Travel industry among hardest hit by coronavirus lockdown

The cascading effect of the coronavirus is crippling the Indian tourism and hospitality industry.

Foreign tourist arrivals (FTA) last month dropped 9.3 per cent month-on-month and 7 per cent year-on-year, according to government data. In February 2020, there were 10.15 lakh FTAs, against 10.87 lakh in February 2019 and 11.18 lakh in January 2020.

The number of visitors who visited the Statue of Unity in Gujarat dropped by over 38 per cent from January to February, and the revenue collected fell approximately ₹5 crore.

The Archaeological Survey of India (ASI) has 3,691 sites registered with it, of which 38 are world heritage sites. As per information provided by the ASI, the total revenue from ticketed monuments was ₹247.89 crore in FY18, ₹302.34 in FY19 and ₹277.78 crore in FY20 (April-January).

According to Vasant Kumar Swarnkar, Superintending Archaeologist of ASI, Agra Circle, at the Taj, the monthly tickets sold did not fall drastically between January and February. “On an average, we sell over 22,000 tickets to foreigners. In March, on a daily basis, we weren’t able to sell more than 16,000 tickets,” he said.

Last Wednesday, authorities had directed the shutdown of the Taj, among other sites. “Two days prior to the shutdown, we were barely able to sell 8,000 tickets on a daily basis,” said Swarnkar.

On Tuesday, the Centre imposed a 21-day nationwide lockdown, which means all the sites will remain closed.

Tourism takes hit

Earlier this month, the Centre for Asia Pacific Aviation India (CAPA India) in a report had said that the Indian aviation industry, excluding Air India, would incur losses of $500-600 million in Q4 of FY20 because of the pandemic. CAPA warned that if the government did not intervene, several Indian airlines would shut operations by May or June due to a cash crunch.

For the Indian tourism industry, summer is the prime season for both domestic and international tourists.

Now, with the total number of coronavirus positive cases crossing over three lakh worldwide, summer looks grim for the industry. The total number of positive cases in India has crossed 500.

The tourism industry was anyway hit by the economic slowdown in 2019, coupled by macro headwinds and geopolitical issues.

Collateral damage

According to Siddharth Jain, CEO – Sapphire Ventures, and Director – Kazin Travel Consultants LLP, the impact is huge and the tourism industry will see be the first collateral damage. Travel agents, hoteliers and airlines are constantly receiving cancellations, he added.

“Business has literally come to a standstill and everyone is bleeding in an already challenging business scenario. Even if the Covid-19 cases decline, the recovery will still take at least 8-10 months. Private stakeholders alone will not be able to recover without financial relief from the government,” he said.

It has been estimated that the larger tourism industry in India contributes to about 10 per cent of the GDP. It may not be an overstatement to assert that almost all of this revenue may dwindle to a painfully negligible amount if Covid-19 does not come to a halt this year.

Loveleen Multani Arun, who runs Panache World in Bengaluru, said she expects business to be near zero for the next three months. Then, depending on the spread of the virus, the market may re-emerge. “The inbound season in India is just about ending and usually picks up from October again. We hope that we will see some tourists coming back but for that the indicators will come in the next 2-3 weeks — on how well we handle the breakout as a country,” she said.

Layoffs likely

Largely an unorganised sector, the interconnected industries are staring at huge losses and lay-offs. The unskilled people become the weakest link in the whole chain and it is evident that it may impact them first.

According to the Federation of Associations in Indian Tourism & Hospitality, the tourism industry is looking at bankruptcies, closure of businesses and mass unemployment. It is believed that around 70 per cent out of a total estimated workforce of 5.5 crore (direct and indirect) — over 3.8 crore — could get unemployed.

Several tourism, hospitality and aviation industry bodies have also written to the government for interim relief to pay EMIs, instalments, taxes, and salaries to employees. The road to recovery for the industry is surely difficult, at least for the next fiscal.