A month after demonetisation, tour and travel operators are not enthused about the future of their business unless cash is easily made available to inbound tourists.

The last month of the year is the ‘visiting season’ for foreigners, who still prefer to use cash rather than cards due to the fear of hacking in the country.

According to data from the Ministry of Tourism, last year November and December had 1.7 million tourists but this year there has already been a 15-20 per cent drop in November alone for both inbound and outbound travel. This is making it difficult for travel companies to book enough packages for 2017, most of whom are projecting a 25 per cent drop in the volume of business.

Chaos at ATMs

“There was no major business activity happening for us in November as both inbound and outbound tourism had dropped by 20 per cent. Foreigners are already giving feedback back home about the chaos at ATMs to collect cash and this is not expected to generate future bookings unless the cash flow improves,” says Lokesh Bettaiah, Honorary Secretary General TAAI(Travel Agents Association of India).

Growth in the travel industry has already been low at about 4 per cent till October. Setting a limit of ₹5,000 per week for foreigners exchanging currency is expected to hamper the growth of inbound travel further.

Going forward the first quarter of 2017 looks grim for most tour operators. “There is going to be a fall in the profile of bookings. Foreigners are already taking back with them bad experiences while withdrawing cash and social media is playing its part, making the travel climate not conducive in India. Outbound travel is also affected and expected to drop at 40 per cent with with poor bookings for even popular events like the Dubai Shopping festival in January,’’ said Pradip Lulla, Vice-President, Travel Agents Federation of India.

Most travel companies are now bracing for a 25 per cent drop in the business in the first quarter of 2017. “Both inbound and outbound travel has fallen by 10-15 per cent . With a limit ₹5,000 per week being imposed on foreigners, there is bound to be further cancellations with a volume drop of 25 per cent for inbound travel,’’ said Zakkir Ahmed, CEO, Trust Travel & Tours.

Forex revenues to be hit

Loss of foreign exchange revenues is also expected to be a fallout due to the lack of travel. “Inbound travellers were allowed to exchange $80 per week in contrast to $200 per day. This has not gone down well with foreign travellers who still prefer to pay in cash and feel vulnerable using cards in India due to hacking and frauds. Indian government’s foreign exchange earnings would have dipped by 30 per cent November,’’ observes Pronab Sarkar, President, Indian Association of Tour Operators.