India Tourism Worst Ever in 100 Years

Reaches Now or Never Inflection Point

India Tourism Worst Ever in 100 Years

Generations of India tourism businesses and crores of jobs are being impacted due to COVID-19, and until a vaccine is found, the concept of tourism will remain in dire straits. The Federation of Associations in Indian Tourism & Hospitality; the policy federation of all the national associations representing the complete tourism, travel, and hospitality industry of India (ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI, TAFI), and the cause partner, AIRDA, have further revised upwards it’s value at risk to Indian tourism to 15 lakh crores.

FAITH’s first guidance which was calculated and was shared with the Government in March 2020 had put tourism’s economic value at risk at 5 lakh crores from this pandemic. FAITH revised this further during the quarter as the situation deteriorated and the value at risk was put at 10 lakh crores. This has been revised again to touch a value at risk of up to 15 lakh crores in terms of the economic output of tourism in India

Given the way the virus is progressing, tourism supply chains have  broken down in India across all its key inbound, domestic and outbound markets and is not expected to recover for the next 5 months, too, making the total impact to a minimum of 9 months starting from March this year.

The direct and indirect economic impact of tourism industry in India is approximately estimated at ~10% of India’s GDP.  This roughly puts the full year economic multiplier value of tourism in India at ~20 lakh crores. Minimum three-quarters of tourism will be fully impacted .

This value covers the whole tourism value chain from airlines, travel agents, hotels, tour operators, tourism destinations restaurants, tourist transportation, tourist guides. Each of these segments of tourism is non-performing or under performing and will stay that way for many months of this year.

This is evident across all segments of tourism. Pending refunds for travel agents,  shut down or vacant  hotels and restaurants,  empty or locked down conventions and meeting or wedding halls, no order pipelines for tour operators, tourist transport lying locked in parking lots, laid off or leave without pay staff , managers, the summer domestic and outbound holiday season gone,  no visible bookings for the peak October-March season, meetings shifted to virtual apps , non-essential travel closed and so on.

Be it leisure ( inbound, outbound, domestic) corporate travel, heritage, adventure, meetings incentives, exhibitions and events religious, spiritual and in upcoming high value niche tourism products such as sea and river cruises, camping, rafting, golf  film tourism, jungle tourism, agri-tourism and many more across all states, this will the worst performing year for tourism in a century.

Tourism has one of the largest economic multipliers and FAITH based upon its industry estimates believes, that each rupee spent on tourism could have an economic multiplier of upwards of  3-4 times more for India given its most globally unique natural and cultural heritage spread across the Indian hinterlands. The cumulative job losses for the full year both in organized and unorganized category of tourism could go as high as 4 crores.

FAITH has been requesting over the past 5 months that for revival of any demand in tourism, it is first important that the survival of tourism businesses in India has to first remain intact.

The following are immediately critical to maintaining the survival of tourism businesses:

– A Tourism fund which can be used by tourism enterprises in India for taking care of their employees.

– A multi-year moratorium by RBI on principal and interest payments by tourism, travel & hospitality businesses.

– An immediate full year waiver of all central and state statutory liabilities be it PF , ESi, income taxes, GST, fixed power and utilities tariffs, property, excise, inter-state tourist transportation taxes and license fees, all without any accumulated or penal interest has to be done immediately.

– Robust booking payments refund mechanism for travel agents and tour operators from airlines, railways, state tourism parks and other suppliers.

Only this will keep the Indian tourism track and hospitality industry alive for a revival, it will keep the jobs intact and it will protect the exposure of the banking sector to tourism preventing their loans from becoming NPAs.

Post the unlock tourism is seeing some spur, but that too is very limited, very short-haul domestic travel and not enough to make any tourism business viable.

FAITH has already raised requests over the past five months to the Prime Minister, the Finance Minister, to each of the 28 chief ministers , to the RBI, Niti Aayog, to tourism parliamentary panel, ministries of aviation, commerce, Finance and to more than 600 parliamentarians and is closely in coordination with ministry of tourism.

It has also requested the Parliamentarians to raise the question as to ‘why not tourism’ for sector specific support when tourism industry contributes to pan India jobs across urban & rural, forex , robust IT and GST collections, capex driven GDP and so on.

Tourism is a very unique business and is a discretionary activity.  Tourism is a means of unwinding, letting oneself immerse in local experiences. With each aspect of the travel journey now under the threat of virus from contact, this puts tourism at risk. Till the time there is a vaccine found, the very concept of tourism will be in question.

This will be reflected in all data points of the government whether in GST collections, banking data, PF, ESI or state level fixed charges.

Tourism cannot be treated economically like any other business and needs NOW a Fiscal & Monetary structured package coordinated among all arms of governments.

The whole value chain of Indian tourism will be under threat – which catered to almost 10.8 million incoming foreign travelers , almost 1.8 billion Indian domestic tourism visits, almost 5 mn- + expats Indians visiting back,  almost 28 mn + outbound travelling Indians and almost $29 bn + forex earnings.

FAITH, Federation of Associations in Indian Tourism & Hospitality, is the National Federation of the 10 National Tourism, Travel and Hospitality organizations of India. These associations are ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI & TAFI.

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