COVID-19 IMPACT ON TOURISM (In Indian Context)
-By Prateek HIra
COVID-19 has come as a dampener to the otherwise dampened tourism industry. As it is, tourism, specially inbound tourism, was not passing through a good phase and coronavirus only added to the woes, putting the industry in comatose.
Personally, I am worried about its ripple effects that will only popup after this immediate situation has ended. Tourism largely stands on the foundation of a good economy and in this case the global economy is shaken to the core. Of course the industry stands with the government and is supporting each step that our government has taken or intends to take further, to come out of this threat, but at the same time, I have seen that governments in India often fail tourism industry’s expectations after such crisis have ebbed. The lock-down stage of tourism has never ever happened in the past (barring the world war). Businesses are at stand-still, jobs have dried-up and all projections for 2020-21 have failed. In such circumstances, it is imperative that our government simultaneously and seriously starts planning the revival of tourism in India, else it will be too little too late to revive tourism anytime soon. ‘Fear’ and ‘Perception’ will be the two key words that will have to be addressed immediately after this health emergency is dealt with, and a robust marketing campaign has to be in place to address the aftereffects of COVID-19 on tourism that will actually start to show up only after the virus spread has been dealt with.
As businesses we need to diversify in other related areas and ancillary services. We as tour operators need to come out from our comfort zones of working only in single genre of tourism and learn to put eggs into many baskets, to be able to counter any such eventuality in future. ‘Workforce Optimisation’ will be yet another area we need to tremendously work upon, and this will mean, not only hiring 360-degree-multi-calibre workforce but also realigning existing workforce to take up multiple roles and give optimum output even with a lean workforce in place.
This is the time to re-engineer, relearn and move forward to lead from the front, charging head-on and regaining the lost grounds.
Lets us enumerate the steps that may come-in handy to revive the industry and how industry can contribute to itself for its own betterment
All eggs in single basket is always a high risk. Almost all of the travel Industry in India, barring a few has focused business scene. They have either been in inbound tours, outbound tours, domestic tours or into corporate travel support or ticketing and ancillary service agents (Of course there is MICE etc too, but let’s for now club it the ones that have been mentioned for the purpose of research). Each domain has its own pros and cons but now is the time that tour operators spread their wings a bit and have a healthy mix of business to counter any specific downturn anytime in future. Given present times of COVID-19, I try to analyse the revival rate after the COVID-19 threat is over or minimised.
Let’s wildly assume COVID-19 threat is over or at least will diminish by 30 June 2020 and the world starts limping back then.
Business Domain : Corporate travel support or ticketing and ancillary services
Recovery Track Time After COVID-19 : 1 month (Expect road to revival by: July’20)
This business domain will pick-up first as people will immediately start travelling for business, completing all backlogs, meeting prospects and enhancing businesses that would have suffered in the wake of Corona threats when travel was barred either due to different advisories or by self restraints.
Business Domain : Domestic Tours
Recovery Track Time After COVID-19 : 3 months (Expect road to revival by: October’20) – Peak season of May/June ’20 will be lost.
Natives know, native conditions the best. Religious travel, visiting friends and family, family outings, postponed honeymoons, school vacation travel; all will start picking up first than any other segment of leisure travel. May-June of 2021 will be the first vacation month to see this trend if COVID-19 is arrested by then. The traces will be visible on weekends from July and then a long weekend of Raksha Bandhan that will fall on August 3, being Monday. So technically it will be a holiday of Saturday, Sunday, and Monday for nearby travel. Similarly Christmas of 2020 will be on Friday, making it a long weekend including Friday, Saturday & Sunday. Also winter vacations in school will be on to give yet chance for people to resume holiday travel. This will also set the tone and rebuild confidence.
Business Domain : Outbound Tours
Recovery Track Time After COVID-19 : 12 months (Expect road to revival by: July’21) – Peak season of Indian outbound travel May/June will be lost.
COVID-19 after all is a foreign import. Families will be restricting themselves to travel abroad very soon. The start will be with domestic travel and gradually after gaining confidence, people will re-look at foreign shores. Outbound Tour Operators will have to entice people with great deals, low airfares and very competitive packages. Destinations will have to offer lucrative visa options etc. Here too, the doubt will be majorly on top affected countries (Specially the top ones with excessive cases of COVID-19 and unfortunately all preferred international destinations are right there – See the ‘Corona List’ on : https://www.worldometers.info/coronavirus/ to get an idea of the effect) which in due course will figure in ‘To Do’ list of travelers. Having said that, all these countries are also known to be quite aggressive in tourism and hopefully they will very soon, recover by their own innovative tourism policies and marketing exercises.
Business Domain : Inbound Tours
Recovery Track Time After COVID-19 : 18 months (Expect road to revival by: January ’22) – Half of tourist season of 2021-22 would be over by then.
Inbound tourism sector as it is, was not doing very well in India due to numerous reasons since the beginning of September/October 2019. Some of the reasons being inconsistent marketing exercise in foreign tourist markets, damp international economy, India losing its traditional markets to neighbourhood rivals, political environment perceptions, high tax structures till recently and then there were internal political protests and demonstrations too making the matters worse. Now under given circumstances of COVID-19, inbound travel will have the slowest road to recovery. As it is, the inbound travel is the first to get affected by any slightest upheaval and last to recover from it.
India as a country has never recognised the economic potential of tourism and specially, inbound foreign tourists thus it has not had a very consistent policy in this regard. With the change of governments perception towards tourism has changed. Thus in our country, we have never had a focused marketing for inbound tourists. This only complicates the matter further and not only prolongs recovery of lost grounds but also a large chunk of market is lost to our aggressive neighbours, with consistent and attractive opportunities. India’s foreign tourist season roughly is from October to March (6 months in all, though from the second week of October, all of November till the first week of December, and again from the middle of January, all of February till the middle of March being the peak of this season thus translating virtually into only 4 months of real business).
Seeing this illustration, I am personally (I really wish, I am proven wrong) not seeing much action in the next foreign tourist season of October 2020 – March 2021, unless some miracle really happens.
This downtrend is not only COVID-19 threat but as I have said in the past, my real worry is the aftereffect of this pandemic which I enumerate as under:-
- Economic Recession (or Economic Depression) – whenever there has been an economic slowdown, trends suggest leisure travel takes a beating. People have less disposable incomes, they concentrate on saving and being at par with their financial positions that they had in pre-recession days. Pandemic of this magnitude is much more severe as this time the geographic spread is much greater and then the news spread is much faster and even the fake news is uncontrollable, making it much more worse than it actually would have been.
- Xenophobia might take a rebirth – this word, ‘xenophobia’ had for long not surfaced but it may come back to haunt all of us. Fear of foreigners, if not harming them, even distancing from foreigners will have an adverse effect on tourism. The moment the news of coronavirus surfaced, many hotels in India started denying rooms to foreigners and so did many taxi drivers resented to accepting a foreign tourist in their cars. Indian co-passengers on trains and flights were jittery on seeing foreigners. The larger worry is that if ‘xenophobia’ stages a comeback it will be very hard to revive the industry soon. After all host has to be welcomingly receptive of the guests for survival of tourism.
- Priorities are Heath & Safely – travel of course is the last priority and once such a pandemic has struck the world, people choose their destinations very carefully and base it on medical index, capabilities and preparedness. India undoubtedly has demonstrated a great preparedness in times of this pandemic, yet people always think they are safer and more secure in the comforts of their own homes and in their own environments. This psychology will be counterproductive for international travel for the time being at least.
- Traveller Demography will change – COVID-19 has shaken the confidence of elderly as it is their immune system that is being questioned, thus there might be a substantial reduction in traveler who are 60+ and this trend will continue for quite some time till the confidence is regained. It will deplete a tourist market and 60+ is actually a good source market for India and many other places too.
- Chinese Over-dependence will be re-looked at – COVID-19 is very unfortunate and it is absolutely wrong to label it to any nationality. Still if you see, Chinese had taken over the world travel scene and somehow tourism was becoming over-dependant on Chinese travellers. This trend will change and as tourism marketer we will redirect our efforts to other markets, no matter how small that market is. Most of the countries world-over had created their tourism infrastructure eyeing the huge influx of Chinese travellers, and now that will have to be realigned even though for short term but over-dependence on any market will end. The downside of this will be, missing out on huge Chinese market that has surprised the world by its volumes and spends, and this can be a huge segment waiting in the wings but not accepted as it was in pre-coronavirus days.
- Many businesses will go bust – small and medium businesses might not sustain for long if this mayhem continues beyond expectation and economic comfort levels. Most of businesses in travel domain are small to medium and like MSMEs are the backbone of Indian Economy; these small and medium enterprises run the travel scene in India. Family owned travel companies rule the business scene in India and most of these are largely dependent on their cash-flow to operate.
- Micro Enterprises: Less than or equal to 5 Cr
- Small Enterprises: 5 Cr to 75 Cr
- Medium Enterprises: 75 Cr to 250 Cr
Above figures are based on Indian Union Cabinet’s approved the amendment to MSME act for the classification
Sudden disruption in the cash-flow would mean drastic loss of jobs in the sector, default in credit and even shutting down of many wafer-thin margin businesses. The entire travel industry could come to a stand-still for quite some time, before it is able to reassemble itself after the virus threat is dealt with and business starts pouring in.
- Exploitation of workforce – when jobs dry up, and supply of workforce outnumbers the actual requirement, there comes a situation of workforce exploitation at the hands of the industry. Unfair payments, unkind work environment, excessive work-load etc. This condition might not encourage suitable candidates to join travel trade and the travel industry might loose on good talent thereby creating a vicious circle, where an average workforce will get only average business thus making the industry suffer more and for long.
- Airlines may ignite high air-fares – airlines were in abundance world-over and that was keeping the airfares under control. I am seeing many small carriers shutting down and even if this becomes a temporary situation, it might limit seats and then fares will shoot-up. This trend was experienced when in India Jetairways was shut and seat capacity was suddenly reduced, it only increased the flying cost. If this happens, the travel cost will increase and this will adversely affect the travel budgets of people.
- Entrepreneurship in travel will not happen easily – young companies shutting down is never a good sign for an economy; this only discourages many out there waiting in the wings to start up. It is a deterrent for new age entrepreneurs intending to join the march. There might be a big question-mark on ‘Travel Start-ups’ for some time now. As it is, shutting down of Jetairways, Thomas Cook (UK) and Cox & Kings (India) has left many thinking twice before taking a plunge, and now after the expected news starts pouring in about others shutting shops, it will be a tough call for new-age entrepreneurs to enter a domain which they will believe to be shadowed with high risk from all quarters.
- Global hospitality giants in India will shake – of course it was a global decision of hospitality multi nationals that investments in hospitality will be put on hold now for some time. Many hotel chains have already announced temporary breaks on expansions, this may restrict tourism infrastructure and industry may take longer to revive in absence of adequate hotel rooms and so will be the case of newer destinations that otherwise would have come up well with international hotel chains steeping in. Even Indian hotel majors have frozen their expansions for the time being thus putting a comma on any new development.
- Lack of employment opportunities for fresh tourism & hospitality graduates – This is also that time of the year that students of tourism and hospitality graduate, and market gets infused with new talent each year during the coming months. Due to the global tourism recessionary scenario in the wake of this pandemic, it is hard for existing work-force to survive thus absorption of new work-force is totally out of question for now. This trend my render fresh graduates of tourism and hospitality jobless and they will land up in other industries reluctantly without specialisation. Losing on this new talent pool, tourism and hospitality industry will not only be unfortunate but will create a further ripple as for another few years students may shy away from joining this course of study. The real impact of this will then be evident from next year on and will continue for quite some time, till the industry is back on track and students are confident about their future after undertaking a course in tourism and hospitality.
- Cleanup of Indian economy might suffer and compromise on genuine business projects – Indian economy by and large is an economy where crony capitalism ruled and had a different set of rules for itself. Only recently Indian government started to iron out this situation through many means adopted for the purpose. With such a situation as present, this may make in-roads again and the efforts in this direction may be defeated. Banks will shy away from funding genuine business projects and fund companies based on their ‘high-powered’ names. Tourism and Hospitality will be the first victim of this and banks, financial institutions and other investors will be reluctant to lend easily even if the projects are worthy.
This time will pass too but what is the need of the hour – Words that should be understood to taken up seriously.
All difficult times have passed and this will pass too. I may be wrong, but I am not seeing it ending very soon. What I understand is that we will only learn to live with it as we have learnt to live with H1NI or Ebola etc, when the spread is controlled and infection graph plateaued.
The time frame I am seeing is 18 months to 24 months for having tourism back on track and by that calculation; it will be the financial year of 2022-23, when we can expect some action. This doesn’t mean nothing will move by then. We as humans have a miraculous way of forgetting the worst and moving on soonest possible, it’s only the quantum that will only gather as speculated in 2022-23. I am also confident, the moment the COVID-19 new case curve plateaus and the spread is controlled people will start travelling much more than they were thought to be travelling, giving a sudden upswing to tourism across all domains, so let’s all be positive.
In conclusion let me leave with some keywords/phrases that we should start understanding and practising till the time we lie-low and till our industry regains the momentum:-
- Re-engineering or Remodelling Businesses
- Realigning Manpower
- Workforce Optimisation
- Synergies and Collaborations
- New Markets
- Discovering New Avenues & Destinations
- Reducing Costs
Our priority should be to counter COVID-19 threat that looms over all of us today and to wholeheartedly support our governments in making us safe and healthy and then we will together with our government chart a revival plan and I am sure government too will be keen to revive tourism as soon as it can. Tourism after all contributes US$240 billion or 9.2% of India’s GDP and supports about 43 million jobs.
Wish all be safe & health and travel again soon.
-By Prateek Hira (Prateek Hira apart from being a renowned travel professional, heading four travel companies is a travel researcher and travel academician)