says pay cuts and layoffs have already happened across companies of all sizes. She further points out that the travel sector’s woes were set in motion even before the lockdown. “Although the lockdown may have started only a while ago, all the work that travel companies have done since January — towards trips in the future, has come to naught. All the trips stand cancelled. So basically, we have already been in this dire situation since January.”

Panache World, too, will miss out on new investments or expansions for the next three years at least, she says, besides foreseeing at least a 75 per cent dip in year-on-year revenue.

Snapshots from a teetering sector

• Mysore-based travel company Gully Tours is anticipating a 60-80 per cent fall in revenue this financial year, unless something changes drastically, says its founder, Vinay Parameswarappa.

• Harshvardhan Tanwar, founder of Mumbai-based experiential tour company No Footprints, expects a “heavy impact” on the company’s first and second quarter results.

• Rupal Shukla, founder of Mumbai-based Tierra Travel, expects an 85 per cent drop in revenues till the fourth quarter of this financial year.

• Sunil Gupta, director of the Agra-based company Travel Bureau, says the lockdown has already led to a loss of ₹3 crore

***

Like she’s done for so many years now, Kallanparambil, who works in inbound tourism, had intentionally delayed the collection of her payment dues for the first three months of this year. That amount was meant to be her buffer for the off-season — April to October. Now, she is left stranded with nothing in hand. “No one would have thought this coronavirus crisis would happen. I can’t even blame anyone in this situation, as there is no one in the offices (travel agencies),” she says resignedly, even as her voice betrays a growing sense of desperation.

She has to pay her house rent and meet other expenses, including the school fees for her two children. “I have absolutely no clue what to do... Maybe I will have to resort to borrowing,” she says with a sigh.

There are lakhs of workers like Kallanparambil who are anxiously waiting for borders to be thrown open again and for people to put on their travelling shoes like before... their very existence depends on it.

Bineesh VR, a 34-year-old visa service assistant at a Kochi-based travel agency, Anna Maria Travels, captures the abject helplessness facing the travel and tourism sector. “Unlike other sectors where there is a provision to occasionally open stores and sell, we are helpless here,” he says. He is also unsure about getting paid for the coming months. “For now, we (his family) are getting by somehow, limiting expenses to bare essentials,” he says.

Rojin VM, a 39-year-old Kochi-based government-accredited tour guide, has had eight trips to places such as Paris, Italy, England and Ireland cancelled. “I should have been in Italy by now,” he says wryly, as that most favourite destination has emerged as one of the worst-hit pandemic zones in Europe. While he is hopeful of sailing through for another six months, he is anxious about the road further ahead.

Tour guides and drivers are the face of any packaged tours, he points out, as the success of such trips largely depend on how efficient they are. But these ground workers find no representation in the travel associations that lobby at the national level, he adds. As tour guides like him freelance with various travel agencies, they fall outside the purview of the organised sector; he is sceptical whether the relief measures from the government, if any, will benefit workers like him.

For service providers such as Kishan Yadav, owner of Mumbai-based Ashapura Travels, which offers pick-up and drop taxi services to companies on a contract basis, the lockdown has not just cut off all earnings but continues to drain his reserves as he has to pay off several stakeholders. Yadav has 18 vehicles, of which only three are loan-free. “Our monthly expense is ₹5-6 lakh. That includes the EMIs [loan repayment in the form of equated monthly instalments] of the vehicles, maintaining them, rent of the office space, electricity and salaries of the employees,” he says.

The 10 employees, including drivers and office staff, have been paid their March salary but the April payment will be delayed, he says. He also has to take care of the expenses of employees who couldn’t return to their villages before the lockdown.

Explaining that he managed to meet these expenses from the payment that some companies had released for March, he reckons it will see him through for the next 15 days. “Probably, whatever is god-willing will happen. I guess I am too numb to think of what I am going to do post those 15 days.”

To be footloose again...
  • Representatives of various travel trade associations in India have petitioned the government for measures to resuscitate the sector. Their demands include:
  • 12-month moratorium on interest payments on loans, and grant of working capital from both banking and non-banking financial institutions;
  • 12-month deferment for payment of statutory dues at the Central government or state government level;
  • Support fund for 12 months, on the lines of the employment guarantee scheme MNREGA, for ‘direct transfer’ of basic salaries to affected tourism employees;
  • Doing away with the TCS on travel that was proposed in Finance Bill 2020;
  • 200 per cent weighted exemption, for twelve months, on expenses for Indian corporates to hold exhibitions, conferences and incentive trips in the country; and
  • Creation of a national tourism task force headed by the prime minister and comprising Central ministries concerned, chief secretaries of state governments and industry stakeholders, to revive the sector.

***

Most of the people contacted for this report did not expect ‘business as usual’ for at least a year. Domestic travel is likely to pick up by September or so, they surmise.

Trust HJ Lin, director of Taiwan Tourism Bureau for the India, Asia Pacific and West Asia regions, says that when travel resumes, his bureau will embark on a new campaign that focuses on “holiday for healing”.

He says the restrictions are likely to leave people yearning to travel again after the lockdown ends. “So, whichever country is able to reach out to travellers and inspire them to visit — the chance would be theirs. We are now working towards this goal and engaging our audiences during the period, to keep them entertained and inspire them,” says Lin.

GB Srithar, regional director of Singapore Tourism Board, is leading a Tourism Recovery Action Task Force (TRAC), which has representatives from the private and public sectors in Singapore working out ways to revive tourism in that country. These plans will be launched at an appropriate time, he says.

There are those who think this break will give added impetus to demands for “controlled tourism”, especially from places that were badly scarred by the effects of ‘over-tourism’ — namely, untrammelled exploitation of tourist destinations, leaving locals frayed and the places themselves degraded environmentally. As Vasudha Sondhi, managing director of Outbound Marketing, says, “You may have read about certain European destinations where the people have come out in anger against over-tourism. This will gain momentum and lead the destinations to control numbers [of visitors].”

Many believe that even after the pandemic abates, only essential travel is likely to pick up in the near future. While prospects for the leisure travel segment would remain bleak for longer, business may pick up in the MICE (meetings, incentives, conferences and exhibitions), emergency and corporate travel segments.

As Shenoy points out, “It’s going to take a long time for people to face a crowd now. Nobody will want to be in a crowd. Have you noticed how people stand away from each other while shopping at supermarkets?”

According to Assocham’s Goyal, since outbound and inbound tourism will take seven months to a year to revive, the only segments that will bounce back fast are domestic tourism, yoga and wellness tourism, spiritual tourism and medical tourism. Another sector that will revive gradually involves travel for weddings, which will increasingly take place in India rather than abroad, he adds.

Ministry of tourism’s Sharma agrees that people will think twice before travelling now, but remains optimistic. “I would like to believe that travel is kind of inbuilt in human lives. After a while, everybody would want to travel, and things will improve. There will be a new normal. So, after 9/11, for example, the security increased, everybody said tourism will suffer, but it didn’t. People adjusted to the new environment and I think that will happen with the pandemic also.”

Namaste India

2018

  • 10.56 million foreign tourist arrivals
  • $28.586 billion forex earnings

2019

  • 10.89 million foreign tourist arrivals
  • $29.962 billion forex earnings

Source: Ministry of tourism

Published on May 01, 2020

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