Even as the travel and tourism industry welcomed the Centre’s move to seperate Jammu & Kashmir from Ladakh and to make the two regions separate Union Territories, it’s a long road ahead in terms of development.

The Modi 2.0 government in a historic announcement on Monday abolished Article 370 and removed special rights that Jammu and Kashmir enjoyed under the Indian constitution.

Gurbaxish Singh Kohli, President, Hotel and Restaurant Association of Western India (HRAWI), said that the body, which represents the Hospitality and Tourism sector, welcomed the government’s move because tourism contributes about 15 per cent to state GDP. He said, “Despite Kashmir ticking all the right boxes as a Hospitality & Tourism magnet, the industry’s presence and business in the state is dismal.”

Talking about the impact of the security situation in Kashmir and its impact on the sector, Sharat Dhall, COO(B2C), Yatra.com said, “The situation in Kashmir will have a short- to medium-term impact on the number of people travelling to the valley. Many tourists and groups have cancelled their trip after the government issued an advisory last week. Travellers are now looking at alternate destinations like Manali, Shimla, Kerala, Connor, Ooty, Goa, Mclodganj, Kasauli among other hill stations."

Commenting on the government’s move, Nishant Pitti, Co-Founder & CEO, EaseMyTrip said that a “virtual barrier can be put to rest”. “With a rising hope that novel initiatives would be taken to elevate the current tourism graph to greater heights leading to better employment opportunities within the tourism and allied sectors,” he said.

Pitti added that Kashmir is a unique destination and holds a lot of potential in terms of tourism and adventure sports. He hoped that the move will have a positive outcome, and as the situation stabilises, more and more tourists would embrace this destination.

Tension and GST issues

HRAWI estimated that almost 50-60 per cent of the total population of Jammu & Kashmir is directly and/or indirectly engaged in hospitality and tourism or related ancillary related activities. “This move of the government will bring in more investment in all sectors, more industry, more private educational institutions, more jobs and more revenue will eventually come by, giving the otherwise bogged down state a huge impetus.”

However, according to a few industry players, to do business, the GST rationalisation on premium hotels remains staggeringly high compared to neighbouring international destinations, rendering the Indian travel and hospitality industry uncompetitive.

The recent budget too did not bring relief for the Hospitality industry on this issue.

Commenting on the same, Aloke Bajpai, CEO & Co-founder, ixigo, said, “Ongoing border tensions and high GST has impacted Kashmir tourism the past few years, with tourist inflow dropping from 13 lakh visitors in 2017, to around 8 lakh visitors in 2018. While the region has recorded good tourist inflow in winter months recently, hotel occupancy rates are still low and are struggling to go past 20 per cent. Constant travel advisories issued, have also impacted YoY FTA arrivals in the valley.”

According to data from SanKash, travel Fintech Startup, with the recent terror alert in Jammu & Kashmir, cancellation requests to the valley have gone up by 25 per cent in coming extended weekends. 30 per cent of the tourists planning a visit have already put on hold the bookings for travel around Diwali holidays. Also, around 40 per cent of those had to cut short their stay, have requested for refund.

Bajpai added that while the decree on article 370 issued has the potential to attract interest from private players to set up high quality hotels in the region and improve overall foreign tourist influx. “A lot still needed to be done to uplift the industry and sustain a healthy flow of tourists year round."

Sameer Patil a Fellow, International Security Studies, Gateway House, believes that the central government can encourage business to invest in Jammu & Kashmir, and in Ladakh, now with a long-term view.

“Tax incentives similar to those available in the North Eastern states, plus suspension of GST for five years, will attract business to J&K. The region is rich in high-value handicrafts and carpets which can now be exploited to scale and for export as can horticulture and agribusiness. The biggest value can be added by an expansion in tourism and entertainment, for which the state has vast capacity.”

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