Government apathy: Tourism, hospitality, aviation sectors left high and dry, say industry players

Forum Gandhi Mumbai | Updated on May 17, 2020

Lack of bailout package for tourism, hospitality and aviation sectors has put the industry players in a tight spot.

According to industry experts, these sectors have been severely hit by the economic slowdown and there could be massive job losses and business closures without any fiscal support from the Government.

“There has been no word about the tourism and the hospitality sector from the Finance Ministry,” said Subhash Goyal, Chairman of the STIC Travel Group and Chairman, Assocham National Council on Tourism & Hospitality, adding that so far all the announcements were “mere jugglery of words and figures.”

There was wide expectations that the Finance Minister was likely to announce a bailout package for the tourism and hospitality industry; however, that did not happen. On Saturday too, measures for the aviation sector were touched upon but no financial relief was given.

Ashish Gupta, CEO of Federation of Associations in Indian Tourism & Hospitality (FAITH), said he is in an “utter state of shock and disbelief because 10 weeks of constant discussions have come to a naught” leaving the players high and dry.

Job loss

BusinessLine had earlier reported that nearly 70 per cent of the estimated 5.2-crore tourism workforce could face unemployment unless the sector is given a bailout package immediately.

According to Gupta since the industry needed cash inflow, which is going to be absent for many quarters over FY20-21, these figures could go way higher than earlier estimates since there is no bailout package.

OTAs like and Ixigo said that globally too, several countries, including the US, UK, Singapore and Australia have provided financial support to the travel, tourism and aviation industry but the Indian government failed to take stock of these industries which will delay the road to recovery, push companies towards issuing pink slips to its staff or taking the emergency exit themselves.

Where OTAs are struggling with cash flows, small travel companies like Sapphire Ventures, Tierra Travels, and No Footprints fear their survival. Siddharth Jain, CEO – Sapphire Ventures, said with the help of the government, “our industry could have recovered to the previous growth levels in two years, which will now take at least 5 years.”

To cut some slack, the government did announce a few measures for the MSME sectors and loans with interest. “Hardly a few percent of the total spectrum would benefit out of these schemes. It is a status quo, and it doesn’t translate into much for this huge industry,” pointed out Chetan Kapoor, Co-Founder & COO, VIDEC, a travel consulting firm.

Paucity of funds

According to Harshvardhan Tanwar, Co-founder, No Footprints, “Small and medium businesses built by entrepreneurs will be the major losers in this scenario and most agencies will be financially bankrupt by the end of three months. There needs to be interest-free loans for us to survive, and in order to pay our staff. Moreso, there needs to be funds given to stakeholders who have a certain percentage of business hits.”

Where the tourism players are stranded on one hand, the road to recovery for the Indian hospitality sector too may take anywhere from 3-4 months to 24-36 months, with revenue erosion of $6.28 billion in a best case scenario, to revenue losses of $14.76 billion in a worst case scenario this fiscal, according to a report by hospitality consultancy firm, Hotelivate.

Achin Khanna, Managing Partner at Hotelivate, said, “The absence of this runs the risk of thousands of hotels shutting down permanently and millions of jobs becoming redundant as a result.”

Speaking specifically about the hospitality sector, Sanjay Sethi, MD and CEO, Chalet Hotels Ltd, a significant contributor to the GDP, employment and forex earnings has been put out in the cold. “We urgently needed the government to facilitate a one-time restructuring of loans by banks without them having to take a provisioning hit. We needed soft loans for working capital,”.

Published on May 17, 2020

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