Indian Travel and Tourism Industry on The Rocks

by Ajay Prakash
No Tourism in Jammu & Kashmir this year

The Indian Travel & Tourism industry seems to be on the rocks. As if last year’s six-month lockdown was not enough, 2021 turned out to be no better. In my article last week, I had written about the severe dent in domestic air traffic during the past year and a half. However, the travel & tourism industry has affected many more people.

Air Travel Remains Impacted

Fifty-six percent (56%) fewer people traveled by air in 2020 when compared to 2019. The first three months also did not provide a rosy picture of passenger traffic within the country. Passenger traffic in April, May and June is predicted to be even worse than the previous quarter.

Domestic Passenger Traffic India last 3 years

Domestic Passenger Traffic 2018 2021, Source: DGCA

Gloom & Doom in the Hotel Industry

According to the Federation of Hotel & Restaurant Associations (FHRAI) of India, the Indian hotel industry has taken a hit of over INR 1.3 trillion in revenue for the fiscal year 20-21 due to the pandemic. As a result, the revenues are down almost 75% compared to 2019.

The Centre for Monitoring Indian Economy (CMIE) showed that the unemployment rate has been rising sharply in the country and stood at 15.31% (urban Unemployment Rate) on June 4, 2021. According to CMIE – The travel, tourism and hospitality industry has lost 10.9 million jobs so far out of the estimated 20 million that it employs. Five million of these are related to the travel and tourism sector alone. Moneycontrol recently published the unemployment data.

Travel & TourismUnemployment Figures By Money Control

Unemployment Figures By Money Control

There have been all-around job losses involving segments of sales, marketing, planning itineraries, customer service, food & beverages, restaurants, and transportation services. However, due to the lack of tourists, the worst impacted segment are still travel agents, tour operators, and hotels. The hotel occupancy rates and the fall in tariffs tell the story.

Travel & Tourism Hotel Occupancy Rates

Hotel Occupancy Rates, Source Statista

Travel & Tourism Hotel Tariffs

Travel & Tourism Hotel Tariffs, Source Statista

The Government have much to worry about. The Ministry of Tourism has engaged the National Council of Applied Economic Research (NCAER) in January 2021 to conduct a study on “India and the Coronavirus Pandemic: Economic Losses for Households Engaged in Tourism and Policies for Recovery.” The objective of this study is to quantify the impact of the Coronavirus pandemic on the tourism sector. The report is yet to be released.

As an interim measure, the country’s federal bank, the Reserve Bank of India, last Friday, announced financial relief to the industry. The bank has created an ‘On-tap Liquidity Window’ of INR 150 billion for the travel, tourism, hospitality, aviation, transport sectors, and other related businesses in the country. This window will be available till March 2022.

This assistance by the Government is a welcome move, but still, the industry has a long way to go. Difficult times will continue. We appreciate your comments in the section below.

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